Dr. John was frustrated with his practice. In his opinion it was “Good, but not great.” He made a decent amount of money, at least compared to some of his friends. He enjoyed his patients. But he wanted more. This isn’t the practice that he dreamed of. And yet when asked about what was keeping him stuck, he claimed he had no idea. He felt like he gave good care to his patients, had a decent team on board. He was involved in the community and did a few trade show events every year. And yet month after month remained the same. Sometimes a little better. Sometimes a little worse.
Dr. John is just a representative of so many doctors that worked so hard to get through school, to get a practice started, and yet it isn’t what they had imagined it to be. They aren’t really sure what to do next, so they do relatively nothing different. Ultimately leading to burnout.
The problem is that Dr. John doesn’t think strategically. He’s not strategic in his analysis of what’s going on in his practice which makes it impossible for him to plan strategically how to fix the problem and get back to growing again. He doesn’t even know where to start.
The solution isn’t that difficult. It really comes down to determining a Key Strategic Objective to focus on. Unfortunately when most doctors are asked what that would be the answer is “I want to make more money.”
Of course! But that’s not specific enough.
There are a variety of ways to make more money in a chiropractic clinic. The good news is there is a finite number of options and it’s a fairly simple math problem:
Patient Visits x Average Visit Income = Revenue – Expenses = Owner Benefit/Profit
Seems simple enough! We basically have three areas we can focus on to find our Key Strategic Objective:
- Decrease clinic expenses
- Increase patient visits
- Increase the average income from the same number of patient visits
Those are not Strategic Objectives themselves, because they aren’t specific enough. There are lots of ways to achieve each of those. By determining which has the highest potential impact, we can determine our Key Strategic Objective.
Decrease Clinic Expenses
Without a doubt, this part of the formula is straightforward enough. Look at your profit/loss and determine if there are line items that aren’t necessary. Unfortunately, in chiropractic business there is not a lot of areas to cut. Payroll … reducing payroll may increase your profit slightly in the short term, it will ultimately limit your overall potential for growth. If you’re overstaffed, find ways to GROW into it, not reduce it. Marketing… very few chiropractic clinics spend TOO MUCH on marketing. The common mistake they make is not utilizing their software to track the results of their marketing efforts to make sure it’s being spent in the right place. Supplements and Supports … this should never be an area that is being reduced as an expense but we should be tracking the expense as a comparison to the revenue generated to make sure that we are in fact selling the inventory we have at a profit versus having hundreds of dollars of inventory that eventually expires and gets tossed.
Overall, decreasing clinic expenses is typically the LAST area to look when wanting to increase clinic profits. So lets look at patient visits and average visit income from those visits.
Increase Patient Visits
This one seems simple enough. Too often, doctors overlook the fact that this is also the result of a math equation and instead of figuring out which part of the equation to focus on they try to WILL their way to increase patient visits and ultimately nothing really changes.
New Patients x Patient Visit Average = Patient Visits
Basically three ways we can impact our patient visit numbers:
- Increase the number of new patients each month, while keeping the treatment plans and the percentage of patients continuing on to a wellness/maintenance plan the same.
- Increase the size of active treatment plans, while keeping the number of new patients and the percentage of patients continuing on to a wellness/maintenance plan the same.
- Improve retention to recommended treatment plans, while keeping NP’s and treatment plan recommendations the same, as well as the number
- Improve conversion of patients to wellness plans, while keeping the number of new patients and the active treatment plans the same.
All three of those can increase your overall patient visits. Obviously, #1 and #2 will have a quicker impact on PV, but #3 can be equally impactful over a longer period of time.
Increase Average Visit Income
Average Visit Income can increase in a variety of ways as well:
- Increase the fee schedule being utilized on the current patient volume.
- Increase the services provided to existing patients to improve patient outcomes and also increase revenue
- Increase the product sales provided to current patient volume
- Improve billing practices to increase the collection percentage without changing Average Visit Services at all.
It All Begins with Knowing Your Numbers
It’s impossible to build your practice with intention if you don’t know your numbers to start with. By evaluating your current analytics, you can determine where the biggest opportunity for change exists. Commit to ONE of them as your Key Strategic Objective and focus on activities that will directly affect that statistics (while also making sure you aren’t dropping the ball on something else.) The best way to determine activities that can change or be improved is by having a Bottlenecks meeting with your team. Read about that HERE in another post.