AS A CHIROPRACTIC ENTREPRENEUR, you wear many hats, including clinician, business owner, and visionary. One of the most critical roles you play is that of financial manager. Smart financial management can mean the difference between a thriving practice and one that struggles to stay afloat.
Here are some actionable strategies tailored for chiropractic entrepreneurs to help you master your practice’s finances.
Success starts with a clear understanding of your financial metrics. Every chiropractic entrepreneur should track the following key performance indicators (KPIs):
• Revenue per patient visit: Are you charging enough for your services?
• Retention rate: Are patients coming back for follow-up care?
• Overhead percentage: Ideally, it should not exceed 50% of your revenue.
• Net profit margin: Aim for at least 10 tol5% profitability after all expenses.
Regularly reviewing these numbers ensures you stay informed and can make proactive decisions rather than getting behind the proverbially financial eight-ball.
A budget is the foundation of financial stability. Start by categorizing your expenses into three categories:
• Fixed Costs: Rent, insurance, software subscriptions, etc.
• Variable Costs: Marketing, supplies, staff bonuses, utilities.
• Savings: Emergency fund, tax reserves, and future investments.
Allocate funds for each category and stick to your budget. Tools such as QuickBooks Online can simplify this process. Also, review your budget with key stakeholders in the practice, including your office manager, associate doctors, and accountant. This helps ensure that everyone is working toward the same goal.
This is a huge problem we often see in our industry. Many chiropractors bundle or undercharge for their services out of fear of losing patients. However, undervaluing your expertise can hurt your business eventually.
Conduct an insurance reimbursement analysis and adjust your pricing to reflect your value, and develop fee-controls where you can. For your non-covered services, consider offering package deals or subscription plans to encourage patient retention and boost cash flow. Your cash-based fees offer you the most control when it comes to profitability.
High overhead is a common pain point for chiropractic practices. To control costs:
• Negotiate better terms with vendors.
• Invest in energy-efficient equipment to lower utility bills.
• Crosstrain your staff to handle multiple roles, reducing payroll expenses.
• Utilize newer technologies to lower overhead.
Even the smallest of savings can lead to significant increases in profitability. I always recommend comparing your profit and loss (P&L) expenses year-over-year to see where rising costs may be impacting you the most and look for ways to make cuts.
For example, one year, we noticed a significant increase in our electrical utility usage. To combat it, we added switchable power strips to all electronic devices. By cutting the power source to each device when not in use, we were able to cut our energy costs by several hundreds of dollars each year.
Technology can help streamline operations, improve patient experiences, and boost profitability. Consider:
• Electronic health records (EHR) to simplify patient documentation.
• Online booking systems and appointment reminders to help reduce administrative workload.
• Add new tech profit centers — more on that below.
While there’s an upfront cost for new technology, the longterm ROI can often justify the investment.
Avoid scrambling during tax season by setting aside a portion of your revenue for taxes each month. Work with an accountant familiar with healthcare practices to ensure you’re taking advantage of all deductions, such as equipment depreciation and continuing education, as well as savings opportunities afforded to business owners.
Investment vehicles, such as Simple IRA programs and deferred comp plans, can help you put away hundreds of thousands of dollars throughout your practice years. It is never too late to start.
“Consider hiring a financial advisor or business consultant who specializes in chiropractic practice management.”
Relying solely on patient visits can be risky. Diversify your revenue by:
• Offering retail products such as supplements, braces, or ergonomic devices.
• Creating online consultations and educational
courses.
• Hosting workshops or wellness events.
Additional income streams can help cushion your practice during slower months, broaden your revenue opportunities, and create profit centers that decrease the doctor’s long-term wear and tear.
Unexpected expenses, such as equipment repairs or staffing changes, can derail your finances. Aim to save a minimum of three to six months’ worth of operating expenses in an emergency fund. This financial buffer can give you tremendous peace of mind and stability during tough times.
Every business has periods where short-term borrowing can be necessary. By strategically leveraging a working capital LOG, a chiropractic practice can maintain financial stability, address operational challenges, and seize opportunities for growth without straining cash reserves, tapping into expensive credit cards, or borrowing from savings.
Financial management isn’t a “set-it-and-forget-it” process. Schedule monthly or quarterly reviews to evaluate your financial health. Compare your performance against goals and adjust your strategies as needed. Review your practice stats and trends monthly to maintain a keen eye on the profitability of your practice and make strategic adjustments to stay on track.
As your practice grows, financial management becomes more complex. Consider hiring a financial advisor or business consultant who specializes in chiropractic practice management. They can often provide personalized strategies to optimize your profitability and help you avoid costly mistakes.
Smart financial management is essential for chiropractic entrepreneurs who want to build sustainable and profitable practices. By staying informed, creating a solid budget, and investing wisely, you can set your practice up for long-term success.
Dr. Michael Perusich, a former investment banker, is a solutions-focused business advisor with more than 25 years of success in the chiropractic industry. His expertise includes personalized coaching and staff development. Dr. Perusich is the CEO of Kats Consultants, LLC, where he and his team offer a unique platform of business tools for today’s chiropractic entrepreneur. He can be reached by calling 407-308-5590 or at Katsconsultants.com.
