While some chiropractors need to get more patients in the door to grow, most established practices can find significantly increased profits by focusing on firming up their systems and preventing revenue leaks. In fact, according to Mark Lion of Lion & Company CPA’s, most small physician practices (including chiropractors) have an average of 10-15% profit leak without ever knowing or doing anything about it.
In your defense, doctor, you’ve got a lot to manage. There’s providing patient care, monitoring staff, taking care of your documentation, making sure everything’s compliant, running the business and at least a dozen other details that fight for your daily attention.
Without solid procedures, systems and tools in place, everyday tasks like may start to wear you down and dry up your cash flow. The sooner you identify these problem areas, the sooner you’ll be able to identify where your business is leaking revenue, and the sooner you’ll be able to find solutions and improve your revenue cycle. With that, here are three culprits common to chiropractic practices to focus on first:
1. FRONT DESK PROCEDURES: Many docs make the mistake of viewing the front desk primarily as their “customer service” center. Consequently, their opinion of a successful CA at the front desk revolves around a bubbly personality, a friendly face and a welcoming smile. While these features are indeed helpful to have, chiropractors also need to appreciate that the front desk isn’t just the face of your chiropractic practice—it’s a critical entry point to ensuring complete and accurate collections, appointment scheduling and a host of revenue producing activities. In that respect, the front desk staff have unique opportunities to verify or confirm patient insurance information, obtain important patient demographics, convey past due balances, discuss billing options, and collect payments over-the-counter to produce the best possible results on your collections and accounts receivable. Great front desk staff actually make the billing cycle shorter, reduce A/R and help you get paid better for what you are doing by proactively eliminating time consuming tasks that often get pushed onto the already overworked billing department.
On the other hand, without efficient front desk processes in place, your Accounts Receivable will always remain higher than it should be as staff are missing an important window to address payment issues and prevent billing problems for your patients and your practice. To make matters worse, poor front desk systems will not only affect your collections, they will even handicap your services as appointments go AWOL, care plans are ignored and ancillary services fall through the cracks.
How dangerous can poor front desk procedures be? Some quick math can reveal the disastrous potential. According to industry stats and surveys, the average chiropractor sees approximately 100 patients per week and is 80% insurance based. That’s 80 or so patients a week who owe co-pays, co-insurances, deductibles and/or past-due balances. If you take an average patient portion of just $20 x 80 patients per week, you’ve got a yearly problem that’s potentially costing you $80,000 per year or more! Even if your front desk is only “half-bad” it could still cause you to lose at least $40,000 each year – ouch! But that’s not all…
2. DENIED OR DELAYED CLAIMS: Accurate and timely claims processing and management is also essential to chiropractic practice’s profitability. Despite this, rejected claims are shockingly common. In fact, according to the research from the Medical Group Management Association, the average healthcare practice experiences between 20-35% of their claims rejected. Worse, resubmitting a rejected claim doesn’t just take away valuable time from your billing person’s job, it’s incredibly expensive. Rejected claim can add an additional 20 to 30% to the cost of that claim which will cannot be recovered even if the claim is paid.
Unfortunately, as insurance payers perennially revolve their plan offerings or payment policies and as employers continue to shop for a better bargain for their employee’s insurance, the situation is only expected to worsen.
To add insult to injury, delayed claims can potentially be more costly than denied claims. After all, the rejected claim is either fixed or written off. Extra staff time is eventually curtailed as the final result of that claim comes to an end. But delayed claims can often take many “touches” by your staff to obtain a resolution. And each time, you are paying a staff member to push the claim back and forth to the insurance company to get it paid. In some cases, the staff compensation based on the time spent exceeds the value of the claim!
3. BAD DATA & BAD DEBT: One of the quickest ways to lose money is to lose control of your ability to monitor your billing department performance. And one of the easiest ways I routinely find money to improve my chiropractic coaching client’s bottom line is to clean up their accounts receivable and its reporting. If you can’t tell exactly how much money you have outstanding, along with who owes it to you, for how long and how collectible it is, you’ve got reporting troubles that will lead to income problems. Getting better data in this regard leads to better procedures to collect the money that is owed to you and better decisions regarding bad debt. In this respect, I simply define bad debt is as dollars that could have been collected, but were not.Creating systems to accelerate slow, partial or no payments—your bad debt — is integral to a healthy practice and healthy collections. This is one of the most deadly revenue leaks of all in that it represents money that you SHOULD collect (but haven’t) AND it follows a distinct time deadline: the longer you wait to collect it, the less likely you ever will!
What’s more amazing is that chiropractors will spend thousands on unproven marketing techniques, new clinical “toys” that they hope will boost their practice when they have a goldmine sitting untapped and untouched in their accounts receivable (whether they can tell it or not). For example, reducing bad debt by just 2% can mean tens of thousands of dollars to the bottom line of your practice. Similarly, getting an accurate reporting of your accounts receivable along with proactive procedures that help you prevent it from unnecessarily getting out of hand can easily become a six figure increase over time.
Finally, don’t be discouraged if your practice is leaking one, two or all three of these items. With the proper guidance and procedures in place, this can be fixed quite quickly. Case in point: we cleaned up old A/R for one of my coaching clients last summer that resulted in a $40,000 boost in approximately 6 weeks time. She wasn’t able to complete all the steps we outlined, but was encouraged by the progress. Just last week, I got another email stating that she had taken additional measures to help curtail delayed and denied payments that we identified were stemming from her notetaking procedures. The result? Another $40,000 increase since the start of the year!
You can do it to, if you take action today!