Beneath the Surface Chiropractic Billing Problems & Opportunities

Most chiropractors have a wealth of problems (and opportunities) bubbling beneath the surface of their chiropractic billing department (regardless of whether it is in-house or outsourced).

I’m not peeking over your shoulder at the moment so I can’t say for certain which specific problems your chiropractic practice is experiencing. Generally speaking though, there’s a finite number of mischievous players who are wreaking havoc on your bottom line. Enter: poor collections, denials, delayed payments, coding issues, labor intensive systems, slacker staff, asleep at the wheel CEO (aka “the doctor”), the well-intentioned (but ill-equipped) spouse or a combination thereof.

Unfortunately, these billing challenges tend to brew beneath the surface for quite some time until you notice. Unlike the glaring problem of not having any new patients, billing challenges are much more subversive. One day you appear to be flying high and the money is flowing smoothly and then a few months later the belt seems to be a little tight to the tune of $10,000 or $20K, or even $40K off of last year’s collection efforts.

If you are like most, you quietly freak out in the privacy of your own office and then publicly have a “come to Jesus” meeting with your staff whereupon you threaten to have them meet their maker or meet the pavement if things don’t improve. Your dutifully loyal (or fearfully employed) staff crack down, start collecting co-pays again and in general, run a tighter ship for the next few weeks knowing that the short-term improvement will settle your blood pressure back down until the next fire erupts.

And so it goes…again and again and again.

Flawed from the Start

The thinkers will dive deep into the books and wonder how this happened. Those who suspect their lack of leadership contributed to the mess will double down on team meetings. And the true tyrants will just going on barking until they see some improvement or the present staff (or billing service) quit or are fired. If the head of the billing department happens to be the spouse, marital relations may become a little strained.

After all, in many (if not, most) chiropractic clinics, the billing person is the most trusted employee of all.  This is certainly true when it’s the spouse of the doctor who does the billing.  But even the non-spousal billing person has been under the careful tutoring and watchful eye of the chiropractor who will not always readily admit that he or she has received a whopping total of zero credits in chiropractic billing, coding or documentation training while in college.

And who could fail with all that knowledge being passed down?

My Billing Stinks – What Next?

Enough of the dripping sarcasm. You can obviously see the problems emerging here. It’s time to formulate your billing rescue plan. Here’s how:

1. Watch the Basket. I love Mark Twain’s quote which is the opposite of most advice to avoid putting all your eggs in one basket. MT says “Put all your eggs in one basket. Then, watch that basket!”  Truly this is the case with billing. Like it or not, your eggs are here. You can do the work, but if you can’t bring in the money, you’ve got a very short lived career as a DC. So watch the money. It amazes me how many doctors do not know basic monthly stats and do not look at them, except when there’s trouble. Here are a few figures to ALWAYS keep an eye on:

  •  Monthly New Patients
  • Monthly Patient Visits
  • Monthly Services
  • Monthly Collections
  • Total Accounts Receivable
  • A/R Current (0-30 days)
  • A/R Past Due (30-60 days)
  • A/R Seriously Past Due (60+ days)

2. Remember “Reasonable” Ratios — While some chiropractors need to begin looking at their numbers on a regular basis and that alone will help them identify areas that need improvement, others must learn how to keep things in perspective.  It’s helpful to know a few “reasonable” ratios in this respect that can guide you to getting a portrait of how your billing department is doing.  Here are three of my favorites:

  • Total A/R to Services — if your A/R is less than 1.5x your services, it’s likely that your billing department is at least keeping up with the pace of your production.  For example, you are doing $40,000 per month in services, it’s natural to assume that there will be some A/R generated because of the time lag between when services are billed and when collections come in.  But if the A/R grows too large, one symptom could be that you are not keeping pace.  So a simple way to monitor this would be to look at the ratio.  If you are producing $40,000 per month and your A/R is $200,000 — that’s a 5:1 ratio and you’ve got problems.
  • Percentage Cost of Your Billing Department — many docs ask if they should outsource or keep it in-house.  One easy way to calculate the possibility of switching is to analyze what it presently costs you to do your billing.  If you are paying a FT employee $3000 per month to handle all your billing and you are currently collecting $30k per month, then it is costing you at least 10% to do your billing (factor in payroll taxes, vacations, and other benefits and it’s more than that).  So the next logical question is…what would it cost me to outsource?  Generally, most outsourced chiropractic billing companies will charge between 6-10% of collections. Do the math and your decision may be clear.
  • Profit Potential of Your Billing Department — there is one clear calculation that you should also be asking?  What’s the profit potential of my billing department?  In other words, it may seem like a bargain that your billing staff is only costing you 4% of collections.  But when they are leaving a ton of money on the table, it’s not.  Conversely, the outsourced billing service that only charges 7% of collections but requires you to do a ton of the billing and follow-up tasks yourself isn’t really earning their 7% for pressing the button and pushing send.  The bottom line question is this:  do you feel that you are getting a good return on your investment?  Or do you feel that there is a lot of untapped potential there due to your billing service or staff’s lack of knowledge, organization, determination or other factors?  If the answer leans towards the fact that you are not realizing your potential, it may be time to switch methods to improve your bottom line.

3. Graph the Trends. For some folks, staring at the numbers helps get a sense of an average. But they miss out on the trends. An easy way around this is to have a simple graph that you can watch over time. No need to complicate life – get Excel. Plug in numbers, plot your graph. Are your collections trending down or up? A/R – down or up? No need to freak out every week. But on the other hand, three months in a row of the wrong direction should be a little disturbing to you…if you watch it.

4. Commit to Ongoing Training for You AND Your Billing Team. Doctors, join your staff by attending seminars on chiropractic billing, coding or documentation.  It’s amazing how many docs send the staff members to understand their part of the puzzle but then stay at home themselves to miss out on what they should be doing as doctors. In this day and age, chiropractic billing, coding & compliance are all team sports. (yes, gone are the days when your billing person knew everything and could do everything) I’m trying to teach doctors how to make documentation most to become one so they can decrease their burden. And business building at least needs to be the responsibility of the doctor – but it’s great if the whole team are on board as well.

5. Know When To Throw in the Towel. If you routinely encounter low collections, billing denials or just think that you are not living up to your potential in terms of what you should be paid, you need to seriously question the status quo. That may mean giving your outsourced billing service the boot for not living up to their performance requirements or liberating a non-producing staff member. But this is all way too important to leave in the hands of the inexperienced or under-skilled. My admittedly biased eyes look at it this way. Most chiropractic practices are about 80% insurance. Having an under-performing billing staff or service on hand means that 80% of your efforts are going to waste. No amount of new patients, no slick marketing, no sales scripts will ever help you recover the money you are leaving behind will poor billing, coding and documentation procedures because some of that money is simply not recoverable and because the rest takes skill that apparently is well-beyond the skill set your team currently has (else they would have collected it in the first place).

6. Know When To Get Help

The final recommendation is to know when to go outside your four walls and beyond your billing service to get help. Any one of these challenges mentioned above can be turned around into potentially profitable opportunity…if you spot it, handle it correctly and address it in time. So if you’ve been struggling, not realizing your potential or wondering if things could be better, now is a great time to get help. Yesterday would have been slightly better but alas that opportunity is gone. Tomorrow is good unless tomorrow turns into next week or next month or even next year. And the worst time is obviously making no time.

Bottom line:  billing IS a major factor in your bottom line.  It is too big to ignore and too critical to be left in the hands of an unskilled employee.  Get a handle on your billing and you will be able to steer your practice in the right direction.  Let it go adrift and you will likely sail into dangerous waters.

Want to Improve Your Chiropractic Billing, Coding & Business Brilliance for a Better Bottom Line?

Check out our upcoming Seminars where we will spend a full-day doing just that!