T he market for Chiropractic adjustment is virtually infinite, given the number of humans on the planet and the fact that everyone requires an adjustment sometime or the other! The financial implication is an everlasting positive cash flow - the very definition of professional success. Nevertheless, how does a Doctor of Chiropractic guarantee patient satisfaction? Three indispensable skills help: a) Technical skill needed for chiropractic adjustments and care b) communication and interpersonal skills helping to empathize with patients ofall backgrounds and inspire them adopt healthy habits and c) conceptual skill which relates to staying tuned and connected to the patient's therapeutic dynamics, and the patient's and the doctor's current status. Technical skills acquired in a Chiropractic school constitute the core credentials. Operational engagement of such a skill calls for buttressing technical skills with two crucial entrepreneurial or business management skills. Medical professionals are enrolling in management courses in increasing numbers, the reason being there is an abundance of practical insights to be picked up from them. There is a compelling case for the Chiropractor too to get acquainted and profit from these disciplines. In recent years, technical skills are being redefined to include business skills essential to organize and run a Chiropractic practice. With such professional savvy, Chiropractic practice would have a higher probability of conspicuous success. Knowing Chiropractic Business Inside Out Two key fields of management are accounting and finance. Sound accounting and finance principles constitute the foundation of any professional business and they can be ignored at the Chiropractor's own professional peril. It indeed pays to know the nitty-gritty of daily and periodic functions of a career finance manager. The doctor can ill afford to disregard the fact that whoever controls the purse strings rules the business! Just an awareness and insight of the basics of finance could ensure that the Chiropractor-founder remains in the driving seat of the business and has a 360 degree view of the business. Like Yogi Berra said. "You can observe a lot by just watching" and improve performance and productivity a good deal. Regardless of the chiropractic clinic, it is eminently feasible to a) cut operating costs up to 50 percent b) improve chiropractic service performance up to 50 percent in terms of number of patients treated, and c) cut capital expenditure up to 30 percent or more "just by watching." Let us give a telltale example of savings in capital expenditure. We know of a chiropractic clinic that has subluxation adjustment capacity (number of adjustment tables) over-dimensioned by more than 50 percent at a sizeable capital cost, done with the best of intentions such as cheapening future expansion. For some time now the practice has been making use of just five adjustment tables, but is saddled with about 15 tables, each costing say S7,500. The amount needlessly sunk in the tables alone is S75.000 ($7500 x 10 surplus tables) not to speak of the rent/mortgage on the larger clinic area. The annual interest cost on this amount alone, at 9% would be $6,750. You can also add up the additional insurance costs, space wasted and maintenance costs. Excess capacity jeopardizes economic viability of the chiropractic practice. The same investment in a growth fund would have yielded at least 10%, which could be regarded as the opportunity cost. Putting all these together, we say that some $100,000 of unproductive investment was needlessly undertaken, turning the business into a white elephant. An awareness of the basics of maximizing the worth of the business by avoiding capital deepening and instead going for module-style expansion of the clinic in a phased manner could have prevented such extravagant outlay. This is something the DC can pick up from a rudimentary accounting/finance class for a few hundred dollars, instead of learning it the hard way in the 'school of hard knocks'! Here is another real-world case. A priest's son graduated as a chiropractor and set up business in an indigent neighborhood. There was a net positive cash flow, including by way of Medicare, Medicaid, insurance company reimbursement and self payment. Keeping in mind the incomes of his patients, the chiropractor intended to keep the fees some forty percent lower than rates listed in Chiropractic Economics. It was about this time one of the authors looked at his revenues and cash disbursements as well as the regular for-profit status for filing tax returns. Our suggestion to run the business as a charity helped the Chiropractor to save on a hefty tax cost. Just glancing at various comparative operational data for competing chiropractic clinics could perk up profitability. For instance, how is it that Parity Clinic, boasting better facilities, more up to date equipment and two chiropractors, had billings of just $ 166.000 during 2006 whereas next-door Paramount Chiro with just a single Chiro-doctor had billings of 5185,000 during the same period? What gives? Just pop the sharp questions to bring cost savings! Business Naivete Hurts The proverbial battle was lost for want of a horseshoe nail. It is also a commonplace perception that if you wish to succeed in business you should know a thousand things very well (in management, accounting and finance) and a few things (chiropractic health care) profoundly. There is no dearth of examples of business models that have floundered, not because the founders lacked the technical credentials, but because they paid less heed to the fundas. This anecdote is about a recent Chiropractic graduate who established a clinic virtually in the boondocks of Georgia without initially undertaking a market survey and sketching a business plan. And the not so unpredictable result? The clinic folded up in about five months despite the excellent neon sign on top of his clinic, and soon he joined an ongoing practice in Atlanta! Not surprisingly, it is DC students themselves that have called for training in the ABCs of business management, accounting and finance in order to make rational and smart decisions in matters like location, recruiting patients, keeping up with computerized information systems and client records, making educated estimates of capital expenditure and leveraging, accounts receivable management, innovating multiple streams of incomes, tax planning, ensuring ethical behavior and so on. Somewhat belatedly, some Chiropractic schools have now started offering these courses and thus fulfilling a real and urgent need. The response is overwhelming. Wisdom of A= L + OE There is quintessential business wisdom underlying the simple accounting equation: Assets = Liabilities + Owner's Equity or A = L + OE From the books of accounting come data for three key financial statements of Income Statement, the Balance Sheet and the Statement of Cash Flows - indispensable for managing a business decisively. Full Cost of Patient Care Service Financial business insight will come in most handy and valuable when the Chiropractor is deciding on investing hard-earned dollars in a Chiro business, filing the tax return, when leasing equipment or office space instead of buying them, when hiring partners or employees, marketing services in health care and in numerous other ways. More importantly, the doctor could quiz himself/herself: how is it that a competing Chiro business with less number of practitioners has larger billing revenue and lower total expense and so a superior return on asset (ROA) or return on equity (ROE)? How did the competition get away with lower capital cost or a lower operating cost? The doctor could also make a ballpark Statement of Cost of Services and accordingly charge a patient on a 'Cost plus' basis. If the Chiropractor is asked to quote for adjusting the basketball or football or rugby players, the Cost Statement would come in handy. A couple of quarters or semesters at a business school after gaining chiropractic technical know-how would thus stand the practitioners in good stead. Gaining business capability would vastly improve the odds for the clinic's success. Dr. Ron Kalli is Emeritus Professor, Business Department, Life University. Dr. Sudlumvu Char is Professor, Business Department, Life University.
