WO*1 WHAT WENT WRONG WITH ONCE FAST- * 3ROWING CHIRO ONI-!? July 15.2014, Chiro One Wellness Centers LLC was one ol me Chicago area's lastest-grow ing pnvatc companies last year. Now it's preparing to auction oil'nearly all its assets. As of December, the Oak Brook-based company was managing 86 chiropractic offices in Illinois, Texas and Kentucky. It provided real sstate, supplies and services such as human resources and billing to ;ach of the offices. The company grew 382 percent in the past five years with more than $55 million in revenue in 2013. Chiro One representatives declined requests for an interview until after the July 18 auction but responded to inquires in a series of emailed statements. The company said in one email that its financial difficulties started last fall due to "a combination of factors which negatively affected its revenue." Jeremiah Holmes, a former company partner who left in April, said the key factors in Chiro One's difficulties were a change in spending practices due to a new executive staff and a new insurance claim review-process instituted by Blue Cross & Blue Shield of Illinois. "Every year before 2012, we grew nonstop in revenue. That all went downhill in the last two quarters of 2013," Mr. Holmes said. Mr. Holmes said Chiro One was profitable in June 2013 when it ranked No. 14 in Crain's Fast Fifty, a list of the city's fastest-growing companies. Her attorney did not return a phone call seeking comment. 'WE WERE OVERSPENDING1 Mr. Holmes said Chiro One made $55 million in revenue in 2012 and had $48 million in operating costs, based on a profit and loss statement he received from Mike Dudek, an auction sales advisor from financial-distress management firm High Ridge Partners, hired by Chiro One to market the auction. In 2013. revenue fell to $46.5 million while operating costs rose to more titan $52 million, he said. Net income in 2012 was $7.6 million, which fell to a loss of $5.8 million in 2013. "While the revenue kept dropping, we were overspending," Mr. Holmes said. Chiro One confirmed in a statement mat "'increased overhead due to investment in infrastructure and management" was not being covered by its "decreased revenues from its business service agreements" with Chiro One clinics. Mr. Holmes said the spending problems go back to the end of 2012 with changes in the C-suite, including a new chief financial officer, chief marketing ollicer and CIO, who changed the company's business management procedures. Since the company's start in 2006, the company had been run by owners Stuart Bemsen and Sam Wang, with the help of nine partners, including Mr. I Iolmes. "As owners and partners, we were spending our own money for the company. But the hired executives became a bit irresponsible with spending decisions. They were spending money they didn't own," Mr. Holmes said. When he voiced his financial concerns, Mr. Holmes said he was "basically quieted down and told not to be so critical." He eventually decided to leave. Upon his departure, Mr. Holmes continued to independently own and operate four Chiro One offices in Kentucky. He added that the company expanded too quickly in Texas. Of the nine operating offices in Texas, only two were profitable. Yet seven more clinics were scheduled to open within the year. "All the unprofitable offices sucked money out of the few that did make money. The profits from the Illinois offices were helping keep Texas and Kentucky offices open." Mr. Dotson said. Mr. Dotson bought a Chiro One clinic in Texas when his Kentucky office was shut down. A NEW INSURANCE REVIEWER Mr. Holmes said the company's Illinois offices remained profitable until August 2013 when Blue Cross hired a new company-, Orthonet LLC, to review insurance claims from chiropractic providers, including Chiro One. The Orthonet rollout happened in stages and was completed Jan 1. A Blue Cross spokeswoman said Orthonet was hired to review all chiropractic mid physical therapy providers in the state. Orthonet would ensure the number of procedures yvere medically necessary- for each ailment and make sure patients receive cost-efficient services. Mr. I Iolmes said Orthonet's revieyvs yvere a factor that led to a drop in 2012 to 2013 revenue as the case average fell for each patient. Representatives of Orthonet, based in White Plains, Neyv York, declined to comment, referring inquiries to Blue Cross. Mr. Dotson said the company's Kentucky offices faced similar issues with third-party claims revieyvers that negatively- affected their revenue. In mi email, Chiro One denied that its offices in Illinois yvere affected by Orthonet's revieyv procedures but would not offer specifics on yvhy the company's revenue fell except to say that the severity of last winter was a factor. Source: http://yvAvyv.chicagobusiness.com/ Pass on the informalion to inform oilier D.C. s about events that are really happening to chiropractors. For further informalion, fax 1-305-716-9212. Write us at editoriaKaamchiropraclor.com or :-CO138, 8619 XIV 68th St.. Miami, FL 33166.
