Recession & Outlook for the Chiropractic Industry

So, let’s get the bad news out of the way. The current economic recession has eliminated 6.8 million jobs since it began in December 2007. Households’ disposable income (money people can spend freely) and savings have shrunk, generally forcing everyone to spend less. On top of that, leaders in the U.S. government are strongly pushing for healthcare reform…who knows what outcome that will have for the already strained chiropractic industry?

Need more bad news? While it’s hard to get a roomful of economists to agree, more and more are warning of a double-dip recession, a brief period of recovery and growth, followed immediately by another recession such as we have now. Just one argument for the double-dipper…Fitch Ratings expects adjustable-rate mortgages (the ones with the low teaser rates for the first few years, then the rates increase to match market rates each year) totaling about $96 billion to suffer increasing interest rates in 2009 and 2010-the average home’s monthly payment will increase 63%. The question is – how will the homeowners be able to make their higher monthly payments? They’ll definitely reduce other spending, causing lower revenues and more layoffs, perpetuating the vicious cycle in the U.S.

We have all seen, whether you’re reading it in the news or seeing it firsthand in your practice, that people are spending less. According to IBIS World, Inc, the economic outlook for the chiropractic industry isn’t very good.

IBIS’ predictions:
• Revenue drop of 2% for 2009 and less than 1% annual growth per year for 2010 through 2014. In fact, we won’t even be back to the 2007 industry revenue figure of $13.3 billion until at least 2015.
• Profitability will fall due to the drop in revenue and increased competition. IBIS expects DCs to cut fees to lure patients, forcing others to do the same.
• Wages and employment opportunities follow revenue. Wages, payroll taxes, and benefits costs, like health insurance, make up the largest slice of a chiropractic practice’s expenses.

You probably already know that the American Chiropractic Association has reported that some managed care networks are restricting or denying care. Not good news when you consider that about 43% of chiropractic patients pay for treatment using their employer-provided insurance. Premiums employers are paying increase by double-digit percentages each year. In fact, Commonwealth Fund, a non-partisan, non-profit group survey released in August 2009 found that the amounts employers pay for family coverage increased by 119% from 1999 to 2008. Employees typically pay in about 30% of those premiums, so our costs are skyrocketing. We are paying more for the same coverage each year – but is it the same?

You’re probably asking, “Does she have any good news?” Well, we’re getting older. The Census Bureau predicts that we will have about 10 million more Americans in the 45+ age group in 2013. Very good news since the National Board of Chiropractic Examiners’ recent survey says 34% of chiropractic patients are at least 51 years old. Thought you’d love to help people prevent back pain and other issues when they’re older, the fact is, most wait ‘til the pain is a daily occurrence.

A growing number of American patients are trying medical alternatives to drugs and surgery. With rising costs and the advent of high-deductible and other expensive health plans, who wouldn’t be?

You can significantly improve your own outlook by educating the public, especially patients, and leveraging new technology that will improve their experience. DCs have to make the most of every opportunity to demonstrate highly specialized knowledge and training, build relationships with patients, and ask for referrals. You can’t compete for very long with price cutting. There isn’t going to be a government bailout. Wall Street isn’t going to ride to the rescue. DCs have to do the little things right every day and provide the best care, including education, to patients. They have to clearly see the value you provide every day!

Tune in next month…bank loans are harder to get but leases aren’t. We’ll talk about leasing versus buying and the different types of bank loans.

Jennifer Birtz, CPA, CIA, CFE, is a Senior Manager at Habif, Arogeti & Wynne, LLP, a fully integrated financial services firm in Atlanta, GA. She can be reached at Jennifer.Birtz@hawcpa.com.

Practice Lessons from an Online Giant

The buzz in business today is the acquisition of Zappos by Amazon. For those of you who are unfamiliar with Zappos, it is an online store started by a brilliant young man named Tony Hsieh (pronounced Shay). Zappos started selling shoes at discount prices and has grown to become an online discount superstore selling mainly shoes, clothing and apparel. But what makes Zappos distinct is their very unique culture that Hsieh obsesses over constantly. (Read this article from Inc. magazine to discover more about how Hsieh has developed an amazing culture.)

In a letter sent out by Hsieh, he describes what the joining of the two companies will mean and reassures his employees that the only thing that will come from the alignment is growth and prosperity. Also, Jeff Bezos, CEO of Amazon created a video to support the merger, and in it, lists the “Things That I Know”. I highly suggest you watch it, as it marries perfectly with what you ought to be doing as you build your practice. I’ve taken the liberty of relating the things Bezos knows to Chiropractic and your office. Perhaps some helpful suggestions to take your practice to the next level.

Essentially, Bezos knows four things:

1. Obsess over customers. Are you obsessing over your patients? In our competitive world, we get so wrapped up in beating our competition that we forget how to win long term. It’s all about the customer! Always. Focus on the ways you can enhance your patient’s lives and take action to do it. There are millions of suffering people out there, and you have the responsibility to communicate our lasting purpose to them to educate and inspire them to take command of their health. When your intent is to serve your customers with excellence, your practice will explode!

2. Invent. Employees at Amazon never accept either/or thinking, they create solutions that gets them both. Are you creating systems and solutions to make your office more efficient? Take a step back every once in a while and observe your systems. Are they as efficient as they could be? What is the low-hanging fruit that you can fix easily? Where is the bottleneck that slows everything down? These things kill efficiency and therefore profits. Be creative, ask your patients what would make their experience better, and then do it! When your employees and patients know that you are listening to them, your retention will go through the roof and referrals will skyrocket.

3. Think long-term. This is a very difficult one. Some of you may be finding it hard to meet your overhead for the month, and therefore get trapped in the rut of survival. When you find yourself in this situation, take a breath and think about your long-term strategy. What do you envision 5 or 10 years down the road? Use your mission and vision statement as your roadmap. Once you’ve determined your destination, what is the most efficient way to get there? You may have to cross turbulent rivers and traverse mountains to get there, but it will be worth it. Once you’ve established your vision, stick to it and take the necessary action steps to get there. Be consistent and you will get to the mountaintop.

4. It’s always day one. Do you remember day one? Reflect on how special it was when you unlocked the door for business, when you received that call from your first patient, when you gave that first adjustment, when you collected that first fee, and when you first changed someone’s life. Carry that feeling with you every single day. Hold on to it. Always remember your purpose and know you can always obsess more over patients, you can always be more creative, and you can always do something more that will enhance your business and your life. Be willing to do whatever it takes to succeed and let nothing hold you back from greatness.

Brian Flannery, DC is lead instructor and Coordinator of Principles of Practice and Business Management at Life University. He is a sought after speaker and consultant of Practice Leadership and can be contacted at bflannery@life.edu

Are You a Fox or Hedgehog?

In his bestselling book, Good to Great, Jim Collins asks the question that all of us beg the answer to. “Are you a hedgehog or a fox?” An odd question for Chiropractors you think, considering his book focuses on what makes companies great after being less than mediocre for over a decade.

But what the answer to this question indicates, has far reaching implications beyond how our practices are run; but filters down to the most fundamental objective we all seek in trying to achieve both personal and practice mastery.

What say you, fox or hedgehog? Collins explains,

“The fox is a cunning creature, able to devise a myriad of complex strategies for sneak attacks upon the hedgehog. Day in and day out, the fox circles around the hedgehog’s den, waiting for the perfect moment to pounce. Fast, sleek, beautiful, fleet of foot, and crafty—the fox looks like the sure winner. The hedgehog, on the other hand, is a dowdier creature, looking like a genetic mix-up between a porcupine and a small armadillo. He waddles along, going about his simple day, searching for lunch and taking care of his home.

The fox waits in cunning silence at the juncture in the trail. The hedgehog, minding his own business, wanders right into the path of the fox. “Aha, I’ve got you now!” thinks the fox. He leaps out, bounding across the ground, lightning fast. The little hedgehog, sensing danger, looks up and thinks, “Here we go again. Will he ever learn?” Rolling up into a perfect little ball, the hedgehog becomes a sphere of sharp spikes, pointing outward in all directions. The fox, bounding toward his prey, sees the hedgehog defense and calls off the attack. Retreating back to the forest, the fox begins to calculate a new line of attack. Each day, some version of this battle between the hedgehog and the fox takes place, and despite the greater cunning of the fox, the hedgehog always wins.” Pg. 90

Simply put, the hedgehog understands that the key to his success, not just in survival and adaptation, but also in growth and development, is to focus on simplicity. Rather than focusing on many things and constantly trying to find the “new thing” to win the battle, the hedgehog knows one thing and understands that that one thing is what they do best. Our forefathers knew this principle and understood that in order to grow and develop, our profession needs to keep things as simple as possible. In his study of movements and organizations, Bill O’Brien stated that the further an organization moves from its founding tenets, the closer it meets its own demise.

Our profession is full of foxes, constantly trying to introduce outside-in thinking and concepts into a profession that is gradually moving away from its original idea. Acupuncture, laser-therapy, even hair removal has been advertised in our professional magazines in the realm of “increasing revenue” and “tap in to a new market,” all the while continuing to undercut our vitalistic paradigm that is so simple in its singular purpose. It’s no wonder the public is confused and cynical about our profession. The complexity we have created in our corner of the health care arena has caused so much confusion and skepticism, it’s no wonder enrollment is down at all schools and why our grip on the market is slowly eroding. It’s how billboards can be put up in Connecticut, along with ads on buses that purport the dangers of chiropractic. How did we let this happen?

We lost our ability to keep things simple. We lost our ability to be hedgehogs.

How simple is the concept that “nature needs no help, just no interference.” Or “the power that made the body, heals the body.” These are examples of hedgehog concepts that are so simple and so clear, that they are often overlooked for more fanciful and romantic notions that are the gimmicks we use everyday to get ahead. Collins defines a hedgehog concept as: a simple, crystalline concept that flows from deep understanding about the intersection of the following three circles:

1. Understanding what you can be the best in the world at. (and, equally important, what you cannot be the best in the world at). When you look in the mirror as a Chiropractor, what do you see? I was presenting to a group of chiropractors not long ago and a new practitioner asked the question that plagues many of us. He said, “I can’t seem to get things going…I mean, I have everything you could ask for, new tables, new x-rays, new office. I’ve been to all the seminars and have all these ideas to implement, I bought this and this and that, but I’m just not growing.” When I asked him this question, he paused for a long, uncomfortable moment and then the light bulb came on. You see, he was a fox, thinking that the next big purchase he made was going to transform his practice (outside-in) when the answer to exploding his practice lay within him. He had to decide and make a commitment to be the best in the world at something, at anything, before his practice could grow. What you can be the best in the world at stems from the core essentials that you learned from your experiences, your education, your practice, etc. So what can we as chiropractors really be the best in the world at? Collins makes it very clear that we should not make this judgment based in bravado, but with a very succinct and clear understanding that we can be the very best at something. The answer is simple. We can be the very best in the world at locating, detecting and correcting vertebral subluxation in as many people as possible so that humanity can achieve its optimum potential for health and life. We can also be the best in the world at communicating this idea with passion and enthusiasm to our society. Of equal importance is what we cannot be the best at. And the answer is again very simple, anything that doesn’t involve what we can be the best at. We can never be the best diagnosticians in the world, we can never be the best physical therapists in the world, we can never be the best acupuncturists in the world. What the good to great leaders did once they realized they could never be the best at something was simply stop doing what they couldn’t be the best at and focus all their energy and resources into what they could be the best at. Most chiropractors go through school and learn the core competencies of the philosophy, science and art of chiropractic, but due to lack of confidence and conviction of these concepts end up dabbling in other pursuits never quite gaining mastery and fulfillment in the fundamentals of chiropractic, ultimately being competent and mediocre in their practice but never becoming great. You say, but I’m doing great, I make huge amounts of money and have achieved great success. It’s worth noting and Collins sums it up quite nicely when he states “to go from good to great requires transcending the curse of competence. It requires the discipline to say, ‘Just because we are good at it – just because we’re making money and generating growth – doesn’t necessarily mean we can become the best at it.’ The good-to-great companies understood that doing what you are good at will only make you good; focusing solely an what you can potentially do better than any other organization is the only path to greatness.” Pg 100

2. What drives your economic engine? This reminds me of the equation the Dr. Guy Riekeman has shared with thousands of people. The answer, however, has nothing to do with profits and revenue directly.

NP x PVA = OV x AFPV = GI – OH = NI

(New Patients x Patient Visit Avg. = Office Volume x Avg. Fee/Visit = Gross Income – Overhead = Net Income)

Ultimately our income is decided by the four factors that we have control over: NP, PVA, AFPV and OH. The latter two are concepts that are easy to adjust. You either charge more per visit than you are now and you decrease your overhead. Yes, it means paying cash for everything. If you don’t have the cash to pay for it outright, then you cannot get it. But the first two, NP and PVA, are the concepts to focus on, and they come down to one thing: patient education. If you have the type of practice where the doctor and staff have no real philosophic or scientific objective for your patients in taking them through initial intensive care or even reconstructive care, then your practice will simply be a pain based practice, dictated by the patients perception of chiropractic; which is treatment of low back pain and neck pain until the pain is gone. The outcome of this type of practice is short-term care, minimal clinical results, high turnover and high overhead. However, if you have a clear vision (hedgehog concept) and see the definite need for initial intensive, reconstructive, and wellness care and have the ability to communicate that vision effectively, you will have well-educated patients who stay longer and refer like-minded people to participate in that vision because they understand and make informed decisions about their health and life. The outcome of this type of practice is well-educated patients, high retention, and a practice built on internal referrals, ultimately reducing overhead.

What about insurance, managed care and Medicare, these our ruining our reimbursement? Collins tells us it’s not about the industry we’re in. I know plenty of Chiropractors, who only take cash that are earning seven figures.

3. What you are deeply passionate about. Easy question for us Chiropractors, right? Not really. All too often I run into Chiropractors and students who are just not satisfied or can’t seem to get motivated to dedicate their life spirit to Chiropractic. We see too many great DC’s that come to a point in their life and in their practice where they’ve lost their creative inspiration and move onto other projects. They enter real estate, restoring old cars, buying and flying airplanes, which all very fun and appealing and believe me, I know the need for a hobby. However, they get so wrapped up in these ventures, they lose focus on what got them there. If you lose focus and get distracted by these issues, they will indeed become your reality and your practice and relationships will suffer because of it. Chiropractors who maintain their passion and zeal for the principles of Chiropractic have a sustained sense of purpose that carries them throughout the course of their careers.

As a profession we must remain hedgehogs. If we are true to the principles on which we were founded, we can and will be successful. We must always remember where we came from, what drives our ability to succeed, and what fuels our passion. Having those in mind and taking specific action on each of the three circles ensures that our future remains bright.

Brian Flannery, DC, LCP, DPhCS is the Coordinator of Principles of Practice and Business Management at Life University in Marietta, GA. He can be reached via email at bflannery@life.edu, followed on twitter, and befriended on facebook.

Chiropractic and New Media Use

Recall Chiropractic’s Centennial Celebration in 1995 and the media blitz that the profession was able to deliver. Over $200,000 was spent on one commercial blackout during the nightly news on the three major networks (at that time!), effectively ensuring that no matter where you turned your dial, you saw the same message. Times were simpler then weren’t they? At least as far as advertising went. You had a few choices, you could advertise on TV, radio or printed word.

Contrast that with the options we have today. YouTube, facebook, Twitter, and blogs have all but replaced the old, worn-out way of doing things. In this fast-paced world we live in, we only have a moment to capture the attention of the next customer. It’s been said that if you can’t capture someone’s attention within three seconds, then forget about it. It’s a Blink (re: Malcolm Gladwell) society that we have become and as Chiropractors it is a good idea to use the latest technology to serve your businesses needs.

The profession may never have the financial wherewithal to run a massive campaign, so it makes sense that we use the technology that we have right now. The best thing about almost all of these is that they are free! Well maybe not completely free…you do have to purchase a video camera, and some editing software (I’m assuming you have a computer if you’re reading this!). But after that, the media mentioned above is free, you just have to be familiar with how to use it.

Marketing expert Seth Godin mentions this in his blog and makes some great suggestions on how to use these tools effectively. Below are his suggestions on how to get it done with results:

1. Assume that the viewer has the attention span of an espresso-crazed fruitfly. That means slapstick, quick cuts and velocity.

2. Find a word or phrase that you can own in Google, that fits in an email, and that comes up in discussion at the cafeteria table or in the playground.

Castrol gets both rules right in this inane commercial.

3. Length doesn't matter. 10 seconds is fine and so is five minutes. Media is free, remember?

4. Challenge the status quo, be provocative, touch a social nerve or create some other sort of interesting conversation. In other words, a commercial worth watching.

Dove does both in this now-famous commercial.

What does this mean to Chiropractors? It means more opportunities to tap into a marketplace that needs to hear our message. We do have the greatest story in the world and if we begin using technology to spread our message, we can make a difference! The more people hear the truth about health and Chiropractic, the more people will flood into our practices. Doing something this simple can spread the word about Chiropractic and save lives. You owe it to humanity to do something!!

Want to Attract More New Patients? Just Be You!

It’s been said that there is only one way to attract a new patient: Just Ask! And there are many ways to ask: health care class, internal referrals, newspaper, radio, screenings, etc. But the one thing that will bring an overwhelming abundance of new patients to your practice is to just be authentic. No matter how you ask someone, make sure you ask them from a state of love for them and conviction for Chiropractic. When you come from that true sense of self, the person can feel that you deeply care for them and want what’s best for them and their family. How often do you tell your current patients how much you appreciate them? Are you afraid to look them in the eye and tell them how much you honor them? This acknowledgment can make their day and empower you to boot. Imagine the experience they just received after a life-changing adjustment, and then a few very powerful words from you. Extrapolate that feeling out a few days, when someone asks them about their chiropractor. Do you think they would refer that person in? How could they not?

ACTION STEP: After each adjustment you give this week, sit down with that practice member, look them in the eye, and thank them for having confidence in your office and in you. Acknowledge them for their commitment to their health and tell them how much you appreciate them. Here’s the caveat: don’t expect anything in return. The universe will reward your gratitude with abundance.

When you connect deeply with people, the rewards of that relationship will be profound. Be energetic, be convicted, be loving, and most of all be authentic and your office will be overflowing with new members.

Dr. Brian Flannery is lead instructor and coordinator of Life University's Principles of Practice and Business Management program. He can be reached by email at bflannery@life.edu