The Cost of an Adjustment

Have you ever done a break-even analysis for your practice? How much revenue needs to come in per month so that you can keep your doors open? Easy to compute right? Take the total expenses per month and for simplicity sake, the number of office visits needed at your average fee per visit (never your published fee, but that's another discussion) to match that.

We've all done this...all fretted about paying the bills to keep the doors open...

But have you ever broken it down further and calculate the actual cost to you in performing an adjustment in your office. That's right, how much does it cost you to deliver the adjustic thrust?

No idea?

Thought so.

I'm gonna ask you to include some things in the calculation most businesses wouldn't, because we're a distinct crowd, us Chiropractors.

Take your total office overhead for the month, then add your personal expenses to it. I include this because I know you. If you're like most DC's in startup mode, you probably don't actually pay yourself a set salary per month...you take what's left over (if anything!) and are happy with that. Something has to finance your personal expenses, therefore the need to include both business and personal expenses in this equation. Then take the total number of office visits that month and divide that number into the total business and personal expense.

Let's say your personal expenses were $2,500 per month (I hope you're living on organic peanut butter and jelly sandwiches for the start-up phase, it's a good idea to keep ALL overheads low!) and your office expenses were a fairly hefty $8,500 per month.

Break-even analysis says that if you charge $40 per visit, you need to see 275 people that month. ($11,000/$40 = 275)

Let's say you're in your fourth month of practice and have done some savvy marketing, along with providing wow service and your referral rate is high, and you saw 325 visits that month. The cost of providing care per person is $11,000/325 = $33.85.

Good news and bad for that number...good news is that it puts you in the black...bad news is the margin is less than 20%. Couple of things you can do to enhance the margin, increase the volume (which you will), increase the fee, or decrease the overhead.

I'd love you to be closer to a 40% margin, meaning in the above example your volume would have to be about 390 visits per month, bringing your cost down to around $28.50 per patient.

This can put some perspective on your budgeting process, on your marketing efforts, and on your educational systems to help you fine tune your strategy to accomplish your vision for a better world.