Chiropractic Practice Management Decision Making
Wake Up and Smell the Coffee
Dr. Ben might be able to make better decisions by tracking KPIs — but would it be worth it for practice management?
“Do you really cut out coffee in the break room when cash flow is tight at the practice?” Carmen asked Ben, pouring him a cup of her special brew. Ben inhaled the aroma of freshly ground coffee beans brewed in a French press with filtered water. Their son was coloring at his end of the table while Ben and Carmen enjoyed a cup of coffee, the family’s usual evening ritual.
“Why not? It’s a small thing that doesn’t affect the patients,” said Ben, breathing in the scent of coffee again. It would be just another minute before it reached the ideal drinking temperature.
“I think that’s a mistake,” Carmen said firmly. “What happens when everyone is crazy busy all day and the waiting room is a zoo and Pam goes for her coffee break — and finds no coffee. You save yourself seven dollars, and you have a dissatisfied staff. That’s no bargain.”
“So where should the savings come from if we need to scrimp a little bit? Sometimes we have to.”
“There’s always something you can do to bring in a little more money in the short term,” Carmen said, swirling her cup. “You can call patients you haven’t seen in a while and invite them in, or offer a referral bonus or something.”
“This isn’t like pizza,” Ben objected. “Plus, we don’t always have too little business when we have a cash flow issue.”
Carmen frowned. “The solution to every problem in business is more customers. Cash flow for the pizzeria means we’ve had a slow week. It’s not that way at the practice for practice management?”
“Not necessarily. There are a lot of things that can affect our income. No shows, for example. When people make an appointment but don’t show up, we lose that income. NFAs, no future appointments — those are the people who may have been coming regularly and providing predictable revenue, but then they leave without making another appointment.”
“Recurring revenue is good,” Carmen agreed. “But when you expect it and it doesn’t happen, it can take a while to make up the difference.”
“There’s also payment. When people order a pizza, they pay for it. We have accounts that are 60 or 120 days late, plus insurance payers who are slow or even dispute the claims.”
“Hold on!” Carmen grabbed a piece of paper and a crayon from Jonathan’s hoard. “Can I have this one, sweetie? Thanks. Okay, Ben, let’s get this figured out. Things affecting your income include no-shows, NFAs, slow pays, and payers like insurance companies that aren’t always predictable. It’s all practice management.”
Carmen drew a neat chart with the crayon. “Wait, I think the insurance companies need their own column. You need to keep track of which payers are fast and cooperative and which aren’t. You also need to know how many claims you have and when there’s a significant backlog so you can respond to it. Maybe also which specific procedures cause problems with which payer.”
Ben admired the chart. “Looks like that about covers it.”
Carmen sat back and admired her work. “I think these are your KPIs. Your key performance indicators that let you see if you’re on track and if you need to trim your costs a bit.”
“Where will these numbers come from?” Ben asked. “You’re acting like I should know these things.”
“You should,” Carmen shot back. “You have to know your numbers to make the right decisions at the right time. When you know your numbers inside and out, you can make strategic decisions wisely. Maybe there are vendors you can safely put off paying if you know that you have money coming in soon, or maybe you can put a staff member to work getting those overdue accounts cleaned up.” Carmen returned the crayon to their son.
“Either way,” she went on, “you won’t have to mess with the coffee!”
Ben drained his cup. He could see where Carmen was coming from. Her plan sounded sensible. But he wasn’t sure it would be worth taking time away from what he did best — patient care — to mess with all those numbers.
Disclaimer: For HIPAA compliance, all characters appearing in this post are fictitious. Any resemblance to actual persons or actual events is purely coincidental.