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Practice Startup Success

Information Advice Encouragement

April 28, 2008 ISSN 1934-3248

“Relativity applies to physics, not ethics” – Albert Einstein

In this issue:

Allstate Suit against Chiropractic Strategies Group – My Thoughts
Building a successful practice – an MD’s story
It’s easier to add than to take away

Allstate Lawsuit – My Thoughts. Chiropractic Economics recently ran a news story about a lawsuit brought by Allstate Insurance against Chiropractic Strategies Group, for a process called “conversion.” The lawsuit charged that the group members were soliciting people who had been involved in auto accidents, and the patients were put through “standardized and unnecessary treatment plans.” The process of getting these patients was called “conversion.” What is most disturbing is that the charges were brought in U.S. District Court for $10 million for violations of federal Racketeer Influenced and Organized Crime (RICO) law. Serious stuff.

So here’s my question: Why do chiropractors get themselves involved in this stuff? Why are they so scared that they won’t get patients that they have to resort to these kinds of tactics? PLEASE don’t get yourself into this kind of situation. Think about what a practice management organization is telling you – if it sounds unethical, don’t join. There are lots of ethical ways to get patients.

So it’s not fun having to scrounge for patients. Consider being part of a $10 million lawsuit. That’s a whole lot less fun.

Building a Successful Practice – An MD’s Story. OK, before you tune me out, you really need to read this story from Medical Economics about a young MD. You think you have student loan debt – think about MD’s. I was surprised that this doctor has the same problems you have in starting his practice – how to get more patients, how to deal with managed care, how to run the office more efficiently. Here is the article: http://medicaleconomics.modernmedicine.com/memag/article/articleDetail.jsp?id=508928 No, you can’t hire a physician’s assistant, but you could hire a CT or CA to work rehab or other ancillary services. No, you can’t get your debt forgiven (yet), but there are other tips he mentions that you can do (like changing your patient mix and getting electronic billing). Let me know if you found this article useful

It’s Easier to Add than to Take Away. I’ve been talking with a lot of new grads lately who have LARGE amounts of money they want to borrow. First, it’s much easier to borrow less money than more money. The bank would more likely to loan you $50,000 than $150,000. And you can always buy the expensive stuff later. Now, I know you are going to tell me that you need that special x-ray machine for your special technique. But think of it this way:

§ Let’s assume you can get a loan that includes your x-ray. That x-ray machine is, maybe, $70,000. How much is that machine going to cost you? The monthly payment is $849.29. That means you will have to make at least that much every month on x-rays to pay for the machine. How many x-rays is that?

§ That’s not all. Look at the total cost of the equipment:

Total Repaid: $101,914.80
Total Interest Paid: $31,914.80
Interest as percentage of Principal: 45.593%

§ And if you get into trouble and you decide to sell the x-ray equipment, how long will it take you to do that? Used equipment is not easy to sell. And you won’t get what you paid for it, and you’ll still have to make the payments in the meantime, and pay off the total amount you borrowed. What a mess!

I’m not telling you not to buy the x-ray equipment. But what if you waited and paid for it out of profits instead of financing it? You would save yourself $31,915.00. That’s a lot of patients to have to see, just to cover the interest cost. What alternatives do you have? Is there a hospital or clinic nearby where you could send patients?

My suggestion is to start small, build up your patient base and your income, and slowly start to add equipment and other expensive stuff to your practice as you can afford it, from your cash flow. It’s a whole lot easier to add than to take away.

If you are buying a practice, there are special considerations, and many details to take care of. And buying a practice involves a tricky negotiation process. Use my book Buying a Practice to help you get through it all. It’s an e-book, so you can download it and start using it right away! Go to the Bookstore at DCPracticeSuccess.com and scroll down the page to find Buying a Practice. Call me if you have questions.

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Ask Dr. Jean Murray a question (email jean@dcpracticesuccess.com )
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