Delegating Your Way to Higher Passive Income
By Jeffrey D. Olsen, DC

Do you know how your income compares to other professionals with similar training and work environments? Would it surprise you to know the median incomes for podiatrists, dentists and optometrists are all higher than the median chiropractic income?

According to Salary.com, the 2000 median salaries for these professions were:
• Podiatrist: $99,991
• Dentist: $99,479
• Optometrist: $71,369
• Chiropractor: $70,076

What are the sources of your income? I know of at least one company that reminds its employees each pay period where the money is coming from. The statement “brought to you by our customers,” is printed on their paychecks.

When patients are presented with accepting our care, they immediately perform a benefit/cost calculation in their minds. Because they may not have all the facts, their estimation of the benefits is based on perception and/or a comparison with alternatives. When benefits are greater than the costs, we “make a sale” and another patient accepts our care.

Part of the reason for the disparity in the earnings among the doctors mentioned here may simply be that individuals in these other professional groups are better at two business practices designed to improve the bottom line by improving sales and revenues: delegating and generating passive income.

Have you ever tried to slash your way to financial success by cutting expenses? It is far easier to add revenue to your “top line” by adding additional products and services that don’t require additional hours or employees (capacity).

Active and Passive Income
There are two types of income: active and passive. Active income requires the direct participation of the doctor in patient care and would include activities like performing examinations, reading films, and providing adjustments. Passive income represents all situations where revenue is generated without the provider’s direct involvement.

To highlight the difference between active and passive generation of income, consider an average visit to the dentist. Before leaving, you will have likely had a set of X-rays, a thorough cleaning, and a quick exam and consultation with the dentist. But in the hour to hour and a half spent in the office, how much time will have been spent face-to-face with the provider? In most cases, probably no more than five minutes. The rest of the time, the doctor’s staff will have performed the time-intensive tasks (passive income generation) that free the provider’s time for more specialized procedures (active income generation).

Of course the dentist could take his or her own films or floss the patient’s teeth, but delegating allows the provider to act as the director and inspector of all the work being done.

Effective Delegation
Woodrow Wilson is reported to have said, “I not only use all the brains I have, but all I can borrow.”

It’s important to realize that effective delegation is far more complicated than getting someone else to perform your duties.

G.M. Blair of the University of Edinburgh, Scotland, says this means your staff “can act and initiate independently; and that they assume responsibility with you for certain tasks. If something goes wrong, you remain responsible since you are the manager; the trick is to delegate in such a way that things get done but do not go wrong.”

For someone else to help you do your job, you must provide or communicate the following:
• description of your objectives;
• authority necessary to accomplish tasks;
• assurance that the individual is
capable;
• monitoring and feedback; leave room for ingenuity and accept alternative approaches that reach the objectives;
• acknowledgement of a job well done, i.e. incentives.

So, what types of things should you delegate? “You should take a long-term view on this: You want to delegate as much as possible to develop your staff to be as good as you are now,” Blair says. Not only should you generate higher levels of revenue more efficiently, but your staff will also receive better compensation, which helps you retain top employees and reduce turnover. This week, ask your staff to monitor your functions and report any duties they feel they could help you perform.

Passive Revenues
Another important aspect of passive revenues is making sure your staff is working at capacity. As your next assignment, ask each staff member to list two more revenue-generating activities they could do each day, without adding to the workday or interfering with current duties.

With your staff at full capacity, consider adding additional services that don’t require finding additional patients. In other words, sell to the people already in your “store.” Picture the boxes of single-serving treats that beckon you as you stand in the check-out line at the grocery store. Simply putting out attention-getting displays of products or services your office provides will generate patient inquires. They’re going to buy it somewhere; it might as well be from you.

Examples may include nutritional analysis and supplements, weight-management products and consultation, cervical pillows, cold packs, and postural supports, including custom-made orthotics.

The dental office is an excellent model for efficient delegation of duties and the use of passive sales. With the opportunities available to chiropractors for passive sales of health products and services, there is no reason why the median incomes of chiropractors could not exceed those for dentists. Consider offering your patients more products and services, and make sure you do a good job of marketing those offerings. Your patients will appreciate the extra consideration you provide, and they'll share their satisfaction with friends and family.

Dr. Olsen is a 1996 Presidential Scholar and summa cum laude graduate of Palmer College of Chiropractic. He has been in private practice with his two brothers/partners since 1997, in Roanoke, Va. Dr. Olsen has served as an adjunct faculty member at the College of Health Sciences in Roanoke, Va., teaching in the physician assistant department. He serves as technical advisor at Foot Levelers, Inc.