11th Annual Salary & Expense Survey Is this years picture in focus?
A survey is a picture in time.
It captures the reflection of those who make the effort to complete it.
The picture our 11th Annual Salary & Expense Survey paints is a good one. It shows increases in billings, collections, net practice income, and total DC compensation. At the same time, however, the surveys results reflect the characteristics of its respondents. And that may cause the picture to be out of focus.
This years survey was completed by a higher proportion of high-income and a smaller proportion of lower-income chiropractors than in the past. Additionally, there were fewer respondents (341) than in 2007 (574).
We found that 14.2 percent of respondents had billings of $1 million or more, whereas only 5.3 percent reported billings of less than $100,000, resulting in a skewed curve. Past surveys reflected a more normal bell-shaped curve of low- and high-income respondents.
To display an accurate picture of income and expenses, we are presenting median averages whenever most appropriate.
Billings and collections. Our 2007 survey reported median average billings of $320,000. This year, the median increased to $380,000 an increase of 18.8 percent. Median collections enjoyed a similar increase from $225,000 to $280,000 an increase of 24.4 percent.
Net practice income. Net practice income is the dollar amount remaining after all taxes and expenses have been paid. In 2007, median net practice income was $88,000. This year, respondents reported it was $107,500 an increase of 22.2 percent.
Total DC compensation. For unincorporated DCs, total compensation is earnings after tax-deductible expenses but before income taxes.
For DCs in a professional corporation, it is the sum of salary, bonuses, and retirement/profit-sharing contributions made on their behalf.
In 2007, respondents said they had median total compensation of $90,000. This year, that figure jumped to $100,000 an 11.1 percent increase.
Introducing our typical respondent
Our survey appealed to a wide range of individuals, from 26 to 70 years old, who have been in practice for less than one year to more than 48 years. By looking at averages, we can paint a picture of a typical respondent, who is:
Male. Only 17.9 percent of respondents were female;
41.9 years old;
A solo practitioner (70.4 percent); and
Licensed in 1.4 states;
Our average respondent:
Owns 1.1 clinics;
Prefers to practice in the suburbs (59.7 percent);
Employs 3.2 individuals in the clinic (2.3 of whom work full time);
Sees 143.7 patients each week;
Has a patient visit average (PVA) of 33.7;
Attracts 6.5 new patients each week; and
Sees patients from 31 to 35 hours a week.
Has billings of $534,596 and collections of $377,983, for a reimbursement rate of 70.7 percent;
Sells products to patients for 3.9 percent of gross revenues;
Pays his CAs $28,023 and himself $107,771;
Enjoys average total compensation of $136,420; and
Has a net practice income of $166,980.
Finally, this typical respondent spends $23,259 on office leases or mortgages; $13,517 on advertising; $2,677 on malpractice insurance; and $7,994 on product inventory.
Billings and collections enjoy increases
Both billings and collections increased significantly from 2007 to 2008. In 2007, respondents reported median gross billings of $320,000. In 2008, that number rose to $380,000 an increase of 18.8 percent.
Collections enjoyed an even greater increase of 24.2 percent. In 2007, median gross collections were $225,500. In 2008, they were $280,000.
The greater increase in collections may partially be attributed to a modest increase in the number of cash-only practices. (We asked cash-only practices to report collections only.) In 2007, 7 percent of respondents said they had a cash-only practice. In 2008, that number increased to 8 percent.
How do you compare to MDs?
Our exclusive, annual survey found that mean average total compensation of respondents was $136,410. Median total compensation the amount that falls directly in the middle of all reported statistics was $100,000.
Medical Economics magazine conducts a survey similar to ours each year. In its Nov. 16, 2007, issue, it reported its latest survey findings: The median total compensation of all primary-care physicians was $165,000. (Mean figures were not reported.)
To earn this median total compensation, primary-care physicians worked 50 hours per week to see an average of 100 patients.
Although the median total compensation of DCs is lower, our survey found that DCs see a median of 120 patients while working 3135 hours per week.
In addition to working fewer hours per week, DCs enjoy something their MD colleagues do not low malpractice insurance premiums. DCs pay on average $2,677. Primary-care medical doctors, on the other hand, pay on average $12,000.
Groups surpass solos in earnings
One way to grow your practice is to take in partners or associates. This years survey shows that groups or partnerships have more billings and collections than solo practices.
Reported median billings for groups were $750,000 more than double than for solo practices ($300,000).
Median collections for groups were $450,000 significantly higher than solo practices, $215,000.
Of course, expenses for groups were higher. We asked respondents to tell us how much they spent in four areas: advertising, malpractice insurance, office lease or mortgage, and cost of products.
Groups spent on average $75,207 on these four major areas of business expenses, while solo practices spent $37,951. Despite spending almost twice as much, however, groups still had a median net income that far surpassed solo clinics: $162,500 compared to $95,000.
In keeping with the higher median net practice income was the median total compensation for group practitioners. (Note: Total compensation for unincorporated DCs is defined as earnings after tax-deductible expenses but before income taxes. For DCs in a professional corporation, it is the sum of salary, bonuses, and retirement/profit-sharing contributions made on their behalf.)
Group DCs earned median total compensation of $140,000, compared to $86,500 of solo DCs.
Higher earnings come at a price. According to the survey, 40.7 percent of group DCs work 36 or more hours per week, compared to 32.3 percent of solo practitioners. Likewise, only 32.1 percent of group respondents are able to work 30 hours or less a week, compared to 42.6 percent of solo practitioners.
Integrated healthcare clinics are lucrative
Integrated healthcare practices (also known as multidisciplinary practices), are defined as those that have a chiropractor and a medical doctor (MD) and/or a physical therapist (PT). Respondents reported extraordinary billings, collections, net practice income, and total compensation packages.
Billings. Integrated practices billed a median average of $800,000, compared to the median billings of $350,000 for solo DCs.
Collections. Practices having an MD or PT on staff had median collections of $556,793, compared to $267,290 for solo clinics.
Net income. Integrated practices netted a median of $190,000 while solo practices netted a median of $86,102 after expenses and taxes.
Salaries and total compensation. DCs in multidisciplinary practices were paid a median salary of $137,500, while those in DC-only clinics were paid a median of $77,500.
Salary is not the only measure of compensation. Total compensation for unincorporated DCs is defined as earnings after tax-deductible expenses but before income taxes. For DCs in a professional corporation, it is the sum of salary, bonuses, and retirement/profit-sharing contributions made on their behalf.
DCs in integrated healthcare clinics reported median total compensation packages worth $175,000, while solo DCs had median total compensations of $100,000.
OTHER INTERESTING DATA
The survey uncovered some other interesting data concerning integrated healthcare practices:
More franchises. About 6.1 percent of multidisciplinary clinics are franchised, compared to 4.6 percent of DC-only practices.
Rehab center. Rehab center is the label of 37.8 percent of integrated healthcare practices, whereas only 5.8 percent of DC-only practices use that name, according to this years survey.
Better benefits. More multidisciplinary practices (52.6 percent) tend to offer healthcare benefits than DC-only practices (33.0 percent). Likewise, more (39.5 percent, compared to 24.1 percent) offer a retirement plan.
Better pay. Pay and benefits generally go together. Consequently, integrated healthcare practices pay CAs and licensed massage therapists (LMTs) better than DC-only practices.
South takes income honors
Which area of the United States boasts the best earnings? Look to the South. Respondents in southern states had a median of $480,000 in billings; $360,000 in collections; and $115,500 in net practice income.
Respondents in the Midwest came in second at least in median billings ($345,000) and collections ($266,145). Their median net practice income of $67,500 is actually the lowest of all four regions.
DCs in the West had the lowest median billings ($300,000), while those in the East had the lowest collections ($232,500).
As you might expect since it took the honors for highest billings, collections, and net practice income the South also took honors in the median salary paid to the chiropractor ($100,000, tied with the East), and total DC compensation ($135,000). Respondents in
the Midwest had the lowest median total compensation of all regions $80,000.
The allure of the suburbs
Do you prefer practicing in an urban, suburban, or rural setting? And where are the most lucrative practices located?
The suburbs are where 59.7 percent of respondents prefer to practice, followed by the city (26.7 percent).
A country locale appeals to 13.6 percent.
City doctors collect more than those in the burbs or the country, and they also take home a higher median salary $90,000 compared to $80,000 earned by suburban DCs and $75,000 by rural DCs.
According to our survey, though, suburban DCs come out ahead with a median net practice income of $120,000 and median total compensation of $103,500. Rural DCs enjoy a median net practice income of $105,000 and total compensation of $80,000. Urban practitioners reported a median net practice income of $97,500 and total compensation of $100,000.
Age pays off
We asked respondents, who ranged in age from 26 to 70 years old, to indicate how much time they spent in patient care each week. The age that spent the most time in patient care was the under 30s. According to our survey, 46 percent of them spent 36 or more hours per week with patients.
The group that spent the least amount of time with patients was the 3140 age group, with only 27.4 percent spending 36+ hours with patients.
As respondents got older, they intensified their patient workload. Approximately 40 percent of those in the 4160 age group spent 36 or more hours with patients.
The number of respondents older than 60 was small; however, 44.4 percent of them also spent 36 or more hours with patients.
Age and compensation seemed to be correlated, with older, more experienced DCs having higher median net practice income as well as median total compensation, although total compensation went down significantly for the age 60+ DCs.
Accounting for gender differences
How many chiropractors are female? According to past surveys, the number has remained fairly consistent.
This year, 17.7 percent were female. In 2007, 19.6 percent were female; in 2006, 15.6 percent; and in 2005, 15.6 percent.
Women have lower median salaries ($67,500, compared to $81,500 for men) and lower median total compensation ($73,000, compared to $110,000 for men). A look at other statistics may indicate why:
Hours spent with patients. Female chiropractors spend considerably fewer hours in patient care than their male counterparts which would account for the disparity in earnings. Only 28.9 percent of female DCs spend 36 or more hours a week with patients, compared to 37.1 percent of the males.
Patients. Although females have a higher PVA than males (43.7 vs. 31.7), they see fewer patients per week (108.6, compared to 150.9 for males). They also acquire fewer new patients each week than their male counterparts (5.5, compared to 6.7).
Groups or partnerships. Group practices are more lucrative than solo practices. (See page 26.) A smaller percentage of women are involved in group practices than men 20.0 percent, compared to 25.4 percent.
Advertising. Women spend less on advertising than men. According to the survey, the average advertising costs for female DCs were $7,157. Male DCs spent on average more than twice as much $15,636.
A look at full-time employee salaries and benefits
Compensation and benefits are important. Employees want to be paid fairly and competitively. If they are not, employers suffer turnover.
To get a better understanding of salaries, this year we asked for salary information on full-time employees only not part time. We defined full time as employees who work 30 hours or more a week.
We found that practices employ on average 3.2 employees, but only 2.4 are full time under our definition.
The average salary paid to those full-time employees was:
CA $28,023 (mean), $25,000 (median);
LMT $29,384 (mean), $30,000 (median);
PT $67,000 (mean), $70,000 (median); and
Associate $65,644 (mean), $55,000 (median). (Associates who reported their own salaries said they were paid a mean of $62,133 and a median of $68,750.)
DCs paid themselves $107,771 (mean). The median DC salary was $80,000.
Benefits are also important for good employee relations and directly affect employee retention. Fewer DCs offered retirement programs in 2008 than in 2007 (25.8 percent vs. 30.8 percent), but more offered some type of healthcare plan (35.2 percent, compared to 31.8 percent in 2007) as well as paid time off (PTO) a combination of vacation and/or sick days (73.5 percent in 2008, compared to 67.5 percent in 2007). The same number (11 percent) offered profit sharing as in the previous year.
Whats in a name?
Specialization seems to be catching on among chiropractors. According to our survey, the percent of generalists has declined slightly for three consecutive years. In 2006, 62.8 percent of respondents said they were generalists. In 2007, the percent was 59.4; and this year, it was 57.8 percent.
Clinic, however, continues to be a popular label, with 72.5 percent of respondents saying clinic most closely matches the name of their practice. Less than 20 percent (18.8 percent) call their establishments a wellness center. Rehab center is the label taken by 7.8 percent, up from 5.6 percent a year ago.
Revenues can come from a number of sources cash payments for treatments, insurance reimbursement, auto insurance, Medicare, workers compensation reimbursements, consulting, and retail.
The amount of revenues generated from the various sources remained approximately the same as the previous year. Insurance accounts for about 43 percent of all revenues.
The percent of practices claiming to be cash-only increased slightly, from 7.0 percent in 2007 to 8.0 percent in 2008.
Products enjoy increased popularity
Products are a revenue source for chiropractors. In fact, the percent of respondents offering products nudged up a bit in 2008 from last year; with 91.8 percent reporting product offerings, compared to 87.9 percent in 2007.
Product profit centers are underperforming, however. Respondents said retail sales accounted for 3.9 percent of total practice revenues, down from 4.6 percent from a year ago.
Which products do respondents offer? The top five are pillows (73.6 percent), supplements (71.0 percent), hot/cold compresses (67.2 percent), orthotics (59.8 percent), and ointments (52.2 percent).
Noteworthy: The percent of chiropractors offering weight-management products increased to 19.4 percent from 15.5 percent the previous year.
A look at overhead expenses
A profitable business results not only from good revenues, but also from low overhead. Our survey asked respondents to identify their expenses in four key areas advertising, malpractice insurance, office lease or mortgage, and the wholesale cost of products.
Advertising. Average costs in this years survey were $13,517, representing an increase of 22.7 percent over last years costs.
Malpractice. This year respondents reported an average expense of $2,677, up 12.8 percent from 2007.
Office lease or mortgage. Average costs were $23,259, up only 2.9 percent.
Wholesale cost of products. Respondents said they spent on average $7,994, up 3.3 percent from 2007.
Specialists especially LMTs bring in more income
If you want to make more money, hire specialists to work in your clinic at least a licensed massage therapist (LMT). That is one conclusion from this years survey.
More than half (51 percent) of survey respondents employ some type of specialist LMT, PT, acupuncturist, allopathic doctor (MD or DO), nutritionist, or trainer to work in their practices, either as an employee or as a contractor.
Clinics employing specialists see more patients per week (160.5, compared to 125.7 patients per week in nonspecialist clinics); get more new patients per week (7.9 vs. 5.1); bill more (median of $450,000 vs. $300,000); and collect more (median of $327,500 vs. $300,000).
The result of this improved performance is a higher median net practice income ($120,000 vs. $80,000), as well as higher median total compensation for the DC ($100,000 vs. $84,500).
LMT: A GOOD CHOICE
If you were to employ only one specialist in your clinic, a good choice would be an LMT. Our survey showed that 43.9 percent of all respondents have at least one LMT, but of the respondents who have specialists, 85.6 percent of them employ an LMT.
We compared practices that had an LMT with those that did not have an LMT. Given that clinics with specialists make more money, it was not surprising to find that employing an LMT gave a higher median net practice income ($125,000 vs. $95,000). Median total DC compensation of those who employ LMTs was $120,000, compared to $90,000 for those who did not have an LMT.
As indicated previously, 51 percent of respondents have at least one specialist on staff. These specialists include:
LMT, 43.9 percent;
PT, 7.1 percent;
Acupuncturist, 6.8 percent;
MD/DO, 6.8 percent;
Nutritionist, 4.5 percent; and
Trainer, 4.5 percent.
Respondents indicated they offer many modalities, even if they do not have specialists who provide them.
These modalities include:
Nutrition, 63.0 percent;
Physical therapy, 62.5 percent;
Exercise, 55.1 percent;
Massage, 51.6 percent;
Weight loss, 23.8 percent;
Acupuncture, 17.3 percent; and
Homeopathy, 8.8 percent.