Running a chiropractic office requires not only a unique medical skill set but also a keen business sense.
In addition to treating patients for a host of maladies and injuries, chiropractors who run their own small businesses must also maintain the daily operations for running the company, which in and of itself can be an overwhelming undertaking.
Perhaps one of the most difficult parts of running a practice is ensuring you have a steady and constant cash flow. Even though your profits might be high and you have multiple streams of revenue, that doesn’t necessarily mean cash flow is available. Invoices can go unpaid for months while insurance claims and Medicare coverage languish in payment limbo.
Nevertheless, by obtaining a small-business loan from an alternative lender, chiropractors can get the cash they need, quickly and easily. Instead of waiting months for a traditional lender to review a loan application—only to then reject it—alternative lenders are more flexible in their ability to furnish crucial capital. This is especially true for chiropractors, for whom it is notoriously difficult to obtain a small-business loan from traditional lenders (such as big banks).
Costs and challenges
One of the biggest obstacles to chiropractors maintaining a steady cash flow is the advent of the new ICD-10 codes. The expansion of codes from ICD-9 to ICD-10 involves a significant amount of training for both chiropractors and their staff, and if they fail to accurately enter the proper codes, an office can find itself underpaid for work, leading to significant cash shortfalls.
Many experts agree that maintaining three months’ operating cash may be necessary to alleviate issues surrounding ICD-10 implementation.
As if coding issues weren’t enough, the costs associated with the practice can really add up, too. From equipment to employee payroll, chiropractors who operate their own businesses have a lot of overhead. First, having the right tools is mandatory for effectively practicing in this field, which includes a range of specialty equipment and tools in their line of work:
- X-ray machines (film or digital)
- Muscle stimulators
- Electrotherapy supplies
Exercise and rehab machines are also necessary in many instances, and can include:
- Stationary bike
There are also numerous specialty tables required:
- Hi lo
- Flat treatment
- Intersegmental traction
- Spinal decompression
Then there is massage therapy equipment, such as a table, chairs, stools, and units.
All of this equipment needs to be stored somewhere, and patients need to be treated in a safe, comfortable environment, which requires the purchase or rental of office space. And the office also needs computers, software, phones, filing cabinets, a copier, and additional furniture like waiting-room chairs and tables, a reception desk, and the doctor’s private office desk, chair, and bookcases.
In addition to furniture and equipment, running a fully-staffed office means paying salaries for employees and other team members, including insurance and payroll taxes. Finally, there are the costs associated with professional liability insurance, medical malpractice, regulatory compliance, and licensing. And this is before other expenses are thrown in, such as the costs for marketing, attending conferences, and other networking events.
At the end of the day, the quantity of equipment and the magnitude of overhead can weigh on a chiropractor, ultimately making it difficult—if not impossible—to grow a practice.
However, by utilizing the right mix of equipment financing and alternative lending strategies, a chiropractor with limited cash flow can start expanding and generating additional profits.
The lease you can do
Even though there are so many costs associated with operating a practice, there are several ways to reduce over- head and keep the money coming in. As there is a fair amount of equipment needed to operate a chiropractor’s office, given the associated purchase prices it can be wise to consider financing it.
After all, purchase prices can be high and equipment, machinery, and tools must be constantly upgraded, not only to ensure clients are receiving the best treatment possible but also to also attract the best clients.
Leasing provides you with access to top-of-the-line equipment, whether for general office needs or the specialized machinery and tools needed to operate a chiropractic practice
Equipment leasing also provides substantial tax benefits because of the Section 179 exemption that lets small- business owners deduct lease payments up to $500,000. With this significant tax deduction, you might be able to make the crucial capital expenditures you’ve been postponing.
When cash flows are tight or profit margins are slim, a small-business loan can bridge the gap between lean times, or provide a financial boost to expand your practice, either by taking on more clients or by upgrading equipment.
Traditional bank loans require a significant investment of time and energy, and take a long time to process. Also, the money obtained must typically be used in a specific, bank-approved manner. If a crucial piece of equipment breaks, and there’s little to no available cash on hand, not being able to obtain a loan quickly could be devastating.
Whether your office has bad credit history or none at all, you can take advantage of the uniquely tailored solutions offered by an alternative lender. There are many different routes to obtaining this capital. Unsecured loans that don’t require collateral are one way, or you can get a working capital loan.
Another viable option includes merchant cash-advance loans, whereby the alternative lender provides up to $250,000 in cash in exchange for a fixed dollar amount of future sales until the advance is repaid in full.
Best of all, alternative lenders can create specially designed loans for almost any practice, regardless of its FICO score. With so many easily accessible choices of alternative financing strategies and equipment financing selections to pick from, you can find a way to ensure cash flow and ultimately find success.
Dave Gilbert is the founder and CEO of National Funding, one of the largest private lenders of small business loans. National Funding provides equipment lease financing and growth capital to small and medium-sized businesses nationwide. He can b contacted through nationalfunding.com, where you can learn more.