How to know when you’re ready to add an associate chiropractor to your practice
If you own a practice, nothing is more exciting and intimidating than expanding your business by adding a new associate chiropractic to your team.
There are a lot of opinions about what the best practice metrics are to assess when a chiropractic practice is ready to hire an associate doctor. There are also many reasons a practice might need to hire an associate beyond what the numbers say. You should also be aware of the most important reason not to hire an associate doctor, which we will go into.
The most common reason to hire an associate chiropractor
Scenario #1 — Your business has grown beyond the number of people you can currently serve. Your momentum is solid; people pay, stay and refer others. Your marketing and retention strategies are working, you are growing and there are more people than you and your staff can serve.
As long as you have clearly defined systems and procedures and a clear job description with defined expectations for the new associate chiropractor, then finding someone to join your growing team is exciting for everyone involved.
Scenario #2 — You’re ready to buy back some of your time and have more freedom. You’re willing to exchange some of your take-home pay to an associate doctor to claw back some of your time. Your new associate will help provide the care you are currently performing so you can spend more time outside of your business or working on your business instead of in your business.
Hiring an associate chiropractor to free up more time is common for chiropractors who have practiced for many years and are looking to reduce their schedule. It’s also common for chiropractors with younger families as their children’s activities begin to take up more time during the week. The key here is that there has to be enough revenue flowing into the business that you can afford to give up part of the salary you are currently taking home and provide a solid living for the doctor you are bringing in to take over some of your workload.
Scenario #3 — As an owner looking to hire an associate chiropractor, you may also be beginning to plan your exit from the practice. Without a doubt, the best way to sell a practice is to a doctor who is already working inside of the practice. Often, to do this properly, it takes a few years to make this transition. Therefore, finding the right doctor is critical. You want to find someone excited to step in and eventually replace you by buying your practice. This type of associate arrangement creates an effective runway to a successful transition.
Other common reasons to hire an associate doctor include injuries to the practice owner or maternity/paternity leave. Now let’s move on to the number one reason not to hire an associate in your practice.
When not to hire
The most common wrong reason we see for an owner looking to hire an associate is that the practice is struggling. This happens more often than we would like to admit.
The idea is that someone full of fresh energy can help grow the practice in a way the owner could never accomplish. This is a flawed premise that rarely, if ever, works.
The red flag here is the compensation model for this scenario does not add up. A struggling owner does not have the available cash flow from the business to pay an associate doctor a reasonable salary, so they get creative.
Typically, in this scenario, the owners will offer the associate either no base salary or a very small salary under $40,000. Then the owner will load up the job with a ton of upside potential based on a commission-style bonus program. This is typically based on new patient attraction, conversion or bottom-line revenue production.
The logic for the owner here is that they don’t have to pay much unless the associate doctor produces revenue. And then, the owner can pay the associate out of the new revenue they generate, limiting the owner’s exposure to the associate doctor not producing.
The problem with this model is that when the practice is already failing, expecting someone new to build up a practice that is not currently successful is simply an unreasonable expectation. If the owner has not built a solid practice, expecting an associate to do so is a recipe for failure.
After assessing tens of thousands of chiropractors, it is evident that approximately 10-15% of chiropractors are hardwired as entrepreneurs. This type of person will often excel in a commission-based environment. The chiropractor who has the behavioral makeup to step in and succeed by going out into the community and attracting and converting new business is also hardwired to get into practice on their own as soon as they can.
This associate chiropractor may stay for a short period in practice but will quickly leave to start their own business or move on to a more appealing opportunity as soon as they’re able to. This creates a short-term solution for an owner who could not build their business on their own in the first place.
If the associate does not generate new clients, they do not make enough money to live on. This is a lose-lose for chiropractic. Please, do not look to an associate chiropractor to save your failing business.
Key benchmarks for adding an associate chiropractor
Now let’s take a deep dive into the key benchmarks which will help you add a new associate doctor with confidence, whatever your situation is.
The rule of thirds is a general benchmark for chiropractic, along with other licensed professional small businesses such as dentistry, attorneys, podiatrists, etc. This business principle states that for the revenue an employee generates, approximately 1/3 should go toward their salary, 1/3 toward overhead for the business and 1/3 for profit. This simple tried-and-true formula serves as a wonderful way to help you decide if you can afford to take on an associate doctor.
Simply do the math for your current situation or your projected situation. Here is an example of how this works. Let’s say your practice is grown, and you need help serving all of the people pouring into your office. A typical care plan in chiropractic averages $50 per adjustment. If the associate chiropractor can take care of 200 people in a week, that equates to $500,000 of annual revenue created for the associate doctor’s efforts ($50 x 200 adjustments/week x 50 weeks a year = $500,000).
Based on the rule of thirds, 33% of $500,000 comes out to a $165,000 salary for the associate doctor. You can run these numbers in all kinds of different directions with different scenarios. Simply make the appropriate adjustments if you charge or collect more or less per adjustment, or your volume is higher or lower per adjustment.
This is fair for everyone involved and an actual win-win-win scenario. This salary creates a wonderful living for your associate doctor and allows them to create a life they dreamed of by becoming a doctor without the stress of owning a business. This also provides a wonderful revenue stream toward your office overhead, along with a solid profit generated by your associate doctor to compensate you as the owner for your time, risk, and intellectual property for creating a successful business.
Add it up
If these numbers make sense, you know with confidence that you’re ready to add a chiropractic associate to your practice. If these numbers do not add up, you simply need to grow the business with another layer of patients and profit so you can comfortably and confidently bring in someone to help you move your practice to the next level.
ALLEN MINER, DC, is a 2003 Parker College of Chiropractic graduate and has been practicing in Albuquerque, N.M., since 2003. He co-founded Chiro Matchmakers, which has placed thousands of DCs around the world. He is also the co-author of “The Chiropractic Code,” published in 2014. For more info go to chiromatchmakers.com.