First try this chiropractor fees formula to find your cost of doing business…
One of the most confusing, and yet important, decisions we make as business owners is what to charge our patients. I’m often surprised by the methods many of my colleagues use to arrive at that decision. How do we know if we even made the right decision? Did we set the fees too high, or worse, too low? It’s a tough balancing act when we want to be profitable and yet provide fair chiropractor fees to the patients we serve.
I have heard of doctors who ask colleagues what they charge and some who just plug in the fees already in place at the practice they just purchased. I can tell you that neither one of these options is smart if you plan to stay in business very long. So, how do we all know what to charge in our offices?
Chiropractor fees: know your cost first
First and foremost, you need to know your cost of doing business. According to a national survey a few years back, overhead in a typical chiropractic practice averages 50%. I would be surprised if that average hasn’t increased in light of increased costs and lower reimbursement models. Not to mention the added expenses related to COVID-19.
Many of the doctors we work with daily can’t tell you their actual cost of doing business. Without this number, how can any of us know if we are profitable? The formula is straightforward:
1. List monthly fixed expenses (rent, business loan payments, equipment leases, etc.) and a 12-month average of variable and non-monthly expenses (utilities, payroll, taxes, etc.);
2. Determine your average number of office visits per month for the past 12 months;
3. Determine your average actual reimbursement per visit (total income divided by total visits for the year);
4. Divide the average overhead expense by the average number of office visits to get your average cost per visit;
5. Divide the average cost per visit by the average income per visit to determine your average overhead percentage.
Here’s how your worksheet should look:
As you can see in this example, the average cost to deliver care is $27.27 per visit. This number helps us understand the minimum amount the clinic must collect per visit to break even. The goal is to be profitable, so that means earning more per visit.
Chiropractor fees research
The next step for determining your chiropractor fees is to gather research on each code’s market value in your ZIP code. I love the website fairhealthconsumer.org. It is a great way to collect this information quickly.
You are limited to a maximum number of searches per week (10), so start with your most commonly-used codes. It would be best if you also pulled all of the published fee schedules for your state, such as Workers Comp., PI, etc. An evaluation of provider fee schedules from one state showed that 80% of the providers were not charging as much as Workers Comp. allowed. Many state associations are fighting to prevent Workers Comp. from lowering reimbursement rates for chiropractic services. You can see where the problem is.
Why would Workers Comp. pay you $100 when you insist on charging $80? Your fees should not be so far below your market averages that you are undervaluing the services you provide and leaving revenue on the table.
Insurance and cost of care
Speaking of insurance, are you signing contracts for less than your cost to deliver care ($27.27)? You must read your provider’s agreements and understand every stipulation you are agreeing to before signing.
Far too often, doctors find out that a procedure regularly performed in the practice isn’t covered, or it’s bundled under the terms of the contract. Additionally, providers may choose to add a new service or product, such as spinal pelvic stabilizers, only to find that their provider agreement allows for reimbursement in the fee schedule at a rate lower than the cost of the product or service.
It is crucial to stay on top of changes from insurance companies so that you can make an informed decision about whether to participate in a particular health plan.
If it has been a few years and it looks like a major overhaul is needed to bring your fee schedule into the 21st century, don’t worry. You are not alone.
Consider getting the help of a consultant. Consultants can evaluate your current fees, and the contracted rates and published fee schedules, for your area. They can also make recommendations on when and how to implement fee changes in your office. If one of your primary reasons for not evaluating or increasing your chiropractor fees over the years is a desire to keep care affordable for your cash and underinsured patients, consider using a discount medical plan organization (DMPO). DMPOs allow you to offer legal and compliant discounts to your patients, helping keep care affordable for non-covered services. If you are already using a DMPO, make sure you evaluate your levels of discounts, too.
Minor adjustments and big impacts
Now that you have cleaned up your fee schedule, you need to commit to reviewing it at least annually. Reviewing your fees each year does not mean you will make changes to your fee schedule every year, but regular reviews will help ensure that you are not devaluing your services and losing money.
When I gathered this information and considered raising my fees, I experienced a sense of dread. I felt that any increase, big or small, would turn patients away from my practice. I didn’t realize that minor adjustments to my fees could have a significant impact on my practice’s financial health without burdening my patients with rising health care costs. For example, I discovered that by increasing my fees $5 per visit (less than the price of a cup of coffee), my practice would generate an additional month’s worth of revenue each year.
Practice growth starts by taking small steps in the right direction. Evaluating your chiropractor fees is a great first step to ensure a successful business.
Ray Foxworth, DC, FICC, MCS-P, is a certified Medical Compliance Specialist and president of ChiroHealthUSA. A practicing chiropractor, he remains “in the trenches” facing challenges with billing, coding, documentation and compliance. He has served as president of the Mississippi Chiropractic Association, is a former staff chiropractor at the G.V. Sonny Montgomery VA Medical Center and is a Fellow of the International College of Chiropractic.