Five financial mistakes chiropractic practices often make and how to avoid them

Financial mistakes can lead to the downfall of any business, and chiropractic practices are no exception.

A flourishing and successful practice does more than provide exceptional patient care. It needs to manage money like a pro and make smart financial decisions to thrive in the industry. It is not easy, and if owners of chiropractic practices are not careful, they can make costly money mistakes. The result can be fatal for the business.

Financial mistakes chiropractic practices often make

1. Lack of proper financial planning: This can lead to a major disaster. Lack of proper financial planning can increase the likelihood of missed appointments and cancellations. This may lead to bigger financial loss. If you have taken out a business loan of a huge amount, you can’t afford to incur a financial loss. You have to make monthly payments on your loan.

If you miss payments for several months, there can be two consequences: You will default on your loans and your business debt will increase. Your business credit score will fall.

Then, lenders will start calling you for payments. They want money. Lenders will not allow you to live in peace until they get their money. You will get collection calls. You can try to ignore the calls, but that will not give you a permanent solution.

Lenders may file a lawsuit against you or seize the collateral pledged against the loan. If the debt is too huge, you may even have to file for bankruptcy.

Some business owners use business credit cards to buy medical instruments and other items. Sometimes, they go overboard and buy more than is required for their chiropractic practices. But if these instruments are not used properly or there is no revenue to cover the payments, business owners have to either settle their credit card debt or repay the full amount.

At the end of the day, chiropractic practices are not doing philanthropy. Like other businesses, they are here to make money. An effective business plan can help minimize risks and increase profit in the long run.

2. Lack of proper cash flow management: Cash flow helps a business thrive. However, a lack of proper cash flow management can lead to irrelevant expenditures, which can cause financial distress and loss. Practice owners need to monitor and analyze financial data to identify missed opportunities for growth and development. The data also can identify areas where they are going wrong so they can fix those errors and tackle financial challenges quickly.

Chiropractic practices that do not monitor their income and expenses are in trouble. They need to monitor the billing and collection process, and they must build an emergency fund to cover unforeseen business expenses.

3. Wrong insurance billing: Improper insurance bills can drastically impact a chiropractic practice’s financial health. Incomplete insurance claims, wrong claims, bill delays and lack of proper follow-up on pending insurance claims may lead to payment delays. Insurance claim rejections are quite common. Submitting inaccurate insurance claims is a waste of both time and money. Rejected insurance claims can increase the cost of the claim by 20% to 30%.

Invest in good software with an integrated billing system to simplify the billing process. Ensure your staff is adequately trained in the insurance billing system to reduce revenue loss.

4. Not reducing expenses: Cost-cutting is necessary for increasing profitability. Many practices do not take proactive steps to reduce expenditures and minimize spending. Look at areas where you can reduce expenses without affecting patient care, such as trying to get better deals from vendors.

5. Bad patient retention management: Patients bring money to practices, so bringing in new patients is necessary. But what about existing patients? Unless you retain them, your business revenue will not go up. Rather, you will lose revenue. If your practice only focuses on attracting new patients without providing them excellent care or services, they will not return. Plus, they will give your practice negative reviews that other patients will read. In this digital age, it takes only a few minutes to give a negative review and ruin a business.

Hold meetings with your staff and introduce excellent patient retention management policies; remind everyone that patient satisfaction comes first. Use software to communicate clearly with patients, schedule appointments and manage patient portals. Use social media channels to attract new and retain present patients.

Listen to patients’ concerns, queries and complaints and try to resolve them quickly. Remember, when your patients get exceptional care and customer service, they will come back repeatedly and may also refer your practice to other people.

Final thoughts

Managing a chiropractic practice is not easy, especially the financial aspects. Still, businesses have to do this. Many times, business owners make financial decisions on their own. Sometimes these decisions click, and sometimes they do not.

If you run a practice, it is important to seek professional financial advice from the right people, such as business owners who have worked in the healthcare industry. They can give you an idea of investment strategies and financial trends. Read articles, watch videos, increase your knowledge and use your wisdom.

LYLE SOLOMON has extensive legal experience, in-depth knowledge and experience in consumer finance and writing.  He graduated from the University of the Pacific’s McGeorge School of Law in Sacramento, California, in 1998, has been a member of the California State Bar since 2003 and currently works as a principal attorney for the Oak View Law Group. Connect with him on LinkedIn for further information.