Dr. Solomon Cogan of Farmington, Mich., has his sights set high and his sites set all over the place. Already owner of five chiropractic offices throughout Michigan, he has a goal of 25 clinics within four years. That’s not all. By the year 2005, he also wants to produce $20 million in annual gross collections, and he envisions a total of 350,000 annual patient visits.
Even better, Cogan plans to carry out his grand designs without missing a beat due to the challenges presented by today’s ever-changing (and ever-challenging) managed-care environment. He has every intention of making these aggressive growth plans a reality by following his own set of rules, a strategy that has worked seamlessly so far.
Cogan’s plans are no pipe dream. After less than nine years in practice, he’s already well on his way. After graduating in three and a half years from the National College of Chiropractic, Cogan opened his first clinic in 1992 and was seeing 100 patients a week within a few months. Within a couple of years, he was seeing 500 per week, with only himself and a chiropractic assistant to handle the load.
“That’s not what I recommend,” says Cogan, who hired an associate soon after he reached that level of patient visits. “I was working seven days a week. That was my life. My passion was to build a big practice.” His first clinic continued to grow, eventually reaching $1 million in annual collections.
At press time, Cogan was operating five offices in Michigan, all carrying the “HealthQuest” name — with two more acquisitions immediately pending. Cogan’s offices collected $3.725 million in 2000, and his 2001 forecast calls for $5.5 million in collections.
Cogan works out of the main office in Farmington, Mich., where he oversees the management of all the HealthQuest clinics. “We communicate by phone, fax and e-mail, and I see a copy of each office’s numbers at the end of every work day,” he says.
Much of Cogan’s financial success is based on the fact that he takes measured steps to ensure his services reap top dollar. He refuses to get caught up in the trap of “discount” chiropractic. Although Cogan’s offices will bill any insurance company, the only plan in which he chooses to be a participating provider is Blue Cross/Blue Shield. Patients who carry any other plan are responsible for whatever balance isn’t covered by their insurance.
Cogan has flatly refused to cut fees in the name of managed care. “Some (PPOs) only pay $20 or $25 a visit,” he says. “I won’t work for that cheap. It’s just basic economics. I think our services are much more valuable than that. My office is not the cheapest in town. It’s more of a Nordstrom’s than a discount store. You get what you pay for.”
Getting paid for services rendered is a big priority for Cogan. Patients typically make their co-payments at the time of the office visit, and balances are not allowed to go beyond $150.
In all, about 35% of Cogan’s revenue comes from insurance. Various personal injury cases account for another 30%, and 10% comes from workers’ comp. Cash makes up the other 25% of the total revenue. The collection rates have “historically been between 85 and 95%” for all of the HealthQuest offices, Cogan says.
“I’m a bottom-line guy,” Cogan says. “A lot of people talk in terms of dollars billed, but I don’t believe you’ve made a dollar until you’ve collected one.” The same attitude is reflected in his dealings with managed-care organizations.
Some aspects of managed care simply cost money, and Cogan says that’s something he’s very reluctant to give up. “I don’t like to cut my fees,” he says. “I choose not to become a victim.”
Cogan says he would like to see more chiropractors take a similar approach, rather than giving into cutting fees and/or signing up with every managed-care plan that comes along. “Everyone gets so uptight about managed care and that it’s not like it used to be,” he says. “People buy benefits. If you can show prospective patients that you’re a greater perceived value than the doctors who feel they have to participate with discount plans, the patients will come to you, and they’ll be willing to pay.” It’s a strategy that has helped his business grow by leaps and bounds in a relatively short time.
It wasn’t until 1998 that Cogan really started thinking big. It was then that he acquired his second office, taking over a small-town clinic in Bronson, Mich. Cogan’s associate from the Farmington location headed out to Bronson, where he and the new practice thrived.
It didn’t take Cogan long to learn that adding offices did not have to be an overly expensive proposition. It has become more a matter of seeking the right deal and not buying until he’s found the right clinic, he says. In the case of the Bronson office, the price was right for the real estate (a 2,500 square-foot house/office combination) and equipment. Within three weeks, the new office was turning a profit.
Energized by his quick success, Cogan saw the potential gold mine at his fingertips. He started thinking bigger and developed a strategy for acquiring more practices. The formula he settled on was simple: Give them everything they want, except the price, unless the price is what they want.
“I’ll negotiate hard on the price,” Cogan says. “But I try to make it a win-win for everyone.”
With that in mind, Cogan will often acquiesce on everything from the closing date, to financing, to transition time. None of that will matter to him when it comes to the big picture.
“If they want to finance, fine. If they want to cash out, fine,” he says. “If they want a short transition, that’s fine, too. I’ve had times when the existing doctor has stayed for a month and times when they’ve been gone in three days.”
With two practices making money and a desire to add more, Cogan sought advice from as many people as he could. He talked with other chiropractors around the country. He consulted with practice-management groups. He did everything he could to ensure he would make no mistakes when adding new practices to his stable.
By March 1999, Cogan had purchased his third practice. That office, in Bad Axe, Mich., is now his second-biggest producer. He has since added two more offices, for a total of five. Cogan’s offices are all approximately 21/2 hours apart, but that wasn’t by design. Those locations just happen to be where he found the best deals. “I’d have them 7 miles apart from each other if they were profitable,” he says.
Cogan works with various business consultants, including a practice broker, who steer him toward different opportunities. He highly recommends working with practice-management consultants, especially for doctors who are just starting out or are taking their practices to the next level.
“Everyone needs a coach,” Cogan says. “You should find someone who does what you want to do.”
The keys to Cogan’s success have been two-fold. One, he and his associate doctors market vigorously in person, and two, he isn’t cheap. He makes sure all his practices are visible within their communities, and his marketing practices vary according to demographics and other factors.
In all, Cogan spends about $100,000 a year on marketing for all the HealthQuest offices. He spends about $40,000 of that budget on telemarketing. Cogan says he’s partial to telemarketing because it allows him to reach a good bit of the population in a relatively small amount of time and do it in a direct way. He also invests about $20,000 apiece on the following (for a total of $60,000): 1) Yellow Pages advertising; 2) radio, cable television and business cards; and 3) spinal screenings, expos and shows.
All told, as a return on his investment, Cogan’s practices saw a total of nearly 200 new patients per month at all five practices in 2000. The total patient visits per month stood at 5,540 last year.
This year, Cogan hopes to bump up the number of new patients per month even higher, to 300, and the patient visits per month is expected to reach 7,750.
For the HealthQuest offices located in smaller towns, Cogan relies heavily on Yellow Pages for marketing, citing an excellent return for the money spent. One Yellow Pages ad in Bad Axe, Mich., for instance, costs him about $1,000 annually. But a similar ad in Farmington, Mich., with its more dense population, could be eight times that much for a single month, he says. His small-town marketing also includes radio and cable television advertising. Smaller markets tend to mean smaller pricetags on advertising, he says.
In the more heavily populated areas, Cogan relies less on print and broadcast advertising, and more on a hands-on approach. He gets out and makes himself visible, and he expects the same of his associate doctors. That includes doing lectures (he has a company that sets up lectures for him), appearing at expositions — “Some you have to pay for and some you can get in free,” he says — and his coup d’etat of marketing: health clubs.
“I’m very big into meeting people at health clubs,” he says. “One, they’re health-conscious, and two, they pay to be there.”
Cogan relies heavily on S.A.M.® spinal screenings as one of his most productive, cost-effective means of marketing. HealthQuest offers screenings at health clubs, health-food stores and even mattress shops — anywhere that people are thinking about their bodies, he says. All of Cogan’s associate doctors do spinal screenings, and all of them give health talks.
The secret to Cogan’s marketing strategy has always rested with getting out and networking with as many people as possible. “I don’t think there’s any way you can get more new patients faster than by meeting people… one-on-one,” he says. “You have to build that time into your schedule.”
Another means of recruiting new patients is to simply request that patients’ spouses, or a friend or family member, be present at the report of findings. Those strategies, along with basic referrals, keep Cogan’s marketing machine rolling without running up excessive costs.
Cogan has high expectations of his doctors when it comes to new patient recruitment. “If an associate doctor can’t bring in at least 10 new patients each month — not including internal referrals and things like that — he can’t be a doctor with my organization.”
Cogan says the key to keeping patients is simply being honest and applying common-sense practices to everything he does.
“I believe you have to have a really strong report of findings,” he says. “I’m a huge advocate of telling people the truth on how much it’s going to take to fix their problems, how serious it is, and how many visits it’s going to take. Too many chiropractors are afraid to tell people what they really need, because it sounds so significant.”
Cogan emphasizes the importance of putting patients first, letting them get a good feel for the practice, and making sure they know that everything is in order. To accomplish this, his staff is “scripted” and follows a very basic set of rules when it comes to dealing with patients.
He may be a tough manager at times, but Cogan doesn’t ask anything of his staff that he doesn’t ask of himself. To that end, nobody seems to be complaining. “The associates know that there is a waiting list to work with Dr. Cogan,” says Kelly Fultz, HealthQuest office administrator. “He cares about his practice more than anything… He instills the drive in each (member) of his staff.”
With his practices webbing out all over Michigan, Cogan hopes eventually to make his market penetration reach even farther. His longer-term plans include HealthQuest becoming a publicly traded entity. That may be several years down the road, Cogan says, by which time he plans to have 25 or more practices in the fold.
He explains: “We want to continue building an organization that is strong enough to produce multiple clinics and generate enough revenue to go public.”
Insider Advice on How To Acquire and Market Multiple Clinics
Even in today’s hectic managed-care environment, acquiring practices can be done without a difficult transition. Dr. Solomon Cogan of Farmington, Mich., has followed a basic formula to open five thriving practices in just nine years. Two more purchases are pending, and he plans on having a total of 25 practices within four years.
Cogan does it by first making sure the clinic has potential and the price is right. Once an acquisition is made, Cogan does everything he can to ensure the transition goes smoothly. Not until the transition is complete does he implement his own set of rules.
“The key is to clean up the procedures,” Cogan says. In most cases, that means streamlining payment methods. He makes his financial policies clear to the existing patient base as soon as possible following a new practice acquisition.
Cogan markets his new practices through methods such as telemarketing, personal appearances by the incoming doctor and spinal screenings. But he also lets the practices market themselves. “We buy practices that are working, and we try to keep what’s working, working,” Cogan says.
Part of the marketing of a new practice includes a mass mailing to existing patients of a letter from the out-going doctor. The letter announces that a new doctor will be on board and encourages patients to carry on with their treatment programs at the practice.
The strategies that are effective don’t have to be rocket science, but they should be consistently applied, Cogan says. “We’re not inventing the wheel here,” he says. “You just have to apply a lot of good old-fashioned common sense.”
Dr. Solomon Cogan is a big believer
in practice-management consultants. In addition, he works with
several other professionals, including attorneys, a CPA,
marketing pros, and a practice acquisition group.
Contact information for some of Cogan’s professional contacts includes:
• Robert Gross, JD, business and real estate attorney: 248-263-3535
• Norm Greenfield, JD, tax attorney: 248-263-3545
• Nora Ceritto, CPA, 248-932-3337
• Pamela Moore, Chiroglyphics, graphic artist/marketing: 410-867-9229
• Michelle Gellar-Vina, MGV Marketing, sets up lectures: 561-392-5206
• Ronnie Gallucci, Metro Marketing: 800-696-7788
• Brian Goldman, The Goldman Group, practice acquisition consulting: 248-569-0508
Dr. Solomon Cogan
3263 Grand River Road • Farmington, MI 48336
Phone: 248-471-5554 • Fax: 248-471-6682
*The Farmington, Mich., office is the main HealthQuest office.
Other offices are located in Bronson, Bad Axe, Grand Rapids
and Munising, Mich.
Gross Billings: $4.33 million
Gross Collections: $3.725 million
Projected Billings: $6.4 million
Projected Collections: $5.5 million
2000 Patient Numbers:
Patient Visits: 5,540 per month
New Patient Visits: 197 per month
Projected Patient Visits:
7,750 per month
New Patient Visits: 300 per month
By Payment Type:
Personal Injury: 30%
(automobile, 25%; others, 5%)
Workers’ Comp: 10%
Total Annual Budget:
Apx. $100,000, Including:
$40,000 – Telemarketing
$20,000 – Spinal Screenings, Expos and Shows
$20,000 – Yellow Pages Advertising
$20,000 – Misc. (Radio, Cable TV, Business Cards)
HealthQuest of Farmington:
Dr. Solomon Cogan
Dr. Melissa L. Soulliere
Dr. Silvio Cozzetto
Dr. Frank Schwartz
Dr. Roosevelt J. Smith
Kelly Fultz: Office Administrator
(All HealthQuest Offices)
Cindi Franklin and Renee Collier: Billing
Sandy Kresch and Rachel Voller: Collections
Gwen MacLaclan and
Holly Gullekson: Front Desk
Matt Nelson: CA
Lance Celusta: “Go-to Guy”’
HealthQuest of Bronson:
Dr. Dustin Morton
Sandy Jaeck: Office Manager
Edna Wheaton: CA
HealthQuest of Bad Axe:
Dr. Gary Blackburn
(Partner-Bad Axe and
Karen J. Hunt: Office Manager
Debra J. Anderson, Amber L. Hessling, Tracy Kalka and
Holli Rhodes: CAs
HealthQuest of Grand Rapids:
Dr. Grant Buck
(Partner-Grand Rapids Office)
Alisa Ambrose and Betsy Lara: CAs
HealthQuest of Munising:
Dr. Devin J. Thauberger
Lei Graves: Office Manager
Sarah Kirmo: CA