Starting your own chiropractic business is an awesome accomplishment, but it is also a very trying, stressful, and overwhelming task. Though as overwhelming as it may be at first, it is worth the stress and frustration.
Where do I start when it comes to the ins and outs of starting a chiropractic office. Do you use a practice management company or software? Do I make an LLC, corporation, or sole proprietorship? How do I acquire loans? These are all questions you need to ask yourself while still in school in your last trimesters. The sooner you start, the better off you will be..
The Starting Point for Your Future Chiropractic Business
The number one point you can do while being in school is paying attention in your business classes. In my experience at Palmer College, we had a class that was a designated crash course, business 101. We had to write a complete business plan and financial excel spreadsheet showing projected profits in this class. These documents are crucial for locking in adequate funding when you start your business. On this same note, you will need some sort of collateral to start your business. This collateral can be money you have been saving, a paid-off car or a co-sign with your parents. A bank or any other financial institution wants to see skin in the game. They will likely look for a 20% investment in the project from you..
Finding Funding for Your Chiropractic Practice
Funding a project like a business can be complex, sometimes being right out of school. Banks are cautious of new graduates because you have no track record, minimal equity, and a ton of student loans! I would get creative with funding and look at every other financial avenue before approaching a bank or credit union. I say this because banks and credit unions are the least flexible with loans. They have stringent rules, require excessive collateral, and their interest rates are typically the highest.
I would first look at local economic development corporations. These corporations have meager interest rates (as low as 1%) to promote growth to the community. Contacting your local economic development coop would then also have additional contacts regarding finding additional funding to finance your office space..
You can also get creative with credit cards. But please be smart. Remember, you have to pay your credit cards back, and you need an excellent credit score. A great example is I used a Citi credit card. I maxed the credit card out because I was allowed 12 months of interest-free money. I had to make sure that I paid the card off in full before the 12 months were up.
What is the Best Entity for Operating a Chiropractic Practice?
When you start your chiropractic practice, you need a name. You also need to identify as an LLC, Sole proprietor, or corporation. My recommendation would be an LLC taxed as an S corporation. This structure is what I utilize personally for my practice. In short, the benefits of an LLC taxed as an S corporation are to allow you the simple protection of an LLC but the tax savings of an S corporation. With an LLC taxed as S-Corp, you need to pay yourself a wage and pay taxes on the earned income. However, the additional funds made by your clinic are not taxed at the same rate. This strategy can save you thousands of dollars a year when it comes to paying taxes. I will also add that you need to discuss this with your CPA and lawyer to find the best approach for your situation. I recommend a few books for you to read to get your mind thinking like a business owner. These books are “Millionaire Next Door” and “Rich Dad Poor Dad” If you are too busy to read books in your spare time, I highly encourage subscribing to Audible from Amazon.
Insurance and Back Office
Chiropractic school teaches us for over three years how to be great chiropractors. However, the amount of time given in the “real world” is minimal. There is very little classwork about insurance billing, claims, explanation of benefits (EOBs), checking patient coverage, and so much more. However, these things are a massive part of a successful practice that accepts insurance. Now, before you just write-off taking insurance and doing a cash practice. Think very hard as to how many patients you would lose if you do not accept insurance. I will be the first one to say I would LOVE to be a 100% cash practice. However, I see a significant number of Medicaid, Medicare, and commercial insurance patients. You have to look through the patient’s vantage point. If my insurance says, chiropractic visits are $15 per visit. That is what a patient walks in the door expecting. If you do not accept their $15 copay or 100% coverage by Medicare/Medicaid, expect a large number of your patients to turn around and go to the next chiropractor down the street.
The first few months are rough when accepting insurance. Insurance claims have a significant learning curve. It all starts to make sense and is not a big deal at all! I recommend you run your whole back office by yourself for at least a year. This year of hands-on training makes you 100% proficient in every aspect of your back office. After you understand it all, you can hire a back-office staffer. I recommend this approach because if you hire a back-office staff from day one, that employee will find out very quickly you have no idea how to do their job, and they will slowly control you. That is not a position you want to be in ever. You want to train your staff how you want your clinic run, not have your employees train you!.
You may be wondering why don’t I just utilize a practice management system to tell me what to do? This approach is an option, and there are many different companies out there to teach you their methods. But it is THEIR method of practice and NOT yours. You may be the clinic owner, but they will be telling you how they think you should manage the practice. But I’m personally too much of a free thinker to be told how to run my clinic. Also, it is costly to be a part of a practice management system. If you were smart enough to get through chiropractic school and pass your boards, you could figure out how to run a chiropractic clinic!.
Marketing Tips for Your Chiropractic Business
When it comes to starting a new small business, you need to be joining the 21 century and become active on social media platforms. Make fun and engaging contact that you feel your community will enjoy. No one knows you exist until you market what you are selling, and you have to market it well! Do not just post clip art pictures! Take pictures of yourself, of the progress of your building. People want to see accurate and authentic posts from you, not dull posts.
What Equipment is Needed to Start A Chiropractic Clinic?
When it comes to your first equipment, buy used equipment and furnishings. For example, my reception chairs are over 40 years old! One reason is that they were cheap. I bought them from a retiring chiropractor, and they still look great. Why would I buy new!.
I also have a Bennett x-ray machine from 1984. It works just fine! I paid $3,000 for it, and three years after purchasing it, I converted it to digital for another $22,000. A total of $25,000 investment vs an $80,000 new x-ray system.
By researching your options on different chiropractic equipment websites, you can save thousands of dollars buying used, refurbished equipment. After you grow and produce more income, you can reassess and see if purchasing additional equipment and chiropractic tools or trading up equipment is a viable option!.
In short, when you are opening up your first clinic, you have to keep overhead as low as possible. If you buy all new everything, you have a higher likelihood of failure. You will have enough monthly bills from student loans, mortgages, utilities, payroll that making payments on an $80,000 x-rays machine will not be fun and will put your practice in a financially challenging position.
Know Your Cost of Living
There are so many factors that are involved when it comes to opening a practice. One that is commonly overlooked is the cost of living. You have to remember that insurance reimbursement is the same across the board. You do not get paid more by insurance companies when you practice in a town or region that has a higher cost of living. I would heavily encourage you to dive deep into the top 5 communities you wish to practice in and investigate the cost of living in each of those communities. For example, I work and live in a small town and community in Lake City, IA. This town has 1800 people. You may think this is way too small for a community. But it isn’t at all! I am one of three different chiropractors in practice. Granted, the other two are close to retirement age, so I will likely be getting even busier. But that is besides the point. I am very successful in a small community with competition. We see many patients a week. I will be honest. I doubt I see as many as my friends in the metros. But, patient volume is only a small part of making money! My friends may see 25% more patients weekly, but I know my overhead and cost of living is less than 50% of their expenses. I own my property, allowing for significant tax advantages of depreciation while my friends are paying very high rent. Home prices are triple the cost of the same house in Lake City. My commute is 4 minutes while theirs is up to 30 minutes. Just remember when it comes to picking a location to really sift through every aspect of your decision. When you do this, you will always make the right decision!.
Hire the Right Staff for Your Practice
Your staff will make or break your business. Your clinic staff is the heartbeat of your office. Your employees should not be overlooked. When I first opened up, I hired a few receptionists that were not a good fit. They came to work cranky with a new excuse every day as to their reasoning. They would be sick once a week. Their car wouldn’t start, snowed in, you name it! I highly recommend you vet your staff deeply, unlike myself when I first opened up. I had a significant problem. Can you imagine having the phone answered by someone who didn’t get any sleep and was cranky to my patients? The patients did not reschedule, or I started to notice that I was swamped on the days the crappy receptionist was off. My patients wanted chiropractic care but did not want to associate with one of my staff. When this kind of a problem arises, you HAVE TO document every single encounter that is not okay for your staff to act. It is tough just to fire an employee with no repercussions. The last thing you want to do is fire an employee and pay unemployment for that person. Suppose you document each encounter and have at least one intervention with the employee, including a written and signed document by yourself and the employee explaining your concerns. In that case, you should be pretty safe with any future issues. In short, it is of paramount importance to have the best team possible to work for you. If you have a great team, you will have no issues becoming successful. We have a great team today, and we will make sure to keep this team for a very long time..
I hope this was helpful for you and your endeavors in starting your own chiropractic office. This blog was only the tip of the iceberg regarding the ins and outs of opening your practice. But this is an excellent start out of the blocks in the right direction towards opening your successful practice. You can open a successful practice anywhere as long as you utilize the topics in this blog. Good luck!
