3 Common Profit Leaks That Cost Chiropractors Thousands of Dollars
While some chiropractors need to get more patients in the door to grow, most established practices can find significantly increased profits by focusing on firming up their systems and preventing revenue leaks. In fact, most chiropractic practices have an average of 25-35% profit leak without ever knowing or doing anything about it.
In the doctor’s defense, there is a lot to manage. There’s providing patient care and building those relationships, monitoring staff, taking care of SOAP note documentation, making sure the business is compliant, marketing the practice, accounting, running all day to day operations, and at least a dozen other details that require daily attention.
Without solid procedures, systems, and tools in place, everyday tasks will start to wear you down and dry up cash flow. The sooner you identify these problem areas, the sooner you’ll be
able to identify where your business is leaking revenue. Then and only then, you’ll be able to find solutions and improve your revenue cycle. Since we have worked with all types of chiropractors for several years, we have identified the 3 most common profit leaks seen in a chiropractic practice.
1. FRONT DESK PROCEDURES
Many docs make the mistake of viewing the front desk primarily as their “customer service” center. Consequently, their opinion of a successful employee at the front desk revolves around a bubbly personality, a friendly face, and a welcoming smile. While these features are indeed helpful to have, chiropractors also need to appreciate that the front desk isn’t just the face of your chiropractic practice—it’s a critical data entry point to ensuring complete and accurate collections, appointment scheduling, and a host of revenue producing activities. In that respect, the front desk staff have unique opportunities to verify or confirm patient insurance information, obtain important patient demographics, convey past due balances, discuss billing options, and collect payments over the counter to produce the best possible results on your collections and accounts receivable. Great front desk staff actually make the billing cycle shorter, reduce A/R and help you get paid better for what you are doing by proactively eliminating time consuming tasks that often get pushed onto the already overworked billing department.
On the other hand, without efficient front desk processes in place, your A/R will always be higher than it should be as staff are missing an important window to address payment issues and prevent billing problems for your patients and your practice. To make matters worse, poor front desk systems will not only affect your collections, they will even handicap your services as appointments be missed and not rescheduled, care plans are ignored, and necessary services fall through the cracks. If you don’t have an All Star in your front office then you had better have an A+ billing team to cover their tracks and resolve billing issues to ensure maximum reimbursements. A Best Practice will have both.
How dangerous can poor front desk procedures be? Some quick math can reveal the disastrous potential. According to industry stats and surveys, the average chiropractor sees approximately 100 patients per week and is 80% insurance based. That’s 80 or so patients a week who owe copays, coinsurance, deductibles and/or past due balances. If you take an average patient portion of just $20 x 80 patients per week, you’ve got a yearly problem that’s potentially costing you $80,000 or more! Even if your front desk is only “half bad” it could still cost you at least $40,000 each year!
2. DENIED AND/OR DELAYED CLAIMS
Accurate and timely claims processing and management is also essential to a chiropractic practice’s profitability. Despite this, rejected claims are shockingly common. In fact, according to the research from the Medical Group Management Association, the average healthcare practice experiences between 20-35% of their claims rejected. Worse, resubmitting a rejected claim doesn’t just take away valuable time from your billing team’s job, it’s incredibly expensive. Rejected claims can add an additional 20 to 30% to the cost of that claim, which cannot be recovered even if the claim is paid. Even worse than that, 65% of chiropractic billing teams have never rebilled a claim! So denied claims will cost you more to recover that revenue or will never even be corrected and resubmitted… that’s comforting.
Unfortunately, as insurance payers continuously evolve their plan offerings and payment policies, and as patients and employers continue to shop for a better bargain for their insurance, the situation is only expected to worsen.
To add salt to the wound, delayed claims can potentially be more costly than denied claims. After all, the rejected claim is either fixed and rebilled or written off; that is only if you have a quality billing team working for you. Extra staff time is eventually curtailed as the final result of that claim comes to an end. On the flip side, delayed claims can often take many “touches” by your staff to obtain a resolution. It requires numerous phone calls and emails to the clearinghouse, insurance carrier, and in some cases the patient. Then it requires more time to communicate within the team to try and reach a max reimbursement resolution. And each time, you are paying a staff member to push the claim back and forth to the insurance company to get it paid. In some cases, the staff compensation based on the time spent exceeds the value of the claim! That is why I recommend a billing team that is paid a percentage rate of insurance collections. Their motivations are the same as yours… faster and higher collections!
3. “MERCEDES BENZ IN A DRAWER” (LOST/UNCOLLECTED REVENUE)
One of the quickest ways to lose money is to lose control of your ability to monitor your billing department performance. And one of the easiest ways I routinely find lost revenue to improve my billing client’s bottom line is to clean up their accounts receivable and their reporting. If you can’t tell exactly how much money you have outstanding, along with who owes it to you, for how long and how collectible it is, you’ve got reporting troubles that will lead to income problems. Getting better data in this regard leads to better procedures to collect the money that is owed to you. In this respect, I simply define “Mercedes Benz in a Drawer” as dollars that
could have been collected, but were not for one reason or another. Creating systems to accelerate slow, partial or no payments—your lost revenue — is integral to a healthy practice and healthy collections. This is one of the most deadly revenue leaks of all in that it represents money that you SHOULD collect (but haven’t) AND it follows a distinct time deadline: the longer you wait to collect it, the less likely you ever will due to timely filing limits. Collect all that money that is owed to you, metaphorically sitting in your billing drawer, and you can buy a brand new, top of the line Mercedes Benz, ALL IN CASH!
What’s more amazing is that chiropractors will spend thousands on unproven marketing techniques, new clinical “toys” that they hope will boost their practice, when they have a goldmine sitting untapped and untouched in their A/R (whether they can tell it or not). For example, finding just 3% of your lost revenue can mean tens of thousands of dollars to the bottom line of your practice. Similarly, getting an accurate reporting of your A/R, along with proactive procedures that help you prevent it from unnecessarily getting out of hand, can easily become a six figure increase over time.
Finally, don’t be discouraged if your practice has one, two, or all three of these leaks. With the proper guidance and procedures in place, this can be fixed quite quickly. Case in point: we cleaned up old A/R for one of our billing clients last summer that resulted in a $75,000 boost in approximately 8 weeks time. That is 75K they would have never seen if they had not contacted CloudChiro billing! We have experienced this success with numerous clients and would like to help you as well.
On average, CloudChiro will find about 25k - 100k in A/R in the first quarter for each chiropractor we bring on board. You can do it to, if you take action. Contact us today to find your “Mercedes Benz in a Drawer.”