Can you guess the two most important numbers to track for a chiropractic practice?
“How many ya seeing doc?” If you you’ve been to some of the hyped up chiropractic seminars, you might think it’s the number of weekly patient visits. After all, you’ve probably been asked this question more times than you’d like to hear.
What does the number of visits per week really tell you about anyone’s practice? It doesn’t tell you how many of those visits are free or discounted. It doesn’t tell you the doctors overhead. For all we know, he could be seeing 300 per week and barely paying the bills. Some gurus even teach that the question “how many you seeing?” actually should be answered with how many patient visits you “see in your head”. Which means make up any answer you want.
“How many new patients you seeing?” New patients are a very important number to track, but the number you see per month doesn’t always tell the whole story. If someone does a spinal screening and gets 30 new patients in for a free exam, is this equal to 30 referred new patients who paid full price? No. Therefore, the importance of new patient totals can vary depending on the quality.
“What are you collecting?” Indeed, the monthly amount collected is a critical number to know for your practice. One that many chiropractors would do good to focus on more. But still, what does this tell you about the “health” of someone’s practice. If someone collects $100,000 a month, you may think he’s a very wealthy doctor. But what you don’t know is that he spent $110,000 to make that $100k. What collections don’t take into account is the overhead a practice has: the rent, payroll, marketing costs, leases, taxes, etc.
“Okay, so what are the two most important numbers? Just tell me already!”
The #1 most important number to know for your practice is the net profit for your practice. Also referred to as the “profit margin”. Simply take the total amount collected and subtract your expenses (doctor’s salary is not counted as expense for this exercise.) Now what % of your gross collections each month is your net profit?
It doesn’t matter if you had 100 new patients last month…or see 1000’s of visits per week…or collected $236,000 last month…if you’re net profit sucks. How many slow months can you make it through with only a 10% or 20% profit margin?
Now granted, you may not want to tell everyone this magic number. But if someone was to ask you, you better know it to the penny for last month…even if you don’t say it out loud. I’ve consulted with too many chiropractors who tell me “we’ll, I think it’s about 50%”. I reply “you think?” Then they give me some excuse about their bookkeeper or account not doing the books yet. Look, we’re not talking about taxes or anything to do with the IRS. We are talking about the actual amount of money that goes into your pocket each month. If you don’t know this number, you’re truly flying blind.
The second most important number is your return on investment for your marketing or ROI for short.Your marketing ROI is just a measure of the profit margin on your marketing dollars. So if you spend $1 on marketing and get back $5, this is good. If you get back $10 or $15 this is excellent.If you aren’t tracking your ROI, you can’t say for certain how well an advertisement performed. Simply measuring the number of new patients that came in from an advertisement is not adequate in comparing ads either.
Let’s look at some actual case studies. Here’s part of an email I received a couple of weeks ago…
Dr.Beck, we put the ‘sciatic don’t live it’ insert on Monday to 2 zipcodes that went to 6,000 readers, we got 3 patients ,all over 80 years old, who all paid. we took in $4,500, which was a 18:1 return. I want to crawl, walk, then run , as I tested the waters, with your ad’s. So far we are pleased, and will put out same ad to more zip codes to a different area next week. Pleased to say each of our 80+ year old NP’s ,noticed improvement with chiropractic and are happier citizens and telling friends. Thanks for the blessings.
Based on the above case study, did this doctor do well or not? You could be thinking “only 3 new patients, that sucks big time!” Or you could say “gosh Dr. Beck, $4500 isn’t that great. I mean that barely pays for my salary!”
But we are missing an important peice of this case study. How much did he actually spend to get that $4500 in his bank account? Here’s the part I left out…
…for a cost of only $250 for the ad…
Wow! For a cost of only $250, he made back $4500. That’s an 18 to 1 return…for every $1 spent he made back $18. Realize he said “will put out same ad to more zip codes to a different area next week.” He can now roll this out to other zipcodes and bring in quite a bit more than his salary. But if he was only tracking the number of new patients that came in — which was only 3 — he may throw in the towel and decide to never run another ad.
Always measure your marketing ROI. Measure it for each ad you run and the monthly total of all your marketing.