5 Strategies to Amplify Profitability in Your Upper Cervical Practice

Watch The Webinar

Speaker Dr. Bill Davis

Well, hello everyone, and welcome to this month's webinar, five strategies to amplify profitability in your upper cervical practice. Very excited to be back with you. This is Dr. Bill Davis, founder and CEO of Upper Cervical Marketing, UCM Practice Growth Systems, and very excited to be back with you.

You know, in this webinar today, we're gonna be focusing on something that's so critical in business in general, but definitely in an upper cervical practice as well. Revenue can be vanity, but profit is sanity. And so we're gonna be addressing how to not just make more money in your practice, but how to bring more money home from the practice because that is much more important in business. And so we're gonna be talking about five strategies to amplify profitability in your upper cervical practice. So let's get started.

Throughout this webinar today, what you're going to learn is six practice profit principles that you need to know in order to make better money decisions. We're gonna talk about the labor efficiency ratio and how that impacts your practice bottom line. We're gonna talk about what the biggest drain on your practice finances is, and you may not even recognize it yet. We're gonna talk about how to tell your money where to go rather than where it went. We're gonna talk about the steps you need to take to boost your profits and understand that revenue is vanity, but profit is sanity. We're gonna talk about how to trim overhead so you can stop wasting money. And we're gonna talk about how to focus on the four key practices to create financial peace in your business, how to consistently demonstrate generosity, how to be prepared for emergencies and opportunities, and ultimately how to serve people better and while increasing your collection.

So lots to cover, lots of great information. Very excited to get into this with you. So let's focus in now on these five strategies to amplify profitability in your practice.

So we're gonna be going over:

Maximizing profit with specific principles.
Minimizing overhead.
Charging what you're worth.
Planning for success.
Pursuing financial peace.
So let's get into the first one here, which is maximizing profit. So there's six practice profit principles you need to follow to maximize profit. Let's go through each of these.

Those six are:

Keep your business finances and your personal money separate.
Operate at the speed of cash.
Know your numbers.
Act your wage.
Pay what's owed by the due date.
Be generous.
So let's look at each of these.

Number one here is keep your business finances and personal money separate. You don't want to use your business account to pay for personal expenses. You don't want to use your personal money to pay for business stuff. Simple as that. You need to set up separate high yield savings and checking accounts for your business and pay yourself and your expenses out of that. This is such a basic business principle, but we see in many upper cervical practices that this isn't being followed. Keeping your business finances and personal money separate is an important part of maximizing profitability.

Number two in this category is to operate at the speed of cash. We really encourage doctors to not take on debt to run their upper cervical practice. to avoid business loans, credit cards, revolving lines of credit. And if you already have business debt to work on eliminating that as quickly as possible, we'll talk more about a plan to do that later. Because many times the biggest strain on your practice finances is payments, debt. And so using a debt snowball to pay off your debts is crucial. It's like the tortoise, the tortoise will beat the hare When you do slow incremental growth beats getting in over your head in debt only to crash and burn.

And so the third thing here is knowing your numbers. It's important to stay on top of what's coming in and what's going out of your practice. This doesn't mean you have to do all of the accounting and bookkeeping yourself, but you need to understand your numbers and where your money is going every month. Proverbs 27, 23 says, be diligent to know the state of your flocks. Pay attention. You should never be shocked about your money because you need to know what's going on with it within the practice.

The next principle here is to act your wage. It's tempting to buy the new CBCT or whatever is shiny and new and promises to make your life and practice better, but you don't need the latest gizmo and model. You can go out that go out of date and depreciate the minute you buy them. That's not financial peace. Acting your wage means living on less than you make and delaying purchases until you can really afford them. Then only making purchases that actually help your practice. So you want to make sure that you don't listen to advice that tells you things like, hey, spend $10,000 on this, $50,000 on that, whatever, so you can save money. money on taxes, right? Buying items just to take a write-off is like paying someone dollars to save nickels on stuff that you don't need. Deductions aren't tax credits. It's important to understand that. It's always better to save up and buy something that is important for your practice rather than bringing on debt just so that you can have the tax write-off because it's actually going to end up costing you a whole lot more in the long run.

Next here is pay what's owed by the due date. No one wants to wait for someone who's pain to collect from right don't be that person plan your purchases in your budget we'll talk more about that in a minute so you're ready to pay when it's due and then you know pay your taxes on time too we just passed tax time here the general rule you want to set aside about 25 percent of your collections to pay your taxes you talk with the tax pro to work out your specific tax rate but that's a pretty good rule of thumb

And then lastly is be generous, right? Some things that you can do that are ways to be generous within your practice is take care of one person per month who is unable to pay for care, right? Have that one charity case per month. Find ways to bless your team and give to others, whether it's a local church or your other charities that matter to you. Focusing on being generous consistently is a huge part of being wise with money when it comes to practice profit principles.

So number one is maximize profit with principles. We've addressed some of these. We'll get deeper into some of these in a moment. Number two is to minimize overhead, right? Overhead is everything in the practice that it takes to run the business. And you want to minimize that as much as possible while still being able to deliver a high quality service.

So one of the ways you can look at this is with the labor efficiency ratio, the LER. And you may or may not have heard of this metric before, but it's a measure that measures the productivity of team members within a business over time. It can be used to optimize a business's economic engine for maximizing your profit. So to calculate your labor efficiency ratio, you want to look at your P&L ratio. total revenue, your collections for a period of time, like monthly, quarterly, annually. And then look at your cost of goods sold, your labor as it relates to that. So for example, a single doctor practice that's collecting $40,000 per month with two full-time CAs, This is how you would calculate the labor efficiency ratio. You would take that $40,000 in collections, your cost of goods sold, specifically your labor costs. That would include your CA salaries, taxes, benefits, everything that you pay your CAs, and everything you pay yourself, your doctor's salary, your taxes and benefits that are related to that. And let's say that all of that... those expenses was $20,000 and your collections was $40,000. So then you would divide that by the other and you would come up with a labor efficiency ratio of 2.0, 2.0. And this is really the minimum of what you want your labor efficiency ratio to be. If it gets anywhere below 2.0, like 1.5, something like that, then you have to really be looking at, do I have too many staff members? Do I have, am I paying myself or my CAs too much? All those kinds of things. But if it's at least 2.0, that's a good place to start. Now, obviously you want it to be above 2.0 if possible, but that's a good way to start to look at your overhead and whether or not it's reasonable for your collections.

Another thing to be looking at when it comes to minimizing overhead is debt, right? I mentioned that before. If you have debt and you are consistently having to pay out a lot of payments from your revenue, then it's going to greatly minimize the profit that you're bringing home. And so highly recommend beginning to pay off debt utilizing the debt snowball method. It can make a dramatic difference in your overhead if you're not constantly having to pay out your business profits as payments. And so what this looks like is the debt snowballing. What you do is you want to list your debts from smallest to largest, right? So regardless of their interest rates or anything like that, you just list your debts smallest to largest and you pay minimum payments on all debts except for the smallest one. And you want to take and pay everything you can towards that smallest debt until it's paid off. Then roll that payment to the next smallest debt until that balance is paid off and so forth. As you do that, that amount that you're paying towards that smallest debt becomes bigger and bigger until all the debts are paid off.

The next way that you want to look at to minimize overhead is to spend money on things that matter the most. Minimizing overhead doesn't mean skimping on things that matter most. For instance, a CA is a crucial part of your practice and should be hired and trained as soon as you open. This is something that we see a lot of times with new doctors who are really in that do everything doc stage. who haven't hired a CA because they wanna keep their overhead low, but they're limiting their growth so much that it's actually hampering them more than it's helping them by not hiring a CA. So getting a CA into the practice so that the practice can continue to grow is a wise investment. You also wanna make sure that you're investing in things like marketing, as this is crucial for growing your practice as well. And consultants.

Consultants can be extremely important investments to help shorten your learning curve. So these are some of the things you have to be thinking about. Like when you're minimizing overhead, don't get rid of the things that are going to help you grow. You want to try to trim the things that are extra when you minimize overhead. So that's number two, minimize overhead.

And if you need help with any of these types of things, minimizing overhead, maximizing your profit, we love talking with doctors about this. We love getting into the numbers and really looking at where you might need some help with this type of areas. And you can do an initial practice growth session with us at UCMPracticeGrowthSystems.com. And we can start looking at you and your specific practice.

Number three is to charge what you're worth. Charge what you're worth. So the average visit, the average office visit from our 2023 survey was $77 per visit was the average visit for an upper cervical practice, right? So $77 per visit.

Reasons to consider charging more than the average, more than $77 per visit are related to your experience, are related to your certifications, are related to whether or not you have advanced training like a diplomate, your area cost of living. All those kinds of things need to be considered when you're looking at your pricing. Because you want to charge what you're worth when it comes to the service that you're delivering, right?

So $77 per visit is the average. And so many doctors who have more experience, who have additional certifications, who are board certified in their technique, for instance, or have a diplomate or have a higher cost of living area should be charging more than $77 per per visit for their upper cervical services. Now, there are reasons to consider charging less than the average, right? If you are in an area where the cost of living is extremely low, then it may make sense to be below $77 per visit. But again, you wanna look at those other areas as well to consider when you're pricing your services.

And so this is, again, an area where we love to talk with doctors about this because sometimes it's a mindset issue where you're not valuing the service that you're providing as well as you should. And so helping you work through some of those mindset issues is something else we love doing with doctors.

And then secondly is charging for what you do. This is something that, again, is very common. We see this a lot with upper cervical practices where doctors are just not charging for everything that they're doing within their practice. So, The only thing that you may not charge for is a consultation. Many doctors offer a free consultation, but everything else within the practice should be charged.

I mean, you should be charging for exams. You should be charging for x-rays and analysis. You should be charging if you're doing CBCT, definitely be charging for CBCT and analysis. Your office visits, again, they should be consistent with the pricing of the industry. So office visits and adjustments, right? So if you're checking someone and they're holding, or if you're checking someone and you're adjusting them, you should be charging for both of those kinds of visits. Progress exams, right? Are you doing progress exams and are you charging for them? That's something else to be looking at. And then progress films, right? All of these things are services that you're providing and you should be charging for them.

And again, when you do this, when you charge for the things that you're doing, it's amazing how much your revenue will go up and ultimately your profit will increase when you just charge for what you're doing. So charging for what you're worth, making sure that your office visits are appropriately priced, that you're charging for everything that you're doing. And that is a huge part of amplifying the profitability of your practice.

Number four, planning for success. So highly recommend utilizing care plans, utilizing appropriate care plans to help patients get the best possible results from their care. So if you're not doing this yet, I'm going to encourage you to do it again. I'm going to continue to encourage you to do this.

A care plan is a crucial part of having a practice that will help your patients get the best possible results. When you have a plan in place for them to help them get from where they are to where they wanna go, then it helps them and it also helps you because you're able to provide them the quality of the care that you desire to do over the time period that they actually need the care.

So again, from our 2023 survey, the average care plan was $1,800. And so that's something to keep in mind. What is your care plan? Is it below $1,800? Is it above $1,800? Is it around $1,800? Reasons why your care plan may be more than average. Again, just like when we looked at the individual visit pricing, your experience, your certifications, whether you have a diplomate, these types of things should go into it because as your experience increases, as your certifications increase, as you have advanced training like a diplomate, then you're providing care at a higher level, which should be charged at a higher level as well. And then also if you're providing additional products or services within that care plan, right? If you have other services within the clinic that are being provided as part of the care of that patient, then it's very likely that it needs to be above that average care plan cost of $1,800.

So that was number four, plan for success. Make sure you're utilizing care plans and that you're pricing them appropriately for the industry and for your individual clinic and the service that you're providing. And so again, this is a great thing we love helping doctors with. You can go over to UCMPracticeGrowthSystems.com. We've got tons of free resources there, but we also just have a great thing for you to do is just to schedule a practice growth strategy session with us. Let's look into some of these things and see where you are and where we might be able to help you improve your profitability.

The fifth way to amplify profitability of your practice is to pursue financial peace. And a lot of this comes down to these four key practices to help create financial peace in your practice.

Number one, make and follow a budget. Number two is do your accounting. Number three is save. And number four is get out of debt. And so the first one here is making and following a budget. A budget gives you a plan for your money, what you make, spend, and save. Every dollar should have a job, right? When you have a budget, you can tell your money, your collections, where to go instead of wondering where it went. So you want to think of a budget like looking through the windshield of your car rather than the rear view mirror. It helps you to gauge how you're doing reaching your destination. When you see the big picture, money coming in, your income, and your expenses going out. You can set goals. You can make adjustments. You can plan for all the costs of running an upper cervical practice.

So this is key. When you're creating a budget, it should be done before the month begins. You should have a clear picture based on your previous results within the practice of how much money should be coming in, how you should be spending that money, and budgeting all of that money that you're being entrusted with for everything that's related to the practice. So in marketing, purchases, saving for certain purchases or whatnot, raises that you wanna be giving, bonuses that you wanna be giving to your team, taxes you need to pay, emergencies, unexpected opportunities. All of these things are crucial when it comes to a budget. It's the power of having a budget in place is amazing.

And number two is doing your accounting. Financial reports tell the story of where your practice is healthy and struggling. Most practice owners don't want to spend their time studying spreadsheets and reports, but what happens if you avoid them? Chaos can take over and your business can fail. So you got to steward what God has gave you to manage. In other words, you have to look at your numbers regularly. And if that sounds really unfun to you, then you don't have to personally track and crunch your numbers. Make one of your first hires, one of those first things you outsource a bookkeeper and accountant to do some of those number things that you hate. But you do need to know your business and the basics of accounting. You need to be able to read a profit and loss statement, a balance sheet, understand it, have some basic understanding of what you're looking at.

The number three way to have financial peace within the practice is to save. Saving gives you margins and gives you margin and choices. A lot of business owners, and this includes upper circle practice owners, believe that they need a line of credit to survive in business. But what you really need is money. You need money in your savings account so you can be your own line of credit. It's called retained earnings. Every business should have retained earnings. And having it is crucial to survive and prosper in practice, right? So need to have more than one account when it comes to for your business. You got to have a checking account where you're paying all of your operational expenses of the business, but you also need to have a retained earnings savings account where consistently putting money into that into that other account to give you margin to handle emergencies, to reduce debt, to make planned purchases, to invest back into the practice.

Retains earnings gives you freedom to jump on unexpected opportunities also. Like, you know, for instance, if there's another practice in the area that is going out of business or a doctor retiring, You want to purchase their practice or purchase their furnishings or purchase a piece of property from them or a piece of equipment. All of these types of things can be done when you are saving money consistently. And so a percentage of money of your collections should always be put into a retained earnings account because having cash gives you choices.

And then lastly, the last part of financial peace for your practice is following or is beginning to get out of debt. We talked about getting out of debt in your personal life, but you also want to, if you have business debt, you want to begin to turn your cash position around. And depending on how much debt you have, you can do this quickly or at least in three to five years. And the way to do it is, You want to start by paying yourself a living wage, right? The minimum your family can live on and still pay your bills without eating know rice and beans for every meal right so if you're in if you're in debt in your practice this is what you need to do this is the plan you need to take is is to pay yourself a living wage pay all of your expenses payroll and taxes put 15 to 20 of your net profit into a retained earnings account as I mentioned and then apply the remaining amount of your net profit after you're paid to your business debt until it's gone. So this could be 80 to 85% of your net profit, right?

So again, let's use an example of a 50% overhead practice. Say you collect $40,000 and $20,000 is paid out to you and to all of your expenses. The remaining 20,000, 15% to 20% of that should be put into a retained earnings account, and the remaining amount should be poured out onto any business debt you have. And as you do that, that debt will become smaller and smaller and smaller and eventually be gone. And when you don't have that debt, then you won't have that payment, which will dramatically improve the profitability of your practice as well.

And so pursuing financial peace is... All of the things we've talked about, but these last four we've talked about even more so, you know, focusing on reducing debt, saving money within a retained earnings account, being consistent with all of that can all help you to have more financial peace in your practice.

And, you know, I just want to mention our mission. We love to help upper cervical doctors. We love to bring hope and healing to to sick and suffering people for the glory of God with our upper cervical clients. And so if you are connected to that mission, if you have a similar mission to bring hope and healing to sick and suffering people, we'd love to talk with you and see if our interests align and we can help you to grow your practice and improve the profitability of your practice so you can make a bigger impact in your community.

So again, schedule a free practice growth strategy session at UCMPracticeGrowthSystems.com and begin the process of growing your practice. It's worth it to get better and better at what you do to maximize the potential of your practice, for your practice to become the best version of itself. We love to help you. And as we always say at UCM, go team upper cervical.

Call Now Button linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram