163: Financial Health

163 Transcript - Creating Chiropractic Financial Health 

DISCLAIMER:  The information presented in this broadcast is for educational purposes only and is not intended to offer legal, investment, accounting, or medical advice.  Seek the consultation of a professional for advice in those areas.

 

Dr Michael Perusich: Chiropractors, how's your financial Fitness? 

Hi everybody. Welcome to the KC CHIROpulse Podcast brought to you by ChiroHealth USA and Kats Consultants. 

I'm Dr. Michael Perusich. I'm your host today and we are going to be talking about how to create Financial Fitness for the Chiropractic practice for the Chiropractic entrepreneur and how to do some things to help Master budgeting and your Investments, as a business owner, we certainly want to be out there producing profits and those kind of things but we need to be saving our profits. We need to be spending our money wisely. We need to be thinking ahead not just for rainy days, but at some point you're probably not going to be in practice anymore in other words you may want to retire so we have to think ahead on those kind of things. So I thought today

Dr Michael Perusich: I just share some thoughts with For those of you that don't know prior to Chiropractic. I was actually in the investment banking business in mergers and mergers and Acquisitions as well as direct Investments. And so I learned a lot about how to analyze businesses and how Investments work in those kind of things. And so I like to share that understanding with you guys from time to time, when we talk about Financial Health I think the starting point is to address our current financial status. Where are you with it? You don't sit down and look at your finances. Look at your loans, look at your net worth which is your assets minus your liabilities equals your net worth at least in simplistic terms. So what is your practice value looking like?

Dr Michael Perusich: So these are really key things to assess not only just periodically but honestly, you should be assessing your practice value every single year. You should be assessing your financial picture about every quarter and you should be really watching some metrics in your practice. I know traditionally our profession has tracked statistics like new patient visits services and collections. we like to go much much deeper than that because that whole analysis part of your practice is incredibly important because Here's the funny thing about statistics. The numbers are black and white they never lie to you. So because they never lie, they will tell you really deep interesting things about your practice. They'll point out problems before they become big issues. They'll tell you whether you're doing really really well or not. really really well.

Dr Michael Perusich: And so forth so we really want to dig in and not just skim the Surface by looking at those top traditional stats and we can add PVA into that which

Dr Michael Perusich: Dr. Fox and I did a whole podcast on PBA one time so you probably already know how I feel about that one, but we need to be really assessing profitability. So we need to be watching our expenses versus our collections that's incredibly important. We should know what our cost per patient visit is and how much profit we make per patient visit. We need to be tracking our Dropout percentages to make sure that we're keeping the practice full of patients and we're not allowing them to drop out faster than we're bringing new ones in so there's a real fine balance there. So we need to really think about retention, years ago. We used to think that it was new patients that drove the practice. It's really not today. We really want to be focused much more on retention. you can tell I got a little bit of sunburn over the weekend because I live in Florida and so

Dr Michael Perusich: that's why I look a little toasty today. so we want to make sure to that we're really using our business wisely and that we're spending money. Not just haphazardly, but we know what we're spending. So we're setting a budget every month. We know exactly what what our variable expenses should be. So what's the difference between the two where your rent for example is probably a fixed expense, but your utilities fluctuate every month right unless you're on a flat pay rate. So we want to really understand all the expenses in the practice and are we driving in enough Revenue to make that work and part of

Dr Michael Perusich: really getting down to the nitty gritty of whether or not you're profitable or not is really having a good feast and fee setting strategy. We happen to be just a little bit haphazard when it comes to setting our fees far too often and there's really a science to it more than just The chiropractic Clinic down the streets charging forty nine dollars for new patient exam. So I guess we'll do the same thing. Your expenses may be much higher and you need to charge a higher rate for new patients. For example, so You really want to dig into your fees and make sure that your fees are set correctly and that you have a good fee strategy in place that not only brings profitability into your practice but still looks attractive to your patients and I'm going to tell you something about these you don't have to be cheap. You don't have to be cheap. You can make great money in this profession.

00:05:00

Dr Michael Perusich: by sometimes setting your fees just a little bit higher than everybody else. You don't have to play the race to the bottom feed game. So at least I don't recommend it. we also want to make sure that when we're spending money that we're spending it wisely. So we're not spending money on things that we don't need. We're not buying new tools and toys in the practice that we're not going to use that aren't going to drive Revenue that we're really thinking hard and fast about tactics and strategies if you're gonna buy new therapy equipment for example Make sure that you have the strategies in place to make it work. Are you going to use it? Is it going to turn a profit? What is your return on investment going to look like? When do you have it paid off? How many patients do you need to see So you want to make sure that you're really managing money correctly and I see a lot of doctors being afraid of debt. So they go out they put stuff on credit cards and then pretty soon before they know what the credit card got out of control.

Dr Michael Perusich: Go to your bank and get a credit line of credit is going to be a much lower interest rate any money that you're not using. That line of credit you're not paying for it's not these crazy high interest rates like a credit card. Every business should have a line of credit and use that line of credit maybe to buy a new piece of equipment because you're accountances you need to spend some money. So you put it on your line of credit and pay it back over a couple months when it's only at seven eight nine percent interest. That's way better than your 24 or 27% A credit card, right? So you're going to pay a whole lot less for it. So want to make sure that we really apply good budgeting and good cash flow management.

Dr Michael Perusich: And a lot of doctors ask me about things like advertising expenses one of those variable expenses that should change every month. But yet I see a lot of us getting attracted to these fixed dollar marketing programs where you're spending $2,500 $5,000 a month every month and there's no relation back to Roi and what your collections actually are. You should set your advertising budget. Somewhere between about three cent three to seven percent of your collections of your cash collection. So make sure that you're setting your ad budget correctly. And so

Dr Michael Perusich: and make sure you're spending the dollars correctly and that you're not getting locked into something that has way too big of an impact on your cash flow. So we're talking about Financial Health For Chiropractic entrepreneurs how to budget how to invest in those kind of things. So we're gonna catch you a quick word from our sponsors here. Then we're going to come back and we're gonna dive into this just a little bit further. 

SPONSOR BREAK

Dr Michael Perusich: Hi everybody. Welcome back to the KC CHIROpulse Podcast brought to you by ChiroHealth USA and Kats Consultants. I want to talk a little bit. About personal financial management for chiropractors, this is incredibly important. We need to balance our business and personal expenses, but not commingle them.

Dr Michael Perusich: So work with your accountant. What can the practice pay for? What do you need to be paying for personally? Can you run your student loans for example through the business. Can you run your car through the business? So you want to make sure that you have a very strict budget and separation between your personal and your business finances that's incredibly important. Also, make sure that you're saving we always recommend that you save at least. 15% of your cash flow every month in the corporation. So get it into an interest bearing account whether it's a money market account or something, but let it earn a little bit of money for you. You should be saving 15% of your cash flow every single month. And what's that it's for emergency funds. It's for expansion. It's for whatever you might need it for when you need it.

Dr Michael Perusich: And of course if you have a line of credit, you also have extra funds that you can tap into but we want to make sure we use that line of credit correctly also on a personal basis make sure that you have a good accountant and a good financial advisor. and not somebody that just has a bevy of mutual funds so they can sell you you want somebody that actually helps you plan that creates some investment strategies that put you in a position where your money's actually earning something. So make sure you set up a Roth IRA for example and maximize it every year. if you own the business, you can set up a simple IRA which is kind of like a 401k and you can put about

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Dr Michael Perusich: $14,000 a year into it. Here's the cool thing you and your spouse can if you have your kids working in the business, they can put money away too. So you can really glean some money out of the practice and get it into savings where it's protected and you're saving for retirement. Also again, make sure that you've got some good investment strategies if you're young and fairly new in practice and retirement years 35 40 years away. You may want to really be in a high growth mode. If you're approaching closer to retirement. You may want your Investments to be spending off more dividends and more cash and so forth in the beginning. When it's possible buy a home, it's a great investment. Your home typically goes up in value over time. It's just a great way to save.

Dr Michael Perusich: and when we talk about Investments, there's all kinds of things that are completely suitable for doctors real estate great investment. Opportunities stocks ETFs ETFs are I think one of the greatest things because it's kind of this hybrid between a mutual fun and a straight up stock investment and you get a lot of bang for your buck without the expense load that most mutual funds have bonds can be great for generating income. And make sure again that you use those. Retirement accounts and always make sure that your Investments are Diversified don't let just a bunch of cash just sit there on the sidelines doing nothing make sure that you're thinking long term and that you have your money working for you. Now, there's also some Financial mistakes that we want to make sure that we avoid so there are some common.

Dr Michael Perusich: Financial pitfalls that we see a lot of doctors fall into one is What's the shiny thing? Will you go to a convention and you see a brand new therapeutic device and you think my gosh, I gotta have that. you don't think about do I have any patience that can use this, maybe get attracted to a decompression table, but you forget that you're pediatric practice. So you probably don't have many patients that can utilize the decompression table. So that might not be a good idea to buy right so That's a financial Pitfall that you want to make sure that you avoid now. We all get hot wasting money on something somewhere along the way but I always use this rule of thumb. if you're gonna make a decision about buying something and it's over a certain amount if you're new in practice, maybe if it's more than $500 if you've been in practice while maybe it's more than a thousand dollars, but

Dr Michael Perusich: Table the decision for 24 or 48 hours or even a week if there's no burn no rush to make the decision. Don't make it just yet think it through a little bit let your subconscious work on it. Also make sure that you get Good Financial strategist a good family planning attorney one that can help you set up a will and those kind of things very very important, especially if you're having a family And those kind of things make sure you have a good accountant meet with your accountant a couple of times a year not just a tax time to turn over all your tax documents. Make sure that you're meeting with them and really understanding how to read your profit loss statement how to put your balance sheet together how to value your practice. And in fact, cats Consultants. We help doctors value their practices. We think you should value it every year.

Dr Michael Perusich: and hopefully you see it going up and that's one of those statistical measures that we've got you if you've got time, you're not selling your practice in the next six months. You may have time to kind of turn that around and make your continue to grow on your balance sheet the value of your practice grow. So make sure you're getting good accountant Investment advisor those kind of people can be invaluable to you.

Dr Michael Perusich: to make sure that you have good software in your practice. And what do I mean by that? good software that's tracking your AR so that you don't have money falling through the cracks. Make sure you have good procedures in place that you're reviewing eobs if you're in insurance and not writing off stuff that shouldn't be written off and not giving away services that you don't need to be giving away. So really having Good strategies in place for those kind of things can really help you'd be shocked at how much extra money just by paying attention. You can bring into your practice into your bottom line just by doing some good strategies with making sure that you're not giving away Services when you shouldn't be and this is such an important topic that I think it's really

00:15:00

Dr Michael Perusich: You should be second nature that you need to learn. So if this is not an area that you're very familiar with learn, there's great books videos learn how investing Works doesn't mean you have to go out and be an investor or a day trader. That's not what I'm talking about. But understand because learning is key to success. So make sure you do those kind of things and if your cat's client, that we already Put on a lot of classes and seminars and things for you guys about investing and about the importance of those things.

Dr Michael Perusich: So good financial management is again Paramount to your success. So make sure that you're budgeting make sure that you're make sure that you've got your fee strategy set correctly analyze your insurance contracts every year. Are you getting reimbursed? Anything is any more being on those insurance plans? Maybe it's time to switch patients over to cash learn good retention strategies. Learn how to analyze your practice from a statistical Point. Not just the simple stats that we typically do in the profession, but really a deep dive on your statistics and make sure you're keeping up with that. So also be sure to check us out at cat's Consultants calm. We've got all kinds of free downloads subscribe to the podcast make sure you're tuning in every week Dr. Fox and I like to completely dismantle and disrupt how we're managing our Chiropractic practices and the profession we

Dr Michael Perusich: Sharing our ideas with you guys and we've had huge feedback since we started this podcast and it's growing like crazy. So be sure to share it with everybody, in the profession as well. Also, be sure to check out our sponsors ChiroHealth USA. They're doing amazing things for practices as well as Kats Consultants. That's our consulting company if you haven't done so yet schedule a breakthrough call with us. We love doing these we love talking to you guys about your practices. It's free. There's no catch. we don't strong arm anybody but we want to hear about your practice how it's going and how we might be able to help you make it even better. So, all right People keep helping your patience and get a good management company behind you to consult with you and Coach you on making your practice even better. Alright everybody Dr. Michael perusich - we’ll see you next time.

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