In Your Best Interest

Doctor, have you recently considered either lowering or raising your fees? Or, are you are planning on joining a PPO or capitation program that requires you to reduce your fees by a certain percentage?

A recent study done by the research department at Eastman Kodak Company should be of interest to you. While their statistics are not from chiropractic, they are true for any business, including chiropractic.

We are all aware of doctors who nonchalantly talk about raising or lowering their fees a few percentage points. But doctor, do you really know what a change in fees actually does to you and your family? Do you really know how much of an increase in patients you must have to make up for a cut in fees? The changes are not linear, but exponential. That means that a slight increase either way has enormous impact!

Let's assume an overhead of 75 percent. If you cut your fees by two percent, you must increase your patient production (sales) by 8.7 percent to have the same profit as before you cut your fees.

Now, continue to assume that your overhead is 75 percent. Let's look at the increase in patient production (sales) you need if you make the following cuts in your fees:

• A 10% cut means that a 67% increase in patient production (sales) is needed.


• A 15% cut means that a 150% increase in patient production (sales) is needed.


• A 20% cut means that a 200% increase in patient production (sales) is needed.

Now, let's reverse this process. Let's see what happens when you increase your fees for professional services:

• A 3% increase means the same profit on 90% (10% less) of your current patient production (sales).


• A 5% increase means the same profit on 83% of your current patient production.


• A 15% increase means the same profit on 62.5% of your current patient production.

There are some chiropractic practices which have only a 50% overhead. Let's see what happens when one of these practices raises it's fees by 20%. This practice could lose nearly ONE-HALF of its patients and still produce the same profit! Naturally, the likelihood of this is extremely small.

Most DCs are irrationally fearful of raising their fees. Why? Because a small vocal minority may voice a complaint. Maybe your practice would be better off without these complainers?

Doctor, who actually is your competition? It is decidedly not another doctor of chiropractic: it's big-screen TVS, vacations, boats, clothing, cars, jewelry and medical services.

What can you do to become or remain a prosperous chiropractic doctor? Educate your patients about the extreme value of the chiropractic adjustment. Explain, explain and explain again what you do and why you do it. This builds value the only place it counts: in the patient's mind. Further, provide service above and beyond the expectations of the patient. Your customer service must outstrip the competition.

Stay informed; attend seminars on billing; and consider a small raise in your fees. Live well and prosper!

Authors' note: This article was adapted from Dental Economics.

Paul Tuthill, DC
Grand Rapids, Michigan

Alan Tuthill, DC
Santee, California