Are Your Fees Too Low?

Many people ask Dr. Bodzin what he thinks they should charge for an adjustment. To do this, there is a simple formula to follow. Once this is done, the Cash Plan Calculator® System takes the desired amount and creates an easy to read plan that your patients can’t say “no” to.

First, you need to figure out how much it costs you to deliver an adjustment. To do so,  follow this formula for a given period of time. Total Overhead / Total work hours / (# of Adj per hour) = Cost to deliver an adjustment. For example, in a year: $150,000 per year of overhead / 1040 hrs per year of work / 12 visits per hour = $12.00 per visit (This is your cost to deliver each adjustment).

This cost to deliver is your overhead on a per visit basis. Now it’s easy to determine your percent of overhead. If you only collect an average of $20 per visit, your overhead is 60% (too high).

Instead of calculating your percent overhead as a result of how you set up your fees, set your fees as a result of a predetermined level of overhead. In other words, as Stephen Covey author of the 7 Habits of Highly Effective People says, ‘start with the end in mind’. The goal overhead should be 30-40%.

If your overhead is to be 40% (or less), then take (Cost to deliver an adjustment) / 40% = (target collected per visit). For example, $12 / 40% = $30. In this example, a target of $30 per visit has to be the minimum average collected per visit (regardless of the type of plan). Any less and you’re off target.

At least once a year (he recommends every three months), recalculate your cost to deliver an adjustment and repeat this exercise. You may discover that your cost has gone up or down. If it’s gone down, then you have a higher profit :-). If its gone up, then you need to readjust your fees.

Next you have to determine what type of plans to offer. We suggest using a set number of visits over a set period of time. You total the patient cost of care (on a per visit amount) and discount it by set percentage. You then offer several options for paying. Either (1) monthly, (2) a third down with the balance paid monthly or (3) prepay. We suggest offering an added discount, like 5-10% additional savings for the second and third options. This works best. Make sure the average collected per visit is above the target you calculated.

This is easily done with the Cash Plan Calculator® System.  All you need to do is input the numbers and it will create the cash plan for you to use with your patients. Another tool that helps make this process extremely easy is the Target Collection Calculator™.



For more information on just exactly how this works, give us a call!

877-343-8950

Get to Know a Cash Practice® Staff Member

From time to time we will be doing a spotlight on a member of our team so everyone can maybe put a face to the name and just get to know the team! Since is the first one I thought I would just start with myself.

Amber Shepherd

I am 21 years old and have been working for Dr. Bodzin since September 2007. I began just as a Chiropractic Assistant working in Dr. Bodzin’s chiropractic office and then also began working here at Cash Practice® in August of 2009. My duties here at Cash Practice® Inc. are writing the blogs, press releases and updating our social websites. I am also in charge of shipping out the swipers and making sure every office receives theirs. When there is an overflow, I also assist in Member Support. I am currently majoring in Public Relations at San Diego State University. My experience at the Chiropractic Wellness Center always comes in handy when helping other CA’s. I love taking what I have learned and spreading it on to other people to help make their offfice better.

Outside of work I love to go to the river and wake board and soak up the sun, go to the desert and ride quads, watch football and go out with friends. I also love to workout and stay active! So say “hi” to me on Facebook or just stay tuned every week and read the blogs!

How to keep Patients from dropping out of care when the Insurance stops!

So how do you keep a client from quitting when their insurance/3rd party pay stops? There are two key points that need to be addressed when dealing with this topic. One is the education a client receives and the other is the financial plan.

The financial plan set up is crucial in preventing clients from quitting when the 3rd party reimbursment ends. Basically, when a client begins, you should create a payment plan that does not change their payment when their reimbursement stops.

Here’s how it’s done.

Step 1: Estimate the amount of service needed for the client’s ENTIRE recommendation.

Step 2: Determine how much service will be supplemented by the 3rd party.

Step 3: Estimate how much the patient is responsible for the care supplemented by insurance.

Step 4: Total the entire plan by incorporating both the insured and non-insured care into one care plan.

By doing this, the client’s out-of-pocket expense does not change when the insurance stops. The entire cost of the plan is spread out over the whole plan. You should then give the patient three options for paying for the plan. We recommend either monthly, a down-payment with the balance paid monthly, or prepaid.

Pay attention to this tip. It will increase your collections 20-30%. One of the biggest mistakes a lot of doctors make is they create a cash plan and then subtract what they estimate the insurance company will pay. They figure, the cash plan is $2900 and the insurance will pay $1,000, so the patient pays $1,900. This is absolutely wrong!

I always try to keep things simple. Don’t complicate things by trying to figure out what the insurance will pay. You really don’t know. Just concern yourself with what the PATIENT’s out-of-pocket PORTION of the insured visits is. In other words, how much is the client responsible for on the visits covered by insurance?

Another pitfall is doctors seem to get confused by how to handle deductibles? They ask, how do I figure deductibles? The answer is, you don’t!  If you determine the insurance will cover 20 visits, does it matter if they cover the first 20 visits or the 20 visits after the deductible is met? In essence, it does not matter if the cash portion of the care plan comes before, after or before & after the insured portion. Of course, if the deductible is so high that you will never get paid by insurance, then don’t incorporate the insurance at all. Go 100% cash and let the patient submit bills for their deductible.

If all this seems confusing, don’t despair. the Cash Practice® Systems have a great tool that automatically figures this all out for you. By using this tool you will easiliy increase your collections 30-50% for the same work. No gimmicks either.

Super CA Bonuses

Are your CA’s as excited as you are when you get new clients? Do they welcome the added work the comes with each new client? Dr. Bodzin has come up with an idea that is a great way to motivate the staff. The formula he always follows is to 1) Have a great work environment 2) Have your CA’s educated about Chiropractic-there are plenty of seminars out there to do this if you just don’t have the time! and 3) Bonuses!!

We have a bonus system based on collections. This allows your CA to have more motivation to help grow your practice. Here is how it works:

1.  Determine your monthly average collections
2. Subtract two to three thousand dollars from that and make that your staff’s base
3. Determine how much of an hourly wage increment you wish to raise your staff pay for every $1000 over the base you collect.
4. Decide if you want to have a second level increment

So here is an example, if your monthly average is $25,000, set your CA’s base pay to $23,000. Set hourly wage increment to $.20 per hour. If your collect $32,000, your CA will be $9,000 over the base so their bonus will be 9 x $.20 per hour =1.80 per hour. So next month your CA will earn the standard hourly wage PLUS an additional $1.80 per hour. This means that each month, the bonus can either go up or down. But the key for this to work is the staff have to actually get a bonus most of the time. That’s why the base is set slightly below the average. It also must be communicated to the staff. An example of this can be with just a simple report in the paycheck explaining the bonus breakdown. The last reequirement is the CA must be shown how to make sure the collections are up. They must have the tools necessary to succeed.

To make this easier, we have the Cash Practice® Staff Bonus System™

Here is a screenshot of where you would enter in each individual CA’s hourly pay rate, their base amount, and their increment amount.

How Dr. Bodzin calculates this is he uses the calculator once per month. We get paid twice per month (1st-15 and then 16-end of the month) on the 5th and 20th and the report with the breakdown of how much we will be earning that month is included in the paycheck we receive on the 5th. He will run the total collections for the month of January that will give him the bonus for the month of February and we will receive our report on February 5th. This is an example of how it would look on a paycheck:

43.45 hrs @ $12.00 per hour regular income
43.45 hrs @ $2.20 per hour other income

As a CA in his chiropractic office, I love this system because it motivates us to make those recalls or upsell that massage package. Your CA’s will love it also!