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Information Articles: Practice Management

Calculating Profitability for Practice Success

Wednesday, November 15, 2017   (0 Comments)
Posted by: Ray Foxworth, DC, FICC, MCS-P
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Calculating Profitability for Practice Success


Setting a reasonable fee schedule is key to the financial success of your practice. It should be simple to understand by patients and compliant with provider agreements and state and federal regulations. 


Of course, physicians want their offices to be profitable, but antitrust law prohibits competing doctors from agreeing on fixed prices, and state laws prohibit overcharging. However, for doctors attempting in good faith to determine what would amount to a reasonable fee for a particular service, there is very little information on how to find comparative pricing information by region or zip code. Many doctors are left to figure it out on their own. The result is that many chiropractors are leaving money on the table and missing out on revenue that can help grow their businesses.


Generally, you should review your fee schedule on an annual basis, because everything around your practice is changing: your costs, your salary, what other providers are charging, what insurance is allowing, as well as many other economic considerations.  There are websites, such as, that allow you to see the see the fees for specific codes representing the 50th, 60th, 70th, 80th, 90th, and maximum percentiles for your zip code area (See Antitrust Editor’s Note below). We encourage you to review your fee schedule and identify opportunities to maximize your reimbursements.


As you are reviewing your fees, it helps also to calculate your average cost to provide an office visit. To do this:

  • List monthly fixed expenses (rent, business loan payments, equipment leases, etc.) and a 12-month average of variable and non-monthly expenses (utilities, payroll, taxes, etc.)
  • Determine your average number of offices visits per month for the past 12 months.
  • Determine your average ACTUAL reimbursement per visit (Total income divided by total visits for the year)
  • Divide the average overhead expense by the average number of office visits. This is your Average Cost per Visit.
  • Divide the Average Cost per Visit by the Average Income per Visit to determine your Average Overhead Percentage.
  • Click here for access to a simple spreadsheet that will allow you to identify your cost of providing an adjustment and a ballpark idea of your percentage of overhead. This chart is interactive to allow you to modify the numbers and determine “what if” scenarios for your practice.

Are you signing contracts for LESS than what it costs to deliver care? You must read your provider agreements and understand every stipulation to which you are agreeing with your signature. Far too often, doctors find out well after the fact that a procedure regularly performed in the practice isn't covered or is bundled with another service under the terms of the contract. Additionally, providers may choose to add a new service or product, such as spinal pelvic stabilizers, and find that their provider agreement allows for reimbursement in the fee schedule at a level lower than the cost of the product or service.


If it has been a few years and it looks like a major overhaul is needed to bring your fee schedule into the 21st century, consider utilizing the help of a consultant. Consultants can evaluate your existing fees, contracted rates, and published fee schedules for your area. They can also make recommendations on when and how to implement fee changes in your office. If one of your primary reasons for not evaluating or increasing your fees over the years is a desire to keep care affordable for your cash and underinsured patients, then consider using a DMPO. A Discount Medical Plan Organization, when available, is a great way to continue offering affordable care to your patients while still maximizing reimbursement. To learn more about the benefits of a DMPO in your office, click here.



Editor's Note: Dr. Ray Foxworth is a certified Medical Compliance Spe­cialist and President of ChiroHealthUSA. A practicing Chiropractor, he remains “in the trenches” facing challenges with billing, coding, documentation and compliance. He has served as president of the Mis­sissippi Chiropractic Association, former Staff Chiro­practor at the G.V. Sonny Montgomery VA Medical Center and is a Fellow of the International College of Chiropractic. You can contact Dr. Foxworth at 1-888-719-9990, or visit the ChiroHealthUSA website at Join us for a free webinar that will give you all the details about how a DMPO can help you practice with more peace of mind. Go to to register today.


Antitrust Editor’s Note: The Federal Trade Commission issued guidance that permits providers to participate in (and, presumably, use) surveys of health care prices if certain conditions are met, including: (1) the survey is managed by a third-party (a purchaser, government agency, health care consultant, academic institution, or trade association);  2) the information provided by survey participants is based on data more than 3 months old; and 3) there are at least five providers reporting data upon which each disseminated statistic is based and any information disseminated is sufficiently aggregated to make it impossible to identify the prices charged by any particular provider. 



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