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It has always been difficult to start a new practice. Think about it. The new doctor has to take himself or herself from a state of professional non‑existence (he or she has never practiced before) to a state of existence (a practice full of patients that stay, pay and refer). That's a big jump. Unfortunately, many new doctors don't successfully make that jump. Statistics tell us that instead of achieving the practice they want, most fall flat on their face and end up with no practice at all. Those who do manage to survive, struggle for years just to pay the essential bills, with nothing left over to show for all of their hard work. This is the infamous "starvation period."
Statistics draw a grim picture for the new DC. At best, only 20% of all new businesses survive more than four years. And, of those that do make it, only about 39% are profitable, which means after four years in business 61% are still struggling just to survive.
Why is it more difficult starting today's practice? There are a number of reasons.
One big factor is the real estate market boom. With real estate values at their highest, landlords are paying a lot more for property today than they have in the past, and guess what? They don't much care because they pass this higher expense on to their lessees ‑‑ the new DCs and other business owners. Rents and leases have essentially doubled in the last two years. It's not uncommon for a new DC to have to pay $4,000‑to‑$6,000 a month for 1,000 square feet of office space. Rent expense alone has caused many new chiropractors to fail and has left others struggling to pay it.
Another contributing cause is the skyrocketing of new construction and commercial build out expenses. Recent extensive hurricane damage in Florida and New Orleans created a tremendous demand for building materials such as drywall, roofing and even cement block. This demand has put a strain on supply, and in accordance with the law of supply and demand, has caused dramatic price increases for these materials. Once again, the landlord simply passes these price increases along to his or her tenants and lessees.
The fact that insurance companies and a number of state legislatures have passed laws prohibiting new DCs from applying to many of the managed care plans, HMOs, PPOs, etc. is also making practice start up difficult today. And, many of the plans simply state that they are not accepting any new doctors. Where does this leave new DCs who need every single patient they can possibly get? It leaves them on the outside looking in as their potential patients choose to go down the street to a doctor that their insurance will pay for.
Even if the new DC gets insurance provider approval, he or she will have to know how to effectively deal with the typical "fee cram‑down" that insurance companies force on doctors. It's very common today to have health care plans that pay doctors less than $18 a visit ‑‑ the amount DCs charged in the early 1970s and when overheads were about four times less than what they are today. He or she could easily have a practice full of patients and still fail.
Today, DCs are up against new laws established and strictly enforced by many state boards. Some guidelines are being used very unfairly. For example, the Mercy Conference guidelines and Best Practices guidelines basically state that anything more than relieving the patient is fraudulent care. The result is that many new DCs end up in front of their state boards being charged with fraud for treating patients beyond the relief phase of care.
It has always been difficult to start a new practice. Think about it. The new doctor has to take himself or herself from a state of professional non‑existence (he or she has never practiced before) to a state of existence (a practice full of patients that stay, pay and refer). That's a big jump. Unfortunately, many new doctors don't successfully make that jump. Statistics tell us that instead of achieving the practice they want, most fall flat on their face and end up with no practice at all. Those who do manage to survive, struggle for years just to pay the essential bills, with nothing left over to show for all of their hard work. This is the infamous "starvation period."
Statistics draw a grim picture for the new DC. At best, only 20% of all new businesses survive more than four years. And, of those that do make it, only about 39% are profitable, which means after four years in business 61% are still struggling just to survive.
Why is it more difficult starting today's practice? There are a number of reasons.
One big factor is the real estate market boom. With real estate values at their highest, landlords are paying a lot more for property today than they have in the past, and guess what? They don't much care because they pass this higher expense on to their lessees ‑‑ the new DCs and other business owners. Rents and leases have essentially doubled in the last two years. It's not uncommon for a new DC to have to pay $4,000‑to‑$6,000 a month for 1,000 square feet of office space. Rent expense alone has caused many new chiropractors to fail and has left others struggling to pay it.
Another contributing cause is the skyrocketing of new construction and commercial build out expenses. Recent extensive hurricane damage in Florida and New Orleans created a tremendous demand for building materials such as drywall, roofing and even cement block. This demand has put a strain on supply, and in accordance with the law of supply and demand, has caused dramatic price increases for these materials. Once again, the landlord simply passes these price increases along to his or her tenants and lessees.
The fact that insurance companies and a number of state legislatures have passed laws prohibiting new DCs from applying to many of the managed care plans, HMOs, PPOs, etc. is also making practice start up difficult today. And, many of the plans simply state that they are not accepting any new doctors. Where does this leave new DCs who need every single patient they can possibly get? It leaves them on the outside looking in as their potential patients choose to go down the street to a doctor that their insurance will pay for.
Even if the new DC gets insurance provider approval, he or she will have to know how to effectively deal with the typical "fee cram‑down" that insurance companies force on doctors. It's very common today to have health care plans that pay doctors less than $18 a visit ‑‑ the amount DCs charged in the early 1970s and when overheads were about four times less than what they are today. He or she could easily have a practice full of patients and still fail.
Today, DCs are up against new laws established and strictly enforced by many state boards. Some guidelines are being used very unfairly. For example, the Mercy Conference guidelines and Best Practices guidelines basically state that anything more than relieving the patient is fraudulent care. The result is that many new DCs end up in front of their state boards being charged with fraud for treating patients beyond the relief phase of care.
