Kats Chiropractic Consultants CHIROpulse

210 Keep Your Costs Low and Your Profits High

• Marisa Mateja

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Welcome to the KC CHIROpulse Podcast.  

This week’s topic:   Keep Your Costs Low and Your Profits High

The KC CHIROpulse Podcast is designed for Chiropractic professionals ready to elevate their practice to new heights, and is hosted by Kats Consultants coaches Dr Michael Perusich and Dr Alex Kallio.  Michael and Alex are both seasoned experts in Chiropractic business development.  This podcast provides invaluable insights and actionable strategies to help you create a flourishing and sustainable Chiropractic business.

In this episode, we discuss:

  • What is overhead and how to identify it
  • Why maintaining good overhead controls is important to success
  • How some expenses “creep” up on you over time
  • Why a good business coach can help you manage overhead effectively
  • …and so much more…

In each episode of KC CHIROpulse, we delve into crucial aspects of building a successful Chiropractic practice, covering topics such as establishing a strong foundation, adopting a patient-centric approach, mastering marketing techniques, achieving financial fitness, fostering effective team building and leadership, integrating technology and innovation, and navigating common challenges in the field.

Whether you're a seasoned chiropractor or just starting your practice, the KC CHIROpulse Podcast offers a wealth of knowledge and personalized practical advice to help you navigate the intricate world of Chiropractic business. Join us on this journey as we explore proven strategies, share success stories, and connect with industry experts to empower you in your pursuit of building a thriving Chiropractic practice.

Don't miss out on the latest insights and expert guidance. Subscribe now and unlock the secrets to taking your Chiropractic practice to the next level. Your success is our priority at Kats Chiropractic Business Advisors.

DISCLAIMER:  The information presented in this broadcast is for educational purposes only and is not intended to offer legal, investment, accounting, or medical advice, and represents the opinions of the speakers.  Seek the consultation of a professional for advice in those areas. And remember…your results using this information may be different than described.

Be sure to SUBSCRIBE to the Kats Consultants CHIROPulse Podcast
When you are ready we can help.


KC CHIROpulse Podcast. Helping Chiropractors keep their pulse on success. Thanks for listening.



Dr. Michael Perusich:

Managing overhead is absolutely necessary for your success. Hi everybody. Welcome to the KC Chiro Pulse podcast, brought to you by Kats Consultants and Chiro Health USA. I'm your slightly hoarse host, Dr. Michael Perusich, and I'm joined by my guest host, Dr. Alex Kallio. Alex, you and I talk about this topic all the time and how important it is to manage your overhead and we often see doctors who get a little upside down with themselves when it comes to the overhead. I think in part just'cause they don't understand it.

Dr. Alex Kallio:

Yeah. It's one of those, there, there's two ways to grow the office and be more profitable. One is certainly get busier and do more the other, lower the overhead, yeah. You can not grow and get more profitable by managing that overhead. So it's an extremely important part of the business. When we look at how do we come about at managing that.

Dr. Michael Perusich:

Very much so let's just so we get the audience on the same page with us, let's define what overhead is and some of overhead is obvious. Your rent, for example, or your mortgage on your practices is part of your overhead, and that's one of those fixed. Expenses. And then we have variable expenses, like for example, your utilities. It's not the same every month. So we call those variable utilities. So the fixed expenses are a little easier to plan for. Yeah, it's the variables sometimes that get away from us, but so everybody should have a list of what all their expenses are. And if you don't think you do, you probably actually do,'cause it's on your profit and loss statement.

Dr. Alex Kallio:

That is maybe a little bit of cart before the horse there too, is I hope everybody is using some sort of accounting software to I hope so. Track a p and l and, have that, that there's some clients can run to that, that haven't been. It's an extremely important piece of staying on top of the overhead component and being able to track that.

Dr. Michael Perusich:

Yeah. And you can't manage your practice by just looking at your checking account and saying, oh, there's money in there this week. We must be in good shape. We've gotta have a little bit more control over it. So we need to hear a word from our sponsors real quick, but I want to come back and I want to dive into this topic of overhead just a little bit deeper and talk about how you really should be managing it. So hang on there, everybody. We'll be right back.

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Dr. Michael Perusich:

Welcome back to the KC ChiroPulse podcast. We are talking about managing overhead, and Dr. Alex, you brought it up. We see a lot of doctors out there who really aren't doing much to manage their overhead and maybe it's because they just don't have a basic understanding of accounting or, I know we're all busy, but this is one of those components that we have to manage.

Dr. Alex Kallio:

Yeah. And part of it, starts with really probably setting a little bit of a budget, especially for those variable expenses. The, I think the big one that gets away from people many times. Clinic supplies, you're ordering Biofreeze pillows or any of these things, or we just, we see something, that catches our eye in an ad and we just all of a sudden go order things. Where did that fit in the budget for the month? What was the cash flow? So sometimes having a little bit of a, an idea of again, what we need to order, what are once kind of thing. Are we setting aside money for those things, or do we have a contingency. Account set aside for those types of purchases there's a little more thought that needs to go into it many times than just, oh, yep, I've got money on the account. Let's get it, thought process.

Dr. Michael Perusich:

So if you don't already have a budget, it's really easy to do. You can probably get your accountant if you have one to help you with it, but it's literally just making a list of all the expenses. And if you don't know how to read a p and l profit and loss statement, or if you don't have a good accounting software set up so you don't have one, at least go through your bank statements and your credit card statements, and you can pretty much find. 99% of your expenses probably, but make a list of'em, make a little spreadsheet and figure out what are we paying out every month. And then from there we gotta make sure, number one, that we've got enough revenue coming in to cover. And unfortunately we see a lot of doctors missing the boat on that just a little bit. And we see their profit per patient visit is very minimal. Sometimes it's negative. They're actually giving money away basically every time a patient comes in the door.

Dr. Alex Kallio:

That ties back to, we have the conversations all the time about proper fee schedule profit per visit. What are we collecting per all of those statistic, I can't talk here, statistical things that kind of tie together that if we don't know what those numbers are and how that all interrelates. It gets really hard to track profit and especially over time, just success of the practice. While we may think I don't need to worry about that, this all kind of interrelates to each other.

Dr. Michael Perusich:

Sure it does. And we have things that creep in on us, like I. I, I'll give you some personal examples. In our practice, every year our trash pickup would go up a little bit and,$20 a month doesn't sound like much until you are two or three years into it. And all of a sudden we're paying several hundred dollars more than we started out paying. Is there another service out there that we could switch to and save some money? Our phone Bill, another great example. We were paying over$700 a month for our phone system and our landline system, and we went to a computer-based VOIP based system and went from 700 a month to$75 a month. Yeah. So we saved a ton of money. But it was one of those things where the phone expense didn't start out at 700. It just crept up over time. And so you've really gotta watch this. So when we talk about budgets, when we talk about expenses and those kind of things, there is a creep to it. And they have a tendency to increase every year. So you've gotta constantly be going back and really analyzing your profit and loss from year to year and seeing where things are changing. And it's not something you just do once a year. You really should do it probably every quarter.

Dr. Alex Kallio:

Yeah, absolutely. And there's a couple other kind of hidden areas that can creep like that. One look in our personal lives too, subscription. What is the office signed up on? How many things are you paying for that you aren't really using that creep up on you? Yeah. Yeah. And credit card processing fees. That's another one that depending if you have not shopped fees or companies that are running that, that can really start to add up quite a bit, even an extra 1% on. 20 to$30,000 adds up quick over the course. Those kinds of things. Or potentially, is there other solutions of. Passing some of that along to patients, but we're applicable or we're able to. Sure. There's just some thought that needs to go into that.

Dr. Michael Perusich:

Yeah, no, that's a great point. The, those credit card fees sneak up on you really fast and they do mount up. Another things that mount up are little things like supplies. Do you use toilet paper and paper towels and kleenex and those kind of things in your practice? Yeah. You probably do. So if we're gonna use a consumable product, why don't we buy in bulk so we can save some money? I. Maybe we need a Costco membership or a Sam's Club membership, or maybe just watch Amazon and, can we sign up for a subscription program for paper products and get on, get them cycling through the practice on a regular basis, number one. But number two, can we si, can we save some money by doing that? And you'd be shocked how much money you can save by really paying attention to those kind of things. I

Dr. Alex Kallio:

said, it's one of those things that you don't realize or necessarily notice the 15 or$20 each, the time that it happens, right? But by the end of the year when it's happened, even five or six time in multiple categories, all of a sudden we're talking, you talk thousands of dollars that you're, you've spent, that you didn't even realize

Dr. Michael Perusich:

real quick. Real quick. Alright. We gotta take another break here and hear another message from our sponsors. But, so when we come back, I want to talk about creating a mind shift in your practice and really thinking about Profit First. So we'll be right back.

Kats Consultants:

Kats Chiropractic consultants, your partner in chiropractic success. We are dedicated with one-on-one guidance to bring you all your practice management needs. Let's supercharge your practice. Give us a call today.

Dr. Michael Perusich:

Everybody. Welcome back to the KC ChiroPulse podcast. We're talking about managing overhead, and Alex, we've talked about some great things. You know the fact that you can't just leave your expenses to chance. You have to manage it. You can't just review your expenses once a year. You've gotta manage it. Probably every quarter you need a good accounting system. You really need to have a good accountant as well, just helping you manage those numbers. But we need to be paying attention.'cause there are things like and you brought this up, Alex, things like subscriptions that just kind yeah. Sneak up on you and you set'em and forget'em and maybe have a subscription to something you're paying$49 a month for, which doesn't sound like a lot of money, but if you're not using it, it's a lot of money. Let's get rid of it.

Dr. Alex Kallio:

It's the piece of equipment that's sitting in the room collecting dust, you know that you're not, not using or generating revenue with. So we gotta look through all that in the other spot I think we, we forget about too sometimes is the personal expenses that we will run through the business. And have we overloaded that to a point that it's a little out of control or just, again, things that, that. Really shouldn't be there or not. And that's where having that accountant comes in, being able to have those conversations and end of the year, not just the strategy of, oh, hey, you, yeah, you've, we need to buy some equipment, or we need to do, that kind of thing. Take some planning. You need to have those conversations earlier than, December 31st.

Dr. Michael Perusich:

And don't get too hung up on thinking about the expense side of your practice. We need to manage it. We need to evaluate it. But if you think about it too much, and I see this happen a lot, then we start falling down this curve of trying to manage expenses and not managing profits. So we always have to have that profit first mentality in the practice because if we don't have profit, it doesn't matter what our expenses are. We're going down in flames anyway. That comes back to making sure that you have a good fee strategy, making sure that you're covering your overhead with your collections. And it's not just your overhead, it's overhead plus some profit in the practice.'cause we want to be able to grow on the profit side. Have we allocated enough in our budget for hidden things like taxes that only come up periodically? Are we really watching the expenses and making sure that, if things are creeping up too much, can we find an alternative way? Like I talked about with the phone system can we find a different methodology that allows us to be more profitable? But yeah, I love this quote, and I think it was Napoleon Hill that said this. What you think about comes about. I. If we are constantly laboring over our expenses, so there's a difference between laboring over it and managing them. So if we're constantly thinking, oh my gosh, my overhead's too high, how am I gonna pay for this? I gotta get our expenses down. If you're constantly thinking about that, you'll never get profits first. You'll only think about expenses. And guess what? The more you think about expenses. The more expenses incur.

Dr. Alex Kallio:

You think slope of the paralysis, by analysis yeah, exactly. If you go down that road too heavy and get stuck there, yes. We lose sight of the ultimate goal. But we wanna make sure we have a Pulsee on it. We know where things are happening and then pay attention to the details. Things we go back to, even things like nutrition products. Have you changed your retail pricing on that? If you're, the cost of all those goods goes up, at least usually annually that you're buying, have you changed and raised your prices right to match those increases? And it just little things like that, again, that can add up over time. I.

Dr. Michael Perusich:

Very quickly. Very quickly. So go through your expenses. What can you live without? What can you replace with a cheaper service? For example talk to your your suppliers. Can we buy in bulk and get things cheaper? Can we look at options with Amazon and Costco and places like that just to get our. Just to,

Dr. Alex Kallio:

Check your practice against things. I've been amazed some of the stuff that I've, have always ordered through certain suppliers and as, as much as maybe some people want to complain about Amazon, you can find a lot of those things sometimes cheaper, through that service or through another supplier, that's out there. Shop those things periodically.

Dr. Michael Perusich:

Talk to your suppliers about. Analgesic. If you offer analgesic in your practice, if you buy 20 cases of it, do you get a huge price break? 20 cases sounds like a lot, but I'm telling you, if you have that much product in your practice, you're gonna move it too. So there's, it's a double-edged sword. So it's only are you saving money, but now you're more profitable with it. Pillows we used to buy pillows. Buy. I think we would buy four cases at a time of pillows. I don't know, there's maybe 10 pillows in a case, and we get a huge discount on it. Can I make more profit when I sell pillows now if I get a discount on my order? Absolutely. Am I motivated to sell more pillows? Absolutely. I've got too many of'em in my office. I gotta push'em. We gotta get'em out the door. So there's really a benefit to stocking up sometimes on things like that, especially if it's a product that you sell or a consumable that you use in the office.

Dr. Alex Kallio:

And an easy way to peek at that. Just look back at your year, you know how many did you sell last year? Were you ordering them five at a time? Once a month. And paying separate shipping, on each one of those right over your expenses. Out where, okay, let's order that even, six months at a time to, to have for that period. You said you're probably end up running out at four months because you are pushing them more, making more profit on that. So it's just, again, think we think outside the box of how we've approached some of this and approach it just a little differently. Yeah. And that's where many times we come in and helping to look at that from a different angle than what you maybe have thought of on your own.

Dr. Michael Perusich:

Yeah. And, having a great coach with with business experience and statistical analysis experience and those kind of things is really important for your practice because it is a lot to manage sometimes, and that's one of the great things that I think we do for our clients is really helping them. I. Manage the numbers. We talk about stats all the time, but it's also helping you manage your profit and loss, helping you manage your overhead, those kind of things. Helping be a sounding board if you think you need to buy a piece of equipment, okay, let's look at the return on investment that you might be able to get. Is it worth it? And so utilizing coaches in that manner where you have a sounding board can really be beneficial and profitable to your practice.

Dr. Alex Kallio:

And we just had this discussion, yesterday with somebody else of, do you know the metrics? Do you know your, all the key points of, whether or not to buy that equipment, to, buy all the extra stock kind of thing. And that is again, where having somebody who's familiar in that realm to help man, help guide you down that road becomes so important.

Dr. Michael Perusich:

Huge. It's huge. All right, Dr. Alex, thanks for being on here today. Great discussion about managing your overhead. Go check. Check us out@Katsconsultants.com. You can see all the great things that we're doing to help clients out there and maybe we can help you too. Give us a call. Alright, everybody, be sure to subscribe and share our podcast. We appreciate you tuning in every week and we'll see you next time.