|
How Chiropractors Screw Up Their Lives
What are the stupidest things chiropractors do? Find out from me, because I did most of them and hopefully it won’t happen to you!
Having been a practicing chiropractor for the past 30 years and a practice consultant for new chiropractic start-ups and existing practices, I have probably made, or have seen made by others, just about every mistake that you can make in practice. Most chiropractors can’t take a hint when it is applied with a sledge hammer. Knowing this and by vigorously applying the sledge hammer/ hint principle, it is my goal to keep new doctors from making the same mistakes that I and most other chiropractors have made in there professional lives.
In today’s changing health care and financial environment, you don’t get many second chances. You don’t need to reinvent the wheel to benefit from it, and the same principle applies for getting into practice. I have seen the following list of mistakes repeated on a daily basis by practitioners 20 years and more in practice. These same mistakes have almost become a rite of passage for new graduates:
1. Not taking care of your credit.
Anyone who loans money has one basic question: “Will this person pay me back?” Since most loan officers are not psychics (or very creative when it comes to financing), nor do they use a baseball bat to aid in the collection of late payments, they must rely on certain parameters to judge whether you are a good credit risk or not. One of the best gauges of your future is the past. How they determine this is by pulling up a little marvel of the electronic age called a credit report. There are three main credit reporting agencies, TRW, Equifax, and Transunion. Your whole credit history can be found in a few minutes, and as the saying goes, “You can run, but you can’t hide.”
Things that will reduce your chances of getting a loan are bankruptcies, I.R.S. reports of any kind, defaults, discharges, judgments and late payments. Consider-ing not paying your student loans or letting your car go back to the bank? Well, if you ever want to get a business loan, you might consider less sleep and working a second job to keep current. Do whatever it takes to protect your credit rating. It takes seven years to get an entry off your credit report. Before you consider taking out a loan, get a copy of your credit report to check it for accuracy. You should do so every year. Remember computers are marvelous tools, but input is done by primates by the name of homo sapiens. If an inaccuracy is found, you must do everything in your power to get it out.
By law, you are entitled to put an explanation into your credit report on any entry and to have proven mistakes removed from it. You may have to get a lawyer to help, but it is well worth the cost. In dealing with the IRS and inaccuracies, they will usually not admit a mistake was made, but will instead put, “Resolved,” in your report. If the IRS was wrong, insist they take it out completely and expect the fight of your life. You may have to find someone who is politically connected with your Congressman or Senator and enlist their help, because the mention of the IRS in a credit report is a major red flag to a lending institution.
If you have a common name, such as John Smith, you must keep a very close watch on your report. Many times data entered will be from another John Smith, and it can take quite a bit of work to get a problem resolved.
2. Associateships.
The first three letters of this word are not there by accident. Don’t take Aunt Emma’s word that Dr. Feelgood would be a wonderful man to work for. Before you work for someone, check them out thoroughly. That means calling the Board of Examiners and finding out what complaints and actions have been filed against the doctor. It never hurts to call the local district attorney or the insurance commissioner. Talk to other doctors in the area about this doctor’s reputation (be able to discern from legitimate concerns versus sour grapes).
Get the phone number of the last associate and speak to them privately. Beware of any doctor who has had six or seven associates in a short period of time. If the doctor gives excuses, such as, “They were all losers,” what makes you think you will be treated any differently? Be wary of doctors who recruit heavily out of state. Under no circumstances go to work for someone without a signed contract that details wages, bonuses, hours, severance, competition, etc. Have a lawyer examine it thoroughly.
If a doctor insists you sign a contract right away or pushes you into starting without one run, don’t walk away. Working for someone can be a great learning experience, but you must thoroughly research the situation.
3. Partnerships and buying into a practice.
If you think marrying the wrong person is rough, get into a bad partnership arrangement. This can be a worse mistake than a bad associateship. Just because you like someone in school doesn’t mean they would make a good partner. What if your new partner has some little hidden secret, like pedophilia? I know for a fact that this has happened, and even though you may be as pure as the driven snow, there is a term called, “guilt by association.” Buying into a practice to me is like putting a bull’s eye on your forehead. If the practice is so good, why would a doctor sell half of it? You have no guarantee of success and it is almost impossible to get financing for such a venture.
Do not go into any partnership in which you do not own controlling stock and have a lawyer draw up an agreement that works for you. You must address issues such as buy-outs, at what price, who makes decisions, along with a multitude of other issues. On the whole, I do not recommend partnerships.
4. Going to your home town.
Unless you are from a large urban area, going to a home town can cause some very interesting challenges. Do not count on family and friends to help build your practice. I much prefer treating and charging total strangers. What if your care does not help, or you misdiagnose a family member with a cancer? Plus, in some people’s eyes you will always be a ten-year-old-brat and not a “real doctor.” My suggestion would be to go a few towns away from your home area and don’t count on family and friends to build your practice. Those who drive to come to you will be much better patients than those looking for a deal or freebie.
5. Banks: No, No, No!
Banks as a whole like to loan money to those who really don’t need it. Silly, you say? Go into a bank, tell them you are a new graduate, have no credit, $80,000 in student loans, no real clinical or business experience, no down payment, and you’d like to borrow $100,000. Unless you have a large trust account or someone willing to co-sign the whole amount, forget it. One bank told me that they’d be happy to loan me one-hundred thousand dollars, if I had 3-to-1 collateral. Even trying to go through the Small Business Administration with your local bank is difficult because you still have to convince the loan officer you are credit worthy.
There are some very innovative new companies we work with that are seeking to write chiropractic loans, but if you go to three to four banks first and they each pull a credit report on you, it will drastically diminish your possibilities of obtaining financing. The reason is that every time someone pulls a credit report on you, an inquiry is put in your credit report. If you have three or four inquiries on your report, it tells the lending company that you have been turned down several times already, reducing your chances of getting any loan, for any amount.
6. Under capitalization.
My company receives calls daily from doctors wanting to borrow ten to twenty-five thousand dollars, and we can’t help them. The reason is the paperwork required is the same to loan twenty-five thousand or two-hundred-fifty thousand. The companies I work with would prefer to write one big loan versus ten small loans. If a doctor has a good credit report (that means being current on payments, student loans, no I.R.S. liens, bankruptcies or discharges and very few late payments), they can purchase a five-hundred thousand dollar, profitable practice with more ease than borrowing money for a start up. When someone asks me to arrange a twenty-five thousand dollar loan to start a practice from scratch, I do not believe this person has done enough planning. You cannot set up, buy equipment, advertise and maintain an office for any length of time on this amount of money. You need enough capital to set up your office and to stay open at least six months, without making one dime. You won’t believe how quickly twenty-five thousand dollars will be gone and most lending institutions will not loan you more money after the first loan is gone, either. That could mean bankruptcy. The companies I work with prefer to lend money to purchase an established practice and will loan money for operating capital, accounts receivables and real estate at very competitive rates. An under-planned, under-capitalized practice is a fast track to failure. Once that happens, you have financial leprosy. No one will touch you. It costs less in the long term to buy a successful practice, thus eliminating a competitor and making money the first month in practice. I highly recommend that over starting your own practice.
7. Up-front fees.
Here is a time-honored way to lose money. There are many companies out there who claim they can get you the money you need, if you will pay their fee in advance of between $2,500 - $7,500. Now, think hard. What is wrong with this scenario? (Do I really need to get out my sledge hammer?) Where is the motivation to follow through if you have already paid them? Don’t do it!
As a new graduate or doctor looking for their first clinic, you are going to pay a fee to borrow money for several reasons. The first reason is that it can take years to set up a good lending program that really works. Secondly, by using individuals who have contacts with lending institutions, you have someone who will work for you to see that your financial procurement package is complete. They have seen enough loan proposals to help you put together a loan proposal that works. Once a lender rejects a loan, it is almost impossible to get financing with another proposal. Thirdly, most of these individuals have a good rapport with the loan officers and can get input from the loan officer that could make the difference in getting a loan or not. Lastly, you are a risk and if someone can get you what is essentially risk-capital, they have earned their fee. Some small up front fees, such as $75 for a credit report is acceptable, but the big fees are not. If you still decide to pay significant up-front fees, demand that it go into a trust or escrow account not controlled by the person or agency soliciting the fee. A better way is to pay the fee upon a successful closing.
8. Long-term leases.
Signing a long-term lease just does not make sense. There are too many variables that can make a location a lot less attractive. Someone once bragged to me that they “locked” the landlord in a 27-year, unbreakable lease. After nine years they were shut down by the I.R.S. Can you spell “bankruptcy?” What may be a good location can change over a period of time. Having a two-year lease with guaranteed options to renew at a set price is a much better way to handle this.
9. Over spending on an office set-up.
Too many new doctors have gone out and bought an office full of brand new equipment to put into an oversized office, only to lose it all when their practice does not go as well as expected. Many have lease payments that they cannot pay at high interest rates. There is nothing wrong with good, used equipment in a smaller office. It is much easier to upgrade, over time, as your practice grows (remember #8). Find one of the older docs out there and ask how they got started and you are likely to hear about a two-room office with flat benches. A smaller, well decorated office with good, used equipment that you can afford is much less stressful than a huge office filled with new equipment that eats up all your profit. Remember, patients are coming to you for help and can rarely tell (or care) the difference between a new adjusting table or a newly recovered one that is three years old. This also shows fiscal responsibility and may give you an edge in a loan application.
Many times you can purchase equipment that is about a year old and hardly used for about 20 - 30 cents on the dollar from doctors who failed to plan properly.
10. Location, location, location!
Choosing a location is probably one of the most important factors in a successful practice. Research an area thoroughly and don’t let emotion control your decision. Check things such as state laws, economic growth, demographics, etc. Sit down with someone who is knowledgable in business and ask them to honestly assess your potential choices. Would things such as your lifestyle or even your race collide with an area you are considering? This is not an easy subject to write about or to consider as a doctor setting up a practice, but starting and running a practice is difficult enough without having to fight prejudices and bigotry.
Being from Michigan with Midwestern parents and having relocated to the deep South eight years ago, I am still amazed at the things I still do not know about southern culture. For me to relocate to an area such as New Jersey or New York City would be a major life challenge, not impossible, but very difficult. Consider the culture of the area and ask yourself if you want to put down roots there. Can you adapt, thrive and be happy there and is it worth the effort? This country is full of distinct cultures, despite what political correctness may want you to believe. Please do not misinterpret what I am trying to say here, but consider it closely.
Okay, I have more than ten reasons, but did you really think there are only ten ways for a chiropractor to screw up their life?
11. Lack of business sense.
Hopefully, colleges are now teaching students a little more about business, but I really doubt it. Go to a bookstore, find a basic book on running and maintaining a business and expand your knowledge beyond the subluxation concept. My personal banker told me the only reason he helped me get a loan after cold calling him was that I knew the business end of my profession as well as the technical end. The loan package that I submitted had a good business plan, reasonable projections, with good explanations for what I wanted to do. The loan was approved with zero down payment. He told me he will approve a loan for someone with a good business sense and no equity over someone with no business sense and better equity. Take the time to learn about businesses and how to run one. Read my newsletter every week.
12. Buying a small, failing practice.
Doctors often call me and tell me they want to buy a tiny little practice for next to nothing and “build it up,” instead of spending more for a successful practice. There are usually good reasons why most practices fail or succeed and you must find out that reason before you purchase a small practice. What if that clinic has a reputation of over-charging or some other very negative problem associated with it? People remember that the clinic over on Main Street did this or that to someone who their aunt used to know, and a bad reputation can follow you for a long time. I can show you how it is more cost effective over time to buy a bigger, more profitable practice.
13. Poor planning.
I heard Dr. Jim Parker say at one of his seminars, “Those who fail to plan, plan to fail.” That saying may be old, but there is great wisdom in it. A successful practice requires good planning, but it must be flexible enough to adapt to changing situations. Set realistic and obtainable goals, along with unrealistic, “impossible” goals. That sounds like a contradiction of terms, but the mind finds a way to achieve that which it believes and desires. Learn to discipline yourself, but take time to dream big dreams, as well. Conversely, if you don’t believe in what you are doing, you will find a way to fail.
Find someone successful and show them your plans, ask their advice, and listen. Most people are delighted to have a willing ear to tell you how they did it and to dispense sagely advice. Ask for honest opinions and don’t be upset if they tell you what you need to hear instead of what you want to hear.
Hopefully, this will give you a small insight into some of the pitfalls that are out there waiting for you. Do not think that this is an all-inclusive list, for people never cease to amaze me in finding ways to get themselves in trouble. There may be a sequel to this list next week, but if you take the time to research your decisions and ask knowledgeable people for help, life will be a lot more fun and productive.
|
