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Cash vs. leasing and end-of-year medical equipment purchases

Tuesday, February 18, 2020

Chiropractic Economics’ Point-Counterpoint is where doctors of chiropractic and health care industry professionals debate the industry’s hottest topics

POINT

Leasing allows for replacement, updating

In the medical equipment market, the typical lease term is between 3-5 years. At the end of the initial term, you have the option to purchase, renew, extend, or return the equipment. As a technologically-driven field, leasing medical equipment often proves to be one of the most financially efficient ways to ensure your practice has up-to-date equipment without tying up significant capital.

The capital you conserve can then be allocated to other areas of your practice. Many practice owners utilize a lease to efficiently manage their cash flow.

Compared to traditional financing or a one-time purchase, a lease maximizes the cash flow produced by the asset during the initial term of the lease. Equipment leasing allows for items which may be nearing the end of their operational life to be readily replaced as the normal course of business. A potential downside to leasing medical equipment is that, over a prolonged period, the continued lease payments may exceed the cost of a direct purchase. To mitigate this, make sure to exercise the end-of-term option that best fits your practice’s requirements.

Equipment financing refers to the practice of taking out a loan to pay for equipment over time. By choosing to finance medical equipment purchases, you will eventually own the asset outright. This works well for practice owners with strong credit and for mature technologies, or for assets with a long life expectancy.

Another aspect of financing is the additional interest cost. Debt source and your credit will determine the interest rate, which should be factored into the total cost of ownership.

MARK SANNA, DC, ACRB Level II, FICC, is a member of the Chiropractic Summit and a board member of the Foundation for Chiropractic Progress. He is the president and CEO of Breakthrough Coaching and can be reached at mybreakthrough.com or 800-723-8423.

COUNTERPOINT

Buy with cash, have a savings fund

End-of-year equipment purchase? This is a tough one! I am never a fan of making moves only for tax implications. If you were not going to buy the piece of equipment anytime soon, I don’t recommend buying it just because the year is ending.

However, if you are thinking about buying the new laser, or shock-wave machine, chiropractic table, etc., and are thinking of doing it soon, now is maybe the right time. I am certainly no accountant and I do not play one on TV. But based on the type of corporation you file as, excess profit at the end of the year may be taxed. We should be planning ahead during the year to avoid this, but if it happens, it may be a good time to make some medical equipment purchases. Make sure to consult with your accountant before making moves.

Buying vs. leasing is a tough question and depends on your situation. I am only 40, but kinda old school with this. I have never leased a piece of chiropractic equipment for my office — I like paying for things with cash; I don’t like having a lot of debt or payments and enjoy being debt-free.

That said, Mark Sanna brings up some very good points about cash flow and equipment being outdated. Truly, it depends on your position in practice, years in practice, cash flow and purchase price. But I would rather see a doctor save up money beforehand and pay cash for equipment purchases. Having low debt payments and being in a good position is critical. This is especially important in this day and age with high student loan payments.

If I can, I like to buy with cash and have a separate savings fund for cash medical equipment purchases. I am not a big fan of making moves just to avoid or change tax situations. Although depending on several circumstances, it may be the best time to purchase equipment at the end of the year.

JAMES R. FEDICH, DC, owns a large multidisciplinary practice in Northern New Jersey. He is also the author of “Secrets of A Million Dollar Practice” and host of the popular chiropractic podcast, Dr. J’s Path to Success. To find out more or to contact Dr. J, visit drjamesfedich.com.


Diversification marketing and base hits over home runs

Tuesday, February 18, 2020
Dr James Fedich

When it comes to diversification marketing, doing all the ‘little things’ adds up to success

When chiropractors are talking in the hallways at a seminar, or over a beer or glass of wine, they often talk about the big home-run idea, the big marketing idea that will change everything.

Maybe it’s Facebook leads, some trick in marketing, SEO, Google Ads — whatever it is, they are always looking for the next home run. It would be nice if we could have the big home-run marketing thing, but in reality, it just isn’t there.

As Dan Kennedy recently said, “Run from anybody telling you that just one thing, one easy button, one magic formula will work magic in your business or your life. Run!”

Avoid swinging for the fences

It’s wishful thinking to think one big marketing event or medium such as Facebook will get you 80 new patients a month. The truth is, successful practices don’t have one home-run marketing idea or plan; they have lots of base hits through diversification marketing.

The saying has been around for a long time, and it’s true: “There isn’t one way to get you 100 new patients a month, but there are 100 ways to get you one new patient a month.” This is hard work — setting up a marketing calendar, implementing diversification marketing every month, running promotions on Facebook, Google, direct mail, newsletters, etc. Having all these poles in the water is how you get to the new patient numbers that chiropractors really need.

See, they are swinging for the fences all the time, when all we really need to do is keep getting base hits. Hit them every month, in multiple categories, and that is how you build a multimillion-dollar practice. It would be very easy to tell someone, “Hey, run Facebook lead ads that will bring you 40 new patients a month.” That is an easy sell, but the truth is, it’s not the truth. Maybe for a month, or a few months, but consistently? No way. Even if it was true, do you want Facebook’s ever-changing whims to have control of your practice? Google just banned stem cell advertising — what if Facebook decides to ban chiropractic ads?

Practice diversification marketing and don’t depend on one source

So, not only is it untrue that chiropractors can get one big source of new clients, it’s dangerous. It happens in chiropractic and every other industry — especially now with the internet and increased regulations and anti-trust concerns. One day Facebook lead ads are here, the next day they are gone!

The real secret to consistent growth, and new patient generation, is having base hits, having a diversification marketing plan. Multiple hits and just keep going. Run internal and external promotions monthly, follow your marketing plan, and have many poles in the water, so to speak. It’s another analogy often told at seminars: If someone is going fishing, do you want them to have one pole catching a bunch of fish, or lots of poles catching fish with different bait? They would always want more poles, because they don’t know which bait works when, and what if the pole breaks and they only have one pole left? The same applies to diversification marketing.

Oftentimes the medium or even the message can run its course. Many chiropractors rely on one source of new patients for too long and then it runs its course. It’s never good to rely on one source to keep your practice growing.

Diversify your marketing plan

So let’s think differently about your practice. Think of installing evergreen marketing poles. What does that mean? It means they keep working month after month, and year after year. It’s a diversification marketing plan that keeps working, and you keep adding to it, thus growing new patients and the practice monthly. Stop looking for the home-run marketing idea; it’s not out there, but there are hundreds of base-hit ideas. If you add up all these base hits, the practice will continue to grow for years.

Fill in your marketing calendar, add events that work, have a lot of poles in the water, and increase new patients. There are a lot of practice problems, but the first one to solve is new patients. It’s also the key to adding associates, which can grow the practice and allow for freedom.

Stop swinging for the fences, or buying into those ideas, and keep hitting singles.

JAMES R. FEDICH, DC, runs a multimillion-dollar-a-year chiropractic, physical therapy and acupuncture practice in New Jersey. He is the author of two chiropractic practice books, Secrets of a Million Dollar Practice and Secrets of the World’s Top Chiropractors. He also hosts the Dr J’s Path to Success podcast. For more information, visit drjamesfedich.com.


How to avoid job burnout in practice and retire on your own terms

Tuesday, February 18, 2020
JAMES R. FEDICH, DC

Follow these tips on how to avoid job burnout to extend your career and take charge of retirement

Burnout is one of if not the largest problems in the American health care system. Chiropractors have only a fraction of the burnout issues that medical doctors have, and yet they are still in peril. The question of how to avoid job burnout and the early exit of many MDs and DCs may end up crippling the health care system.

Poor care and early retirement

If a doctor is tired, stressed or worried about payroll, they will not or cannot give the best patient care available. Burnout also causes early retirement for many doctors, including chiropractors.

This is a huge loss to patients, as there are fewer doctors, less appointments, longer wait times and more. It is even a larger problem to the doctor, as several studies have shown that doctors in general tie a lot of their worth into patient care. Which makes sense, as if someone is a doctor for the right reasons, they are in it to help patients. Generally all specialties have a hard time with retirement as they lose this connection and their sense of worth by not treating patients any longer. This can be a tremendous psychological loss to doctors.

Early retirement can also be devastating financially, as even a year of early retirement can dramatically affect a doctor’s net worth and ability to live a comfortable retirement.

How to avoid job burnout

Especially in a chiropractic practice, time off can dramatically affect patient volume and income. In a solo doctor practice, a one-week vacation can take an estimated 12 weeks to build back up to original volume, and that is a tough pill to swallow.

If you are just starting out and trying to build your practice, take a three-day weekend every 90 days. Try to get out of town, out of the clinic and get a break. This might not sound like much, but it can be amazing.

What we don’t understand about time off and vacation is that anticipation is actually what’s most rewarding about time off. In fact, a 2010 study in the Journal of Applied Research in Quality of Life found that vacationers are actually most happy before the vacation. What does that mean? Our brains are hard-wired for anticipation, so it is naturally looking forward to something. But what makes it most important as a chiropractor is it gives us something to get through the tough days and weeks. If you are having a horrible day at the clinic, just knowing you have this day off in a few weeks or months makes it more tolerable.

So, step one, take a long weekend every 90 days. Get out of town, borrow a friend’s cabin — patients will be happy to lend you a place, or just get a cheap motel.

For the experienced DC

When you have grown the practice a little more, turn those three-day weekends into four-day weekends. So now we are taking eight days off in addition to holidays. Why not a whole week?

As I mentioned earlier, a week off can set the practice back 12 weeks.

This can work until you add associates. Next step would be the four-day weekends and then the whole week off. Once you get multiple associates and have the practice running like a well-oiled machine, you will have more time off than you need.

Plan, then plan some more

There are many more details and ways to take a break. But, the key point to this article is two things:

Schedule in advance — The vacation schedule should be blocked in advance for the whole year. If you don’t schedule it, something will fill in — plus we talked about how the anticipation is the reward for days off.

Make it regular — Ninety days is going to go by very fast, and if you always have something to look forward to, it makes those tough days much more digestible. Of course it would be nice to take a week off every month, but that will severely limit practice growth if a doctor doesn’t have multiple associates. There are many plans for how to avoid job burnout, and this is one way to make sure we are refreshed and able to give our patients the care they deserve. Enjoy and make sure to take some breaks!

JAMES R. FEDICH, DC, owns a large multidisciplinary practice in northern New Jersey. He is also the author of “Secrets of a Million Dollar Practice” and host of a popular chiropractic podcast, Dr. J’s Path to Success. To find out more or to contact Dr. J, visit drjamesfedich.com.



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