Climbing the chiropractic mountain: The first seven year of practice

Journal of the American Chiropractic Association, Oct 1999

Whether it was three years ago or 30, who can forget leaving structured college life for the reality of starting a practice? Many well-established doctors still remember the mounting financial pressures and plummeting self-esteem. New doctors today also face contemporary obstacles, such as a shrinking managed care dollar and growing competition from other health care providers.

Fortunately, there are many resources available to today's new doctor. Over the past three years, chiropractic colleges have added departments to teach practice management-from finances and staffing to marketing and legal issues. Professors and alumni associations offer follow-up assistance throughout the early years. State and national associations provide help, and practice management consultants are proliferating.

Finances

During the first seven years, money matters cast a long shadow over this otherwise exciting career stage. There are student loans to repay, start-up loans to secure, and personal expenses to meet. That's why it is essential to keep overhead low and start out slowly but surely, says Bruce Hodges, DC, coordinator of the Ethical Practice Management Program at National College of Chiropractic.

"You don't have to have the biggest office or the best equipment," Dr. Hodges says. "I've seen more doctors get in trouble right out of the box when they go hugely in debt for 2,000 square feet when 1,000 is plenty. Or they buy new tables when they can buy used. You've got to pay off your loans and establish credit so that in three years when you need more equipment, the bank will lend you money. The practice is like a baby. You have to nurture it for years. Money is its mother's milk."

The debts new doctors face, including student and start-up loans, average $150,000, which, awesome as it may seem, is right in line with the average small business loan of $130,000, according to JoAnn Perusich, coordinator of Professional Career Resources at Cleveland College of Chiropractic. "When new doctors compare themselves to other small businesses, they realize it's not unrealistic," she says. "Also, the majority of their investment is in themselves in their education, not retail inventory or perishable food. They have invested in their own two hands, which will increase in value the more they use them." In other words, student loans are a cost of doing business-like equipment, rent, and electricity. Business is key, because a successful practice requires as much business savvy as medical expertise. Dr. Janice Justice, a management consultant and part-time teacher at Western States Chiropractic College, cites a favorite paragraph, written in 1930, by Dr. R S. Marlow:"... Our failure to achieve the success we had dreamed of was NOT because we did not know our chiropractic principle well, not because we did not get sick people well, but because most of us did not know that we needed to be business men and women, as well as professional men and women.

Sources for business loans range from traditional banks to less conventional avenues, such as loans from personal pension plans with attractive interest rates, life insurance policies with a monetary value, and, of course, family and friends. Dr. Justice says she's seen parents take out a second mortgage to help their kids. Most new doctors, without assets to back up their loans, will need co-signers or guarantors for bank loans. Dr. Hodges says it was humbling for him, at 35 years of age, to ask his mother and father to co-sign for his start-up loan. But everyone else he knew was in the same boat.

Most new doctors will need a business plan to take to a lender for a loan. Help in creating a successful plan is available on the Internet through the Small Business Administration's comprehensive Web site and from SCORE, a non-profit organization of retired professional business people who volunteer professional services to entrepreneurs. College career centers also offer assistance.

Eventually, more money will come in than goes out. But this can be a dangerous time, according to Dr. William Sherwood, assistant professor of business, legal and practice issues and a clinician in the student clinic at New York College of Chiropractic. He cautions new doctors. "When there's more income, many doctors think now is the time for the Mercedes or the big home," he explains. "But they need to forestall or scale back these things while they are paying their loans. Acquiring material things just puts more pressure on them again."

Professional Services

While keeping overhead low is good policy, cutting corners on the professional services of insurance brokers, accountants, and attorneys is not. Insurance experts can answer questions about the type of insurance, limits of liability, and where to go for a fair premium. An accountant can give advice on whether money should be spent now or later on new equipment. And attorneys can decipher leases. After malpractice issues, Dr. Sherwood says the next most common legal troubles arise from the small print in leases and contracts.