We went through a multi-day strategic planning session last fall. In our case, that essentially meant Tara and I sequestered away in a cheap hideaway where we could focus on the big-picture of the business, and do some great hiking when we needed a break. It was three days very well spent.

One of the real advantages to this process was that we came out of it with a concrete, concise template for how to move forward when things get dicey. I’ve gone through the plan and pulled out the strategies that I feel are making the biggest difference during challenging times:

1. Look for Prospects, Not Patients

It’s easy to think that you need more patients, but the truth is that before someone becomes a patient, they often make a pitstop along the way. In sales, they call it being a “prospect” – that’s someone who might become a patient.

In a slower economy people are more careful in their spending. They’re cautious when it comes to resources, and as a result they don’t necessarily want to leap from stranger to client in one step. They want to kick a few tires first.

In practical terms for us, that meant pushing our 15-minute “meet the doctor” visit. It’s a complimentary appointment for people to find out if naturopathy is a fit for them, and how we can help. It gives prospects a risk-free way to explore the idea of becoming patients without leaping right in. It’s a stepping stone to becoming a full-fledged client, and in a slow economy, you need those stepping stones. (And is it worth it? I think so. Over 90% of our 15-minute prospects become patients.)

What risk-free “stepping stones” are you offering for people to discover you?

2. Build MD Relationships

Health care is publicly funded here. That means that a recession doesn’t really change whether or not you can see an MD, or visit a hospital. It may affect how long you wait, but you can do it regardless of your income. The same applies for people with insurance coverage.

The impact of this is that in slow times, MD’s still see a lot of sick people. While CAM usage tends to be out-of-pocket and hit harder by economic changes, MD’s in many countries stay busy. We’re working to create more relationships, and nurture the ones we have with MD’s. The downside? These often take time to build. But like planting trees, if you want to have big ones, you need to start with small ones as soon as possible.

3. Cut Costs

This one isn’t rocket science, but it’s a critical piece of the plan. Here’s what we did:

• Created a quick spreadsheet containing most of the expenses in the clinic
• Used the spreadsheet to calculate the savings on each item, and overall, if we could cut 15% across the board
• Assigned areas, where possible, to the staff. The admin and other support staff tackled things like medical and office supplies, we did things like payroll and others. (Even in a one-person office, it’s actually pretty easy when you just itemize it all and get going.)

This whole process did feel a bit squishy at first – like scarcity thinking, or a step backwards – but one we got started, I realized there were some things we should have done long ago that had nothing to do with the economy. They were just smart business decisions.

4. Stay in Touch with Your Clients

These days, it’s easy and cheap to stay in touch, particularly by email, and when things slow down, there’s no excuse for not connecting with patients. We do a few email newsletters and a couple of print mailings a year, and we’ve stepped that up a bit with targeted mailing to certain groups within our patient base.

If you’re looking for an easy way to start your own email newsletter, we’ve always recommended iContact. Lots of templates, and those great little signup forms for your website, too. No geekiness required, and you get a beautiful email newsletter delivered to your client base for pennies apiece. Two thumbs up!

5. Increase Advertising (but Measure Return)

It’s tempting to cut your advertising when money’s tight, but the truth is that as long as your marketing is working (bringing in patients), then there’s no reason not to spend more.

If your advertising generates more profit than it costs, it makes sense to do more of it.

The trick, of course, is to actually know when it works. We track the source of every new patient so that we know whether a splashy ad, or our website, or a trade show, or an open house are attracting patients. It’s not hard – we just ask patients on our intake form, and clarify as needed – but it’s unbelievably valuable. If you also know the annual value of a patient, then you can pretty quickly see what’s paying off and what isn’t. If we run an $800 ad, and 7 new patients come in as a result, we know exactly whether or not that ad was worth it.

6. Consolidate Debt

If you’ve got business loans, student loans, operating lines of credit, credit card debt, etc., it’s worth trying to consolidate them into one loan in one spot. Easier to manage, and you can often get away with a smaller payment, or a shorter term. It’ll depend on your situation, but it’s worth half an hour with your banker to find out.

7. Expand Operating Credit

If cash flow is tight going into a recession, you’ll need some extra breathing room to be able to advertise more, get through a lean month, etc. If you don’t have a business line of credit to help you through the swings in business, it’s worth checking into. if you do have one, consider expanding it just in case. You don’t have to use it, but you’ll sleep better if you have it.

8. Monitor Your Media Consumption

Unless you’re prepared to take action on bad economic news, there’s no need to be micro-informed about every bit of bad media out there. I’ve ditched news radio in favor of music, changed the news I see on my browser’s home page, and I stay away from television news wherever possible.

This isn’t head-in-the sand behavior – I know these are challenging times and we’re taking action. I just don’t need to hear it 24×7 – I can tune in briefly once in a while to get the big picture. This one wasn’t in our strategic planning, but it really is important. Too much bad news keeps you frozen in place and makes it really difficult to execute these strategies. I’m not usually troubled by any of this stuff, but I can honestly say that avoiding the bad-news mania has made a real difference.

If you’ve got a question about how to implement these strategies or you’d like to share a few of your own, leave us a comment!

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The latest podcast from SoundPractice.net is an interview with Owen Dahl, MBA,, author of Think Business! Medical Practice Quality, Efficiency, Profits on the topic of the true cost of seeing a patient. It’s mainly for MD’s, but the principles are the same for any CAM practice. If accounting isn’t your strong suit, there’s a good review of the differences between fixed, variable, direct and indirect costs, and a few other interesting tidbits.

What I found most interesting was a question Dahl posed: what’s it worth to your practice to see one extra patient a day? It’s worth pondering. Even if you’re not overflowing with clients, those cancellations, missed appointments and other avoidable gaps really do add up if you do the math.

How Much Does it Cost You to See a Patient?

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The latest podcast from SoundPractice.net is “How To Stay On Top of Practice Finances”.

While all the podcasts are for MD’s, there’s usually something good in there…

SoundPractice.Net

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The new yellow pages came out in our area last week, so as usual, I took a spin through to check out the competition. To my surprise, some of the newer practitioners in the area had chosen not to advertise. Our area is pretty thick with chiropractors, and the number of naturopaths and TCM practitioners is on the rise, too, so I was curious why a new practice would overlook this choice. A yellow page ad is relatively inexpensive here.

I’ve always been a fan of the yellow pages. You can find a list of good reasons here, as well as a list of negative aspects here.

My favorite reason has always been that the yellow pages are how *I* find things. Even for a company I regularly patronize, I don’t tend to use the white pages. And if you happen to be a holistic practitioner with a hard-to-spell name, the yellow pages are critical – it may be the only way your patients can find you.

What can be challenging, once you’ve decided to use the yellow pages, is how much to spend. The most useful piece of information for helping you with this choice (or any advertising choice) is your average annual revenue per patient. To find this, take your total revenue for a year, and divide it by the number of active patients in that same time period. I find this is a handy number to have in mind for many expenses. It seems so much easier to make decisions when you can say, for example, “Okay, all I need to do is get two new TCM patients this year from the yellow pages, and the ad is paid for.” It puts things in concrete terms.

If you track your referral sources, you’ll also be able to tell how many new patients came through the door in a given year as a result of your yellow pages listing. Using your revenue per patient number, you can then easily tell if your ad was worthwhile, and whether to go bigger or smaller the following year.

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At E-Myth Worldwide, you can complete a short questionnaire that ranks your business on a few different scales.

While the results are generally geared towards getting you to buy E-Myth products and services, the questions themselves and the simple results might get you thinking.

dan

PS – For those wondering what the E-Myth is, I’ll put a review of Michael Gerber’s book, The E-Myth Physician, up in the next few days.

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It’s one thing to understand the types of referrals, but quite another to know which type is growing your practice. I’ve touched on this briefly before, but I want to stress it further.

Tracking your referrals is actually pretty straightforward, but often neglected. For the most part, it’s a front-line job, and needs to happen the first time a patient arrives. The easiest way to do it is to make it part of your intake form. It’s very difficult and far less accurate (and less likely to happen) later on in the patient cycle. The great thing is that it’s easy to implement – if you’ve got staff, just make it part of the new patient process. That’s it.

If you’re using any type of software to run your office, there may be a place to enter this information. If not, a spreadsheet will do just fine. Even a piece of paper will work, but it’s a lot harder to do the math at the end of the quarter or year.

You can use the 5 referral type framework to categorize your new patients, each with a sub categories:

Professional

• Break this down by profession – chiropractors, naturopaths, MD’s, acupuncturists, TCM practitioners, etc. – and then even further by the actual professional (Dr. Jones, Dr. Ahmad, J. Doe, etc.).

Patient

• List by patient, and enter into the referring patient’s file as well, so you know when you see a patient who they’ve referred recently. It’s quite helpful to jot this on the inside cover of their file so you can see it as soon as you open it, and thank them on the spot for recent referrals.

Promotional

• Again, this can be categorized by print, other media, speaking engagements, internet, etc, then broken down further by the actual magazine, paper, website, etc.

Purchase

• Patient files you’ve bought. If you’ve purchased from more than one source, list them separately

Personal

• Family, friends, etc.

In a future post, we’ll take a look at how this info can be used to help you grow faster and spend smarter.

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Based on the last metrics post on new patients, we’ve got some idea of how many new patients we’ve got coming in the door for any given time period.

Let’s go a little further, and see how many active patients you have in your practice. The term active is going to mean something a little different for everyone, depending on your modality and how you operate your business. Naturopaths, for example, might consider anyone seen in the last year as active. A chiropractor, however, might consider monthly or even weekly visits as the cutoff point. It’s up to you, but make sure that your definition of active meets these requirements:

• The patient in not deceased
• The patient hasn’t shifted to another practitioner
• The patient hasn’t “given up” or abandoned your modality
• They’ve been seen at least once in the past year.

As mentioned, you may want to change the time period of the last requirement, but I suggest a year as the longest time frame you use. Sure, you may have patients that just don’t need your services for several years at a time, then turn up out of nowhere, but those folks don’t help much when we’re doing calculations for business purposes.

Once you’ve decided on your time frame, then it’s a matter of adding them up. This is going to be either a) really easy, because you’re using software to manage patients b)moderately easy because you use those handy file labels that color-code the years, or c) really hard because you don’t use any kind of system at all

If you’re in position (c), this’ll be a great exercise. It’ll force you to get organized.

What it tells you: In a growing practice, the number of active patients should continue to increase over time. Declining active patient numbers over time generally indicate some type of “problem” that needs to be addressed: office management issues like scheduling or staff, increasing competition, or business model problems such as not building a “return visit” practice. On the bright side, it could also indicate that you’re doing such a fantastic job that everyone’s healthy doesn’t need to see you any more…:)

You can also compare your active numbers against your new patient numbers. If the new patients are continuing to come in the door, but the active numbers are down, it’s more likely an internal problem, like service or office management, as opposed to an external one like competition.

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The first post in our new category of “Practice Metrics” – the numbers that affect your alternative health practice. Let’s start with some basic data on new patient visits.

Even the most robust practice will eventually start to dry up without a supply of new patients. For starting your tracking your new patient numbers, you’ll want the following information:

Total Number of New Patients: The total number of fresh faces per day/week/month/quarter/year. An easy one to generate, but critical to keep an eye on.

Referral Source: Where do your new patients come from? I recommend tracking referrals from 4 main sources. Keeping an eye on what proportion of your patients are coming from promotions, other patients, friends and family, etc. helps allocate advertising dollars, and focus your efforts on the best new patient sources.

Keep an eye out for any of the following:

• declining new patient numbers
• seasonal variations – great for either planning vacations or increasing marketing efforts, depending on which you need more, rest or cash
• ineffective marketing – if you’re advertising, but not seeing new patients from that source, it can be a sign to make a change in your marketing, or abandon that particular method altogether

These are simple measures, but they provide some basic growth measures for your alternative health practice, and form the basis for some more critical measures to follow.

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I like to think of every new patient as a referral, even the ones that come in from direct advertising – I find it’s an easier way to build a new-patient strategy. Here’s a way to break down your referrals into 5 categories. You can break each down into sub-categories as required, and track each using something as simple as a spreadsheet or notebook.

Patient Referrals
Still ranking as the best source of new patients in my book, existing clients tend to refer other people who will also find success with your approach. And they’re so easy to market to – it’s a captive audience whose contact info is (or should be) at your fingertips.

Professional Referrals
These are the clients that come to you via your colleagues – other naturopaths, chiropractors, RMT’s, homeopaths, MD’s etc. – as well as related professions like health food stores and personal trainers.

The best part about many of these referrals is that they’re in similar industries, so they tend to refer people that may already “get” what you do.

Personal Referrals
This is a catch all for the friends, family and acquaintances who come to see you because they know you. Also includes anything you generate from networking.

Promotional Referrals
Anyone who finds you via traditional advertising, phone directories, newspaper and magazine articles, signage, the internet, etc.

Purchased
I use this 5th P to refer to files/patients acquired by buying a practice or buying patient files.

Each of these referral sources has its own strengths, and requires a unique approach. For example, the flyer that you direct mailed to 1000 households may not be effective at generating referrals from the MD down the street.

If you use this as the top-level breakdown of where your new patients come from, you’ll easily be able to see over time where to best spend your marketing time and budget.

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(Click here for Part 1)

When you buy a practice, you’re making an investment – you’re putting your money somewhere in anticipation of it multiplying. So just like stocks, mutual funds, or your savings account, you want the best return on your investment (ROI).

The simple formula for ROI is:

ROI = (benefits/costs) x 100

If you spend $10,000 (your “cost”) on stocks, and those stocks are worth $12000 at the end of the first year (benefit), that’s a 20% ROI.

My general rule of thumb is that I like purchased files, at a minimum, to pay for themselves in a year (100% ROI). That means after 12 months, the files are paid for, and starting to generate a true profit.

That’s just my number – you can use whatever makes sense to you. I’m just comfortable with that range. Unlike stocks or real estate, patient files may go stale a little sooner, and you can’t necessarily turn around and sell them again, so the ROI concepts are a little different. If a patient you’ve “bought” hasn’t come to see you in the first year (or much sooner), there’s a good chance they never will. So I like high rates of return.

From here, you can use two numbers:

• How much is an average patient worth to you in a year?
• In the practice for sale, how many patients have been seen in the last 12 months?

Let’s say you have an opportunity to buy a practice that has 500 files, 200 of which have been seen in the last 12 months. As a chiropractor, you might know the average file is worth $350 a year. (I’m making this up, but have a look at your numbers. Take your annual revenue and divide it by the number of live files that year for a rough estimate.)

200 files x $350 (your average) = $ 70,000 in annual revenue. Now just divide that figure by your desired ROI, and you’ll get the price you should be willing to pay for the files less than one year old.

For example, if you want to get back all the money you spent on files, plus make a healthy profit in a year – say a 150% ROI, you’d want to pay no more than $70,000/1.50, or roughly $47,000.

What about the fact that there are 500 files? My inclination is to ignore anything older than a year, but that’s affected by the market, your industry, how effective you are at marketing, and just how plain good of a CAM doctor you are.

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