Management of a chiropractic practice
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Management of a Chiropractic Practice. Where do I learn ?. Goals. To prepare the student to establish and maintain a practice of Chiropractic including business and personal financial management The student will have an understanding of the different business structures

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Management of a Chiropractic Practice

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Management of a chiropractic practice

Management of a Chiropractic Practice


Where do i learn

Where do I learn ?


Goals

Goals

To prepare the student to establish and maintain a practice of Chiropractic including business and personal financial management

The student will have an understanding of the different business structures

The student will establish a business plan


Objectives

Objectives

The student will be able to discuss and explain the advantages and disadvantages of the following types of practice:

  • locum tenens (i.e. relief work)

  • associateships

  • partnerships, corporations and sole proprietorships


Objectives1

Objectives

The student will be able to provide answers to the questions delineated by a business plan including:

  • What practice structure will I choose to form my business?

  • Where will I get financing (if necessary)?

  • How will I survive the first 18-months?


Objectives2

Objectives

If I start a practice as a sole-proprietor, or as an incorporated business, what will my operating expenses be including:

  • Leasing (and the different options)

  • Equipment and furniture

  • Employees

  • Services (e.g. credit-card processing, CPA, cleaning, laundry, attorney, web-master [if web-page])


Ethics summary integrity

Ethics Summary: Integrity

Do what you say,

say what you do!


In discussions with your patients your forbidden list

In discussions with your patients, your forbidden list . . .

Politics

Religion

Entitlement


Who do you want to look like to the outside world

Who do you want to look like to the outside world?

Ethical

Educated

Active in your community

Well-rounded


Your resume how to grow it

Your resume: How to grow it

  • Be a member of a chiropractic organization

  • Be certified in specific techniques

  • Be a member of the Chamber of Commerce or similar group

  • Volunteer to be a board member for school, church, or community

  • Become a leader in your community

  • Be active in your local chiropractic organization


Who should i know

Who should I know?

  • All the chiropractors in your area

  • All the health clubs and similar groups

  • Local high-school or college coaches (if interested in the sports-focus)

  • Local clerks at banks, grocery stores, etc.

  • Get recommendations from practicing doctors in your area for good MDs and other health professionals as referrals options


Get to know your fellow dcs

Get to know your fellow DCs

  • The lunch/office tour approach

  • What you want to know after this encounter:

    • What techniques do they practice

    • What management software products they like and don’t like

    • Referral resources to MDs such as orthopedic/neurological surgeons, etc.

    • What groups they are contracted with (if any) and what their experience has been

    • Learn from their office design (good and bad) with regard to style, patient flow, etc.

    • Arrive early to see the office in action


Do i join

Do I Join?

  • Medicare providers

  • Managed care groups

  • Chiropractic professional organizations

  • Practice management group


Creating my practice 101 the basics

Creating My Practice 101: The Basics


My business

My Business

  • What is it called?

  • Fictitious name: “Doing Business As” (DBA)?

  • Separate bank account?

  • Federal Employer Tax ID or SSN?

  • Business license?


Business name versus fictitious name

Business Name versus Fictitious Name

  • The legal name of a business is the name of the person or entity that owns a business.

  • If you are the sole owner of your business, its legal name is your full name

  • If your business is a partnership, the legal name is the name given in your partnership agreement or the last names of the partners

  • For limited liability corporations (LLCs) and corporations, the business' legal name is the one that was registered with the state government


Business vs fictitious name

Business vs. Fictitious Name

  • The legal name of your business is required on all government forms and applications, including your application for employer tax IDs, licenses and permits.

  • A fictitious name (or assumed name, trade name or DBA name, which is short for "doing business as") is a business name that is different from your personal name, the names of your partners or the officially registered name of your LLC or corporation.


Business plan

Business Plan

Type of business structure

Market-share (anything unique?)

Operating expenses and projected revenue

Funding


Funding

Funding

  • Personal loan and credit cards?

  • Co-signed loan?

  • Small Business Association Loan?

  • Investors?

  • Partners?

  • Franchise? (some)


Yearly expenses

Yearly Expenses

  • Estimated taxes (quarterly)

  • Business licenses

  • Professional licenses and continuing education

  • Management fees (if using a practice-management group)

  • Web-Site and other advertising


Don t forget

Don’t Forget . . .

  • Malpractice Insurance

  • Office liability (for your property and assets)

  • Personal Health Coverage

  • Personal life Insurance and possibly insurance for disability


Monthly expenses

Monthly Expenses

  • Salaries (including yours)

  • Lease (building and equipment)

  • Utilities

  • Triple-Net and similar shared expenses

  • Student Loan

  • Credit-card processing

  • Advertising

  • Management (if using management company)


My office space

My Office Space

How many square feet?

How many rooms and which ones?

What design? (i.e. professional but affordable)

Patient flow design


Let s guesstimate for a single practitioner

Let’s guesstimate for a single practitioner . . .

Average room between 80 - 120 square feet

  • Two treatment rooms = 160 - 240 sq. ft.

  • One personal office = 80 – 120 sq.ft.

  • Extra room for therapy/x-ray etc. = 120 sq. ft.

  • Front office = 80 - 120 sq. ft.

  • Bathroom/Utilities/storage = 30 – 50 sq. ft.

  • Waiting area = 120 sq.ft. (important to be larger)

  • Total = a minimum of about 700 – 800 sq.ft.

  • If average cost of $2/sq.ft. = about $1,500 on average

* Varies dramatically from state to state, region to region


My employee s

My Employee(s)

  • Front-office

  • Back-office

  • Contracted services (e.g. massage, exercise)

  • Who does what, when and where?


Vendor relationships

Vendor Relationships

  • Computer software

  • Web-Page

  • Credit Card processing

  • Orthopedic supplies

  • Nutritional supplies

  • Lab or X-ray

  • Referral list to other health professionals


Where do i get forms

Where do I get forms?

  • Government forms related to Medicare available on-line

  • Questionnaires for functional evaluation, through software management system or ACA

  • Entry questionnaires, etc. through NCMIC or outside vendor

  • Examination

  • HIPAA, Informed Consent, Patients’ Rights and Responsibilities

  • Tax forms – CPA or on-line

  • See website for links to resources


Credit card processing

Credit Card Processing

  • Requires the establishment of a business and business type and a bank account

  • Requires a payment portal (processes payment)

  • Requires a Merchant Service Provider (MSP)

  • Negotiated fee per transaction

  • American Express is a separate process


Credit card processing1

Credit Card Processing

Questions to ask:

  • Is this an established company related to chiropractic or more general (e.g. BofA versus NCMIC)?

  • Do they process all types of cards? Is there a separate application process for American Express?

  • Is the data from transactions transferrable to an office-management or financial software product (e.g. Quick Books)?


What can i charge

What can I charge?

Key questions:

  • Fee schedule establishment based on what?

  • Can I give discounts to specific groups?

  • NOOP claims?

  • Contracts and cancellations?

  • Liens


Office management software and electronic patient records

Office Management Software and Electronic Patient Records

  • Appointments/Scheduling (connection to web-site?)

  • Medical records

  • Billing (patient, Medicare, Private Insurance, Managed Care groups, through clearinghouse or not)

  • Reports

  • Patient Education


Taxes

Taxes

  • Projections are necessary for estimated taxes which are required for both Federal And State (in most states)

  • Pre-tax – decrease through contributions to a retirement method such as a SEP

  • What can you write-off?

    • Tax preparation

    • Professional dues (not state board or PAC contributions)

    • Operating expenses (e.g. lease, salaries, purchases, losses) travel and entertainment related to business is severely limited


Business models

Business Models


Sole proprietorship

Sole Proprietorship

  • The business is owned by one person

  • The business owner wants a minimum of paperwork and legal restrictions

  • The owner is not concerned about current or future lawsuits

  • The owner is not concerned about tax deductions that are available to corporations.


Advantages of a sole proprietorship

Advantages of a Sole Proprietorship

  • Income is reported on the owner’s tax returns (e.g. Schedule C for Federal)

  • Owner makes business decisions

  • Minimal paperwork

  • Ease of “start up”


Disadvantages of a sole proprietorship

Disadvantages of a Sole Proprietorship

  • Unlimited personal liability for debts and obligations of the business

  • Tax advantages are not as great as with incorporated companies

  • Personal assets can be at risk in a business lawsuit

  • The business terminates upon the death of the owner

  • Raising “outside” capital and earning the trust of investors can be extremely difficult


Partnership

Partnership

A Partnership describes any business or enterprising venture where there is more than one owner involved.

The partners in a partnership can be individuals, corporations, or trusts, and the ownership is shared among the partners; this includes

all income as well as

all debt and liability


Advantages to partnership

Advantages to Partnership

  • Flow through taxation

  • Relatively easy to establish

  • Talents and strengths of each partner can best be utilized

  • Minimal paperwork and legal restrictions


Disadvantages to partnership

Disadvantages to Partnership

  • Partners have unlimited liability with regard to the liabilities and debts of the business

  • One partner can cause all partners to suffer the loss of business and personal assets

  • Without advance planning, the company terminated upon the death of a partner


Disadvantages of a partnership

Disadvantages of a Partnership

  • A decision by one partner with or without prior approval from the other partners can obligate the business

  • Limited ability to raise capital

  • Divided authority

  • 85% of business partnerships break-up within the first year


Incorporated business structures

Incorporated Business Structures


Limited partnership

Limited Partnership

A limited partnership (LP) is comprised of one or more general partners and one or more limited partners in order to form a separate, legal entity.

Very much like a General Partnership, save for the separate, limited status of the limited partners.

The driving concern is usually protection from liability and the ability to distribute funds among many shareholders (in the form of dividends) that would otherwise not be possible under a standard corporation.

The general partners are responsible for the daily operations of the company, and are personally liable for its obligations and debts.

To absorb the liability, a corporation or a limited liability company is most often used in the general partner position of a Limited Partnership.


Limited liability company

Limited Liability Company

A limited liability company, or LLC, is a form of business organization that allows for limited liability for an unlimited number of shareholders that they might not have otherwise enjoyed had they formed as a simple partnership, but all the while maintaining most of the taxation benefits (pass-through taxation) afforded by a partnership.


Advantages to llc

Advantages to LLC

  • An LLC allows members, like shareholders in a corporation, to enjoy limited liability. The LLC is a separate, legal entity and thus its assets are considered separate and apart from Member’s assets save for the amount invested by the member in the LLC.

  • An LLC, if properly organized, enjoys the advantage of pass-through taxation, whereby business profit is treated as having “passed through” the entity and onto the individual members, via the 1065 form filed by the LLC, and thus avoiding tax at the corporate level, and again at the member level (“double taxation”).


Advantages of llcs

Advantages of LLCs

  • Corporations are allowed as members of an LLC. This further level of tiered ownership increases the limited liability aspect of an LLC, and makes for greater features and benefit options for the owner.

  • Less strict organizational rules and an absence of the “corporate formalities.” Depending on how it is structured, an LLC can be completely driven (managed) by the operating agreement, with no special need for annual meetings or special notations or record keeping.

  • Unlike an S Corporation, there is no limit to the number of members allowed by an LLC.


Disadvantages of an llc

Disadvantages of an LLC

  • Because of the pass-through profit designation via the 1065 form, all income “distributed” to the individual members’ K1s is treated as member income, irrespective of any actual distributions.

  • When a corporation is a member of an LLC, the owner of the corporation can be subject to taxation from the LLC's income.

  • There is no perpetuity with an LLC, with its term usually specifically outlined.


Corporation

Corporation

A corporation is a legal entity that is created as a separate entity from its owners via the filing of the appropriate documentation with the state in which the corporation is to be formed.

This documentation is known as the “Articles of Incorporation,” and is where the term “corporation” originates.

The creation of a separate business entity, or legal separation between the company and its owners (also known as “shareholders”), serves to limit the liability to the owners by empowering the corporation with the ability to establish credit, acquire assets, and enter into contractual engagements based on its own merits. Because these potential liabilities are incurred


Advantages of a corporation

Advantages of a Corporation

  • Limited Liability for Shareholders

  • Certain Tax Benefits

  • Prestige for the Business and Corporate Officers

  • Credibility

  • Ability to raise capital and attract investors


Disadvantages of a c corporation

Disadvantages of a C Corporation

  • Double Taxation pitfall

  • Increased paperwork

  • Necessity of exercising the corporate formalities


C corporation

C Corporation

  • A traditional Corporation (or "C" Corporation) is an incorporated business structure that creates a new, separate, legal entity that is distinct from its owner(s).

  • As a separate, legal entity, a C Corporation can engage in business, have its own bank accounts, enter into legal commitments, establish its own credit identity, and even acquire property and assets.

  • One of the chief advantages of being a separate entity is that the owners of the Corporation, known as “Shareholders,” enjoy limited liability protection. This means that their personal assets are protected


S corporation

S Corporation

  • An S Corporation is an incorporated business structure that is formed in such a way as to comply with sub-chapter S of the Internal Revenue Code.

  • Limited to 100 shareholders in most states, the S Corporation provides for the limited liability of a standard Corporation, and couples it with the pass-through taxation of a partnership.

  • This means that the shareholders avoid the pitfalls of double-taxation, where income is first taxed a the company level, then again at the individual


The s corporation formalities can be summarized as follows

The S Corporation Formalities can be summarized as follows:

  • Corporate Funds must be maintained separate and apart from Personal Funds.

  • There must be Annual Meetings of the Board of Directors.

  • There must exist Corporate Minutes and an officer assigned to take and care for the minutes.

  • All Corporate engagements, contracts, and strategic acquisitions must be in Written Form.


Joint venture

Joint Venture

A Joint Venture is a legal entity formed between two or more parties to undertake economic activity together.

The parties agree to create a new entity by both contributing equity, and they then share in the revenues, expenses, and control of the enterprise.

The venture can be for one specific project only, or a continuing business relationship such as the Sony Ericsson joint venture..


Advantages to forming a joint venture

Advantages to Forming a Joint Venture

  • Spreading costs and risks

  • Improving access to financial resources

  • Potential Economies of Scale

  • Access to new or different technologies and customers

  • Access to new, different, or innovative management practices


Disadvantages of joint venture

Disadvantages of Joint Venture

  • Subject to local laws, if an international venture

  • Susceptibility to volatile demands or rapid changes in technology

  • High rate of failure, statically


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