Financial Capacity

This old farmer in dirty, worn-out overalls goes into the local Chevrolet dealership and sees a truck he wants to buy.  He asks the salesman a few questions about the truck and tells the salesman he’ll take the truck.  The salesman should have asked the farmer if he wanted to pay for the truck or finance the truck.  Instead, the salesman said, “Are you sure you will be able to get financing on the truck?”  Long story short, the farmer ended up with a Ford truck.  He paid cash for it in $100 bills.

It's the proverbial don’t judge a book by its cover story.  The Chevrolet salesman assumed (from the “book cover”) this old gentleman didn’t have the financial capacity to afford the brand-new truck.  Mistake one.  Then, the salesman insulted the old farmer, who left and went to the Ford dealership to purchase a new truck.  Mistake two.

Unless you’re familiar with the financial particulars of an individual, it’s always a mistake to assume this person has money or doesn’t.  It’s insulting and disrespectful, and it’s often wrong.  The person who drives up in an expensive new car, who has expensive clothes and jewelry on, might be so leveraged he doesn’t have enough to pay your fee.  The dirty welder who comes into your office might have half-a-million bucks in his bank account.

The car story is a true story that happened in my small southern town.  I knew the old farmer and knew, if he wanted to, he could write you a check for over a million dollars.

The point is, it’s bad business to assume the financial capacity of anyone.  In our business as chiropractors we’ll get a good idea of what that capacity is through respectful inquiry as to insurance status or preferred mode of payment.

While you want to be respectful regarding the capacity to pay for your services, most chiropractors also want to provide a fee that is within the financial capacity of most people’s ability to pay, while still being profitable for the chiropractor.  That factor really becomes important when you are interested in providing longer-term care to folks.

Financial refers to the monetary resources a person might have.  Capacity is defined as the maximum amount that something can hold.  When it comes to “self-pay” patients (noninsured/underinsured), there are really two critical phases of care to be concerned with.

We’ll call the first phase the pain phase.  When people are acute, in pain, money isn’t so big of an issue.  In fact, in an optimal clinical environment, perhaps you might want to consider this phase as its own unique phase and price that accordingly.  This “pain phase” often includes more of your time, extra analysis, more paperwork, etc.

I did that in my own clinic.  I’d give a report and let the patient know what’s up.  This first phase of care was designed to get them feeling better as quickly as possible.  I’d give them a follow-up report when they were out of pain and transition them into a second phase of care—corrective/stabilization.

Let’s call the second phase long-term care.  My second report was often where I’d let the patient know about Preferred Chiropractic Doctor (PCD) and the more affordable fees available to them.  This was a strategy I’d developed after having many new patients drop out of care after the initial phase of care.  I suspected there was financial resistance to my fees.  I cut my standard office visit fee for phase two care by 50%.  What happened was quite remarkable.

After a year of operating under my new fee structure, we did an analysis on my self-pay patients.  On average, I saw this group over four times more than before, which was over a 400% increase.  I increased my income on these patients by a factor of 2.3, or 230%.  What’s the dominant takeaway from this experience?

Financial policies that provided more latitude regarding the financial capacity of my self-pay patients definitely made my care more financially accessible to these patients.  In the absence of pain or crisis, the utility of my service wasn’t as urgent.  Patients usually understood and agreed to my recommendations, but it’s tough to overcome “fee resistance” when your patient is feeling much better.

My entire thought process was it’s better for these patients to come in, even at a reduced fee—because they weren’t coming in like they needed to after their crisis was resolved.  So, I tapped into their range of financial tolerance—I offered a fee that was profitable for me and affordable for them.  The change in patient compliance was really quite remarkable.  I enjoyed the added revenue and the opportunity to help these folks even more.  It was a definite win/win.

The Preferred Chiropractic Doctor (PCD) program is a program you can incorporate into your office to provide these kinds of benefits to your patients, too.  You get the legal protection you need to offer more affordable fees to self-pay patients and the latitude you want to customize the PCD program to your specific needs.

I’ll never forget what one patient told me one day.  She said, “I’m so glad you offer the PCD program in your office.  Now I can afford to come in when I need to, not when I have to.”  Come to find out not only did I get the chance to help her more with regular chiropractic care, I ended up making more money on her case, too.

Eliminate as many barriers as possible in your practice.  The ability for patients to afford your care—their financial capacity—is a primary barrier to their access and participation in that care, especially longer-term care.  PCD removes those financial barriers and enhances access and participation.

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