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January 2005, Vol. 15, No. 1
Table of Contents
ACA's New CCGPP Guidelines • An Opinion of Shortcomings CBP® • ASHN: Chiropractic Enemy • CBP® fosters international Research Collaboration • CBP® Research Corner • Contraction/Expansion Mentally • COX Inhibitors and the FDA • Counter Point • Do You Practice CBP®? • Don's Opinion • European Spine Accepts CBP® Clinical Control Trial • Regarding the Use of Body Weighting • SAC Reaffirms Life University's Accreditation • Spine Accepts CBP® Research • The Diminishing Return Triangle • Traction Details • Validity of PosturePrint™
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The Diminishing Return Triangle
by Mark Radermacher, D.C., President
Total Practice Management Int’l, LLC
Dr. Radermacher has been a chiropractor for the last 25 years and has been coaching some of the largest, most balanced and profitable practices nationally and internationally for the last 17 years. He is the author of: The 5 Minute Report Of Findings©, The 5 Minute Pre Consultation© (including the invaluable Life Impact Points©), The Dynamic Micro Report© (communication with patients during adjustments), The Fade and Fade Response©, The Minimization and Minimization Response©, Cluster Scheduling© and The 24 Hour Per Week Mega Practice©. He is currently the leader in coaching chiropractors in patient communications and practice building.
All businesses, including the chiropractic office, experience diminishing return triangles. A diminishing return triangle is a stage in business when expenses are increased attempting to create growth and net profit is decreased, temporarily, as a result. The diminishing return triangle is a natural stage in business cycles. The plan to spend more money in order to earn more money is essential. The loss in net profit is seen as a short lived sacrifice for a business to experience. Many chiropractors don’t understand this common business principle. When a stage of diminishing return triangle occurs, these chiropractors get emotional and see the stage as negative. When this happens, chiropractors often lose confidence, energy and business direction.
To predict the exact beginning and ending of diminishing return triangles is impossible. Growth in business is not an exact science. When a business has a plan for growth, that plan can include a list of expenditures along with an expectation for growth. Knowing that more money will be put into the business to help it grow helps to understand why net profit is reduced. Many chiropractors, however, often grow because of excitement and the desire to help more people with chiropractic care. A noble cause indeed. But many of those same chiropractors fail to realize that more growth often requires changes in the office and these changes often cost more money. Failing to realize these basic business principles can produce the real expense of a diminishing return triangle, the negative personal impact on the chiropractor, which includes the loss of energy, confidence and often direction.
There is no guarantee that a chiropractic office will grow by spending more money and entering a diminishing return triangle. Sometimes all that happens is a stage of diminishing return of various lengths of time. It’s what happens after the diminishing return that matters greatly. Common business sense would be to plot and study what impact expensive changes might have made. This would provide a platform of information that could be used in future expansion attempts. In other words, learn what worked and learn what didn’t work and remember both so that in the future the same mistakes aren’t made and the same successes can be repeated and enhanced. Business is supposed to be business, not an emotional roller coaster. Making good business decisions will often, over time, have positive overall results. Emotion used instead of good business decisions will cause stress and doubt. This is how many chiropractors lose energy, confidence and direction. They spend money to make changes in the office in order to grow and use too much emotion instead of business sense. After a few bouts in this type of fight, most chiropractors long for change and growth, but quit trying to produce it out of fear of entering the seemingly negative diminishing return triangle.
A typical example would be in marketing a practice. Take a chiropractor who hasn’t run costly promotions for a long while. This chiropractor may desire to see growth in the office and thereby justify the expense of a few promotions over a three month period of time. If the promotions acquire enough new patients who start, stay and pay for care, the change to promote and the expense to do so would be a huge success. This chiropractor’s energy, confidence and direction would all improve. If, however, the opposite were to occur, there would be a problem. The same chiropractor could justify the cost to run a few expensive promotions to grow the office but have no meaningful growth occur. Promoting is not a science, it is instead a dynamic learning experience. This means any number of problems could occur. Perhaps the promotions were run and no new patients responded or, new patients responded but were not pre-qualified and most never even started care.
Another possibility is to have new patients respond to the promotions and most of them stay, and pay for care, but the office organization and chiropractic communications were too weak to support the growth. In any of these scenarios, the chiropractor using mostly emotion instead of good business sense will plunge into a dismal diminishing return triangle. The stress and doubt will cost vital energy, confidence and direction. It is this chiropractor who soon begins to fear change and never grows the practice.
There are important considerations to understand prior to making changes in order to grow the practice. No practice can grow non-stop. This can’t happen in any business, because the non-stop growth will destroy the business. After a period of growth, a leveling-off or plateau will occur. This isn’t negative, this is natural. Additionally, the obvious changes to make in order to grow must be coupled with the less obvious changes that are required to support the growth. To simply get excited and create growth with excitement will often stress the office staff, the limited equipment and perhaps even the physical size of the office itself. With good business sense, money would have been spent to support the growth and the diminishing return triangle would have been understood as part of the business plan to grow. Common sense, yes. Intellectually, easy to understand, of course. Yet, practically, not often done. Thus challenges arise.
A well run practice seeing 300 patients visits each week is often experiencing very high net profit. Yet, in order to grow, the same practice might not experience a similar net profit until it reaches 500 visits each week. The additional cost of promotions, extra staff, extra equipment and supplies will significantly erode profit. This office might dip into a diminishing return triangle for 3 to 12 months. It might take that long to grow from 300 to 500 visits each week. A chiropractor who understands this scenario will use good business sense to stay the course and let the plan play out. Worse case scenario would be to fail in the area of sufficient growth but to be cognoscente of what failed. In essence, to learn from the failure in order to rectify that failure at a later date.
Diminishing return triangles are a natural stage in a developing business. These are stages that should be planned for and then completely lived out. Most chiropractic offices couldn’t handle and sustain any growth beyond their current level without experiencing a stage of diminishing return triangle. If the diminishing return triangle is seen as negative, the chiropractor will lose confidence, energy and business direction. Prior to leaping into a diminishing return triangle, just for the sake of growing the business, stop, think and plan with good business sense. This is a stage in business that needs common business sense. When understood, the diminishing return triangle should be enjoyed by the chiropractor and the experience should become one that will often be repeated.
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