Medical Billing Network Effect in Chiropractic Coaching - The Metcalfe's Law

The pressures and the steep learning curve required of the newly graduated chiropractic doctor are nothing short of monumental because of the mounting complexities of the business in an increasingly hostile billing environment defined by insurance companies bent on minimizing payouts to doctors. The coach has become a critical element of the chiropractor's team - a consultant with experience and leadership in the field - who mentors the new chiropractor through this minefield of potential revenue-chewing issues. The enlightened coach uses automated systems that collect and segregate data among all client practices, allowing them to more easily identify and address problem areas.

This is the third article in the series of three articles focused on automated coach assistants. The first article presented an overview of the issue, touching on automated coaching assistance need, features and networking. The second article focused on specific practice issues and data collected, and how this helps the coach identify problems. The last article in this series focuses on the networking effect (Metcalfe's law).

Automated coach assistance systems (CoachMate) address every aspect of chiropractic office workflow management. CoachMate stores information for each client in a coach's database within a central repository, providing a single point of contact via the Internet to both aggregate and individual patient information. The coach can then take a universal perspective when evaluating trainee performance in the aggregate, flagging deviations and isolating the trainee who is most in need of coaching advice promptly, meaningfully, and efficiently.

CoachMate's value to the coach and to each of the student doctors grows in step with the number of chiropractors that subscribe to the coach's service, creating the "network effect." The network effect, according to Wikipedia, "causes a good or service to have a value to a potential customer which depends on the number of other customers who own the good or are users of the service." For example, by purchasing a telephone, a person makes other telephones more useful - and therefore more valuable to their users - by virtue of expanding the network. A telephone without a network of other telephones is worthless, nothing more than plastic and silicone. In other words, the more players on the team, the more value to each player. Thus, a consequence of a network effect is that the purchase of a service by one individual indirectly benefits others who use the same service. This bandwagon effect is an example of a positive feedback loop, an essential aspect of the network effect.

The network effect (also known as Metcalfe's Law) says that while the system's costs are proportional to the number of submitted claims, the value is far greater than the sum of the participants - proportional, in fact, to the square of the number of practice owners using it. For example, when you multiply the number of users by ten, the coach's system-wide cost goes up by a factor of ten while the value goes up a hundredfold. The hundredfold increase in true value represents the possible number of relationships between one piece of data to another - with ten users, there are 100 possible relationships among them. In other words, Metcalfe's law - as applied to CoachMate - says that the value to the individual practice owner and the coach using it is proportional to the number of other practice owners (N) sharing the same knowledge base and processes. The more participants, the greater the value to the extent that the number of possible value-providing relationships has been raised significantly, to a factor of N-squared.

In the early 1980s, when Robert Metcalfe discovered his law, he was vague about the notion of value. In those days, it had something to do with sharing expensive resources like fax machines and printers, exchanging electronic mail, and accessing communications technologies, such as the internet. But value is not remotely vague when considering what an automated system does for the chiropractic business and the coaches who apply it to their base of active trainees. For the chiropractic coach, CoachMate shatters any perceived limits on capacity and growth. Its users receive value in four primary ways: improved collections, lower audit risk, efficient practice management, and added revenue sources. And, according to Metcalfe's law, this value continues to grow long after the coach began using such a system, in proportion to each new practice that joins the service of the coach using the system.