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The chiropractic industry has enjoyed recent growth, but its future requires some flexibility. By JASON BAKER of IBISWorld.

By Jason Baker

As a health industry sector, chiropractic services need to rely on legislative support as well as the population’s propensity for bad backs.

The $500 million market for chiropractic services has grown over the past five years thanks to the increasing number of Australians taking out private health insurance with ancillary cover. 

But the industry’s growth over the coming five years will be modest unless the long-standing issue of Medicare funding for chiropractic services can be resolved in the industry’s favour.

IBISWorld estimates that this industry grew at an average annual rate of 2.4% over the five year period to 2007-08.

A strong economy, growth in private health insurance coverage and an ageing of the population has promoted industry growth in the five years.

The number of chiropractic services provided in Australia has grown modestly each year, with an increase in the proportion of chiropractic services being covered under private health insurance benefits. The number of chiropractic services rendered for which benefits were paid by private health insurers has grown solidly in the four years to 2007-08.

There is very limited coverage of chiropractic services under the Federal Government’s national health insurance system, Medicare. This is a long standing issue between the profession and the Government, not the least because in some cases medical practitioners can render a chiropractic service that is covered by a Medicare rebate.

A major stumbling block in including chiropractics in Medicare is the issue as to whether chiropractic treatment can be effective for disorders not normally associated with spinal stress or injury, such as peptic ulcers, hypertension and diabetes.

IBISWorld estimates the industry will grow at an annual average rate of 3% over the five years to 2012-13. Industry growth will be underpinned by volume growth.

However that growth in industry revenue will be constrained by low, if any, real price increases, thanks to high competition and slow growth in average benefits paid per service by private health insurers.

The demand for chiropractic services will increase due to the ageing of the population; and as a result of improved public and medical awareness and acceptance of the profession and of so-called alternative therapies generally.

But the proportion of the population with private health insurance membership probably peaked in 2007-08. There will now be a decline in the proportion of the population with ancillary health cover over the next five year, and this will tend to have an adverse effect on growth in benefits paid for chiropractic services.

In the longer term, superannuation savings should contribute to higher levels of income for people in retirement, which would benefit this industry.

Key success factors for operators in the industry

• Having a good reputation. Establishing a reputation for consistent and sound results with the patient community and with local general practitioners and allied health professionals.
• Having a loyal customer base. Establishing patient rapport and loyalty.
• Proximity to key markets. Location – chiropractors should locate in a prominent site in an area of under-supply.
• Development of a symbiotic relationship with another industry. Association or co-location with a sports clinic or paramedical group can also be beneficial to demand.
• Effective product promotion. Patient and community education which encourages confidence in chiropractors.
• Ability to attract local support/patronage. Principals should seek to market their practice at all opportunities. This can be achieved through advertising, making presentations to other health practitioners and to interest groups, and participating in the local community.
• Ensuring pricing policy is appropriate. Setting fees at a level that maximises profitability while remaining attractive to customers.

IBISWorld supplies business information databases, including industry reports, company reports and business indicator reports. www.ibisworld.com.au