Use KPIs to Make Better Business Decisions Choosing the right performance indicators for your practice can help inform your decisions and determine the health of your practice. In Private Practice
Free
In Private Practice  |   December 01, 2017
Use KPIs to Make Better Business Decisions
Author Notes
Article Information
Practice Management / Professional Issues & Training / In Private Practice
In Private Practice   |   December 01, 2017
Use KPIs to Make Better Business Decisions
The ASHA Leader, December 2017, Vol. 22, 42-43. doi:10.1044/leader.IPP.22122017.42
The ASHA Leader, December 2017, Vol. 22, 42-43. doi:10.1044/leader.IPP.22122017.42
Business owners recognize an old saying as an inescapable component of business growth: “What gets measured gets managed.”
In business, the things that are measured are called key performance indicators, or KPIs—the company’s performance metrics that demonstrate how effectively the company is achieving its major business objectives. Organizations use KPIs at multiple levels to evaluate their success at reaching targets.
Audiologists and speech-language pathologists who own practices can use the KPI concept to make decisions about what insurance to accept, when to schedule specific marketing activities, whether employees are performing optimally, and other factors that affect practice success.
The first step in choosing KPIs for your practice is to understand what factors are important to your company’s growth. KPIs typically fall into four main categories: revenue, collections, marketing and productivity.
Revenue
Take a look at your revenue through several different lenses to determine if your company is profitable—and, if it isn’t, why not. In private practice, it’s important to measure these revenue-related metrics:
  • Gross and net revenues: per month, quarter and year, per clinic location, and for the company as a whole.

  • Net revenue per visit.

  • Payer revenue per billing code and number of patients per payer.

  • Total expenses.

  • Profit margin.

Try starting with just one metric per category, which would give you four KPIs to track and measure with consistency and precision. If these those four could be related in some way, even better.

Collections
Measuring collections regularly ensures not only that you are receiving payment for the services you provide, but also that you receive those payments in a timely manner, which has a great impact on your cash flow.
Collections-related metrics could be:
  • Percent of receivables older than 120 days.

  • Average number of days to collection.

  • Percent denial rate.

When these numbers get out of balance, you can investigate quickly to determine why—and make changes quickly so that money is flowing into the bank account with ease.
Marketing
Most private practices use several different types of marketing methods and activities. Each involves its own costs, yields various numbers of new patients, and requires different amounts of time to execute. You want to make sure that your marketing time and money are actually yielding new patients and at what cost. Some common marketing KPIs might include:
  • Average number of new patients acquired per activity.

  • Cost per patient per activity.

  • Top referrals.

  • New patients per week, month, quarter and year.

Productivity
You can measure productivity in many layers for a private practice: individual clinicians, clinic locations and the practice as a whole. Some KPIs to consider regarding productivity include:
  • Total number of patients per week, month, quarter and year by clinician, location and practice as a whole.

  • Percent of billable versus nonbillable hours per week per clinician.

  • Cancellation rate per week, month, quarter and year for each clinician, patient and location, and the entire practice.

  • Customer lifetime value (LTV), or the average number of visits each patient will require to complete their course of treatment.

Schedule regular, consistent intervals to gather, record and analyze the data. This allows you to make more informed decisions about how to grow your company to its greatest potential.

Getting started
You could take hundreds of different measurements to quantify and gauge the performance of your practice. I’ve mentioned only a few, and the thought of measuring even just these can be overwhelming. So how do you get started?
Try starting with just one metric per category, which would give you four KPIs to track and measure with consistency and precision. If these four could be related in some way, even better.
For example, I decide that I want to track gross revenue per month, quarter and year to determine if there are any trends—up or down—that coincide with a particular time of year or strategic marketing effort.
  • Given that revenue is determined by whether we actually collect the money owed for services provided, I might choose to track average days to collection to determine if I can change the collections process to receive payment more quickly.

  • To collect money, we have to provide a service. So my productivity metric might start out with tracking the number of patient visits billed per week, month, quarter and year for the company.

  • To get more patient visits, it is reasonable to think that we need to do some marketing. My marketing metric would be to track the average number of new patients per marketing activity for the year to see which activities yield the greatest number of new patients.

Now that I’ve determined KPIs, I need a method of recording that information to analyze it quickly and comparatively over time. This method could be a well-constructed Excel spreadsheet or a report generated from practice-management software.
The only thing left to do is schedule regular, consistent intervals to gather, record and analyze the data. This allows you to make more informed decisions about how to grow your company to its greatest potential.
0 Comments
Submit a Comment
Submit A Comment
Name
Comment Title
Comment


This feature is available to Subscribers Only
Sign In or Create an Account ×
FROM THIS ISSUE
December 2017
Volume 22, Issue 12