Although you’re up to your eyes with keeping up with day-to-day operations, it is vital that you make time for monitoring your practice’s financial performance. One of the top reasons practices lose money is failing to track this consistently, so here are 10 essential financial KPIs to measure to ensure your success as a business.
KEY PERFORMANCE INDICATORS (KPIs) ARE VITAL TO PRACTICE SUCCESS
A KPI is a type of performance measurement used to monitor the success of targets in set categories within your business. When used right, they will be linked with your key goals and strategic priorities to allow you to evaluate data in each area. This data will lead to a greater understanding of your current position, it can identify irregularities, and it will help you guide future decisions that move your practice towards success.
KEY FINANCIAL KPI’S IN YOUR PRACTICE
Monitor and evaluate your financial position with these essential KPIs.
Billings – what are your daily/weekly/monthly billing targets? Are you meeting these targets? Are you aware of what the benchmarks are ? This metric provides a big picture of how your practice is doing.(Read: 5 Secrets to Successful Business Planning for Your Practice)
Collections – what percentage of fees are actually collected? 98% should be the minimum. Benchmark this metric against your own speciality, how do you compare? Profit – what is your total profit after operating costs have been paid?
Overheads –what percentage of your income are your overheads? Your expenses should be less than 59% of your total income. New Patients – how many new patients do you have coming in monthly and yearly? Most importantly, what is your retention rate? You want new patients to be increasing by 10-15% annually.
Revenue Split – what is the split between your bulk bill (e.g. private billings, insurance etc)? For a medical practice, what are the fees generated by your nursing team? For a dental practice, what is the revenue split between dentist and hygienist? Ideally, this should be at a ratio of 75:25. Can any of these metrics be adjusted to benefit the practice?
Case Acceptance – how do patients respond to treatment recommendations? Are at least 90% of case presentations accepted? Percentage of patients scheduled – are 98% of patients scheduled for their next appointment at all times?
Cancellations/No Show Rates – is the rate 1% or less? If not, the practice may be losing money from unproductive gaps in the schedule.
Marketing – what is your return on investment? Are you covering costs?
TAKE CONTROL OF YOUR PRACTICE’S FINANCES
Many practices struggle with financial challenges until it reaches a point where they have to close their doors for good or the principal doctor/dentist doesn’t get paid.. Don’t be one of those practices!
Take control of your finances by using these key KPIs and analysing them regularly (your admin team should provide a weekly one-page report). Once you have all of these being recorded, reviewing the numbers will only take up a few minutes of your time yet it will contribute greatly to the success of your practice.
Be 100% sure of your financial position, identify performance gaps, and make the necessary corrections to effectively run your medical/dental practice for the long-term.