One of my favorite sayings and a critical component I teach to all of my medical practice consulting clients and in my proprietary “7 Fundamentals to a 7-Figure Practice” training is “Inspect what you expect.”
If you DON’T have systems, processes & procedures and a way to track your business analytics, or you don’t know your numbers, or even what numbers you should be tracking, then you are setting yourself up for failure.
Even if you DO have the best practice management software in place with a comprehensive dashboard that is integrated and updated hourly, it ONLY WORKS if you’re using it to your advantage, running reports on a regular basis (weekly, monthly, quarterly and yearly), and reviewing the right Key Performance Indicators (KPIs).
No matter what stage your medical practice is in, there are so many business decisions you need to make. The bottom line is without knowing your numbers, you cannot scale, you cannot make informed decisions and you cannot course correct.
I have worked with hundreds of medical practices, and I have found that most do not know which metrics to use and are not using KPIs at all.
I have seen practices spend thousands of dollars in marketing efforts without tracking what is actually working and converting. Without knowing how many leads your marketing dollars are generating and how many of those leads are converting into clients, you are literally throwing money down the drain.
Critical Numbers and Common Benchmarks
When I work with my clients one-on-one or when they attend one of my live sales trainings or complete my online course, we take a deep dive in what baseline KPIs are needed and how to figure out the calculations.
Here are some of the most critical KPIs to measure:
Revenue Per Hour
Average revenue per invoice
Revenue per provider and procedure
Conversions Rates (phone, web, consults)
Operational – staff capacity and productivity
Lead acquisition cost – what is converting and how much is it costing
Here are some common benchmarks to keep in mind:
High performance medical practices should run at a 70% capacity. If you are getting close to 65-70%, you need to hire someone else.
Rent should be no more than 4% of total expenses
Costs of goods should be 30-40%, Injectables can be a high as 50% of expenses
Payroll under 30% of expenses
Marketing 10% of total revenue
If you are looking at these numbers and benchmarks and are lost, or know yours are out of alignment, trust me–you are not alone. I am here to help. My team can perform a practice assessment, starting with the pre-work of a gap analysis, an enhanced 21-page deep dive look into your practice where we analyze your entire practice and the data and give you a plan of action with recommendations that will improve the health of your business.
Expert Advice and Best Practices on Reports/KPIs
Here is some advice and a list of suggested best practices from my colleague, Senior Practice Analyst Randy Torban of Symplast:
KPIs should be viewed by the day, week, month, quarter, and year, and comparisons should be made year over year. Going back 3 years helps with trends – which in turn helps with forecasting.
The KPIs medical practices, med spas and aesthetic clinics should focus on can be determined by how long the “business has been in business.”
A new business (opened 0-12 months) should be focused on:
Revenue by Provider
Revenue by Lead Source
Total Appointments Booked
Total Appointments by service
Total number of Cancellations
Global Conversion Rate
An existing business (1-3 years) can focus on:
Customer Acquisition Cost
Profit by service
Profit by provider
New vs. existing patient ratio
Percentage of returning patients
Lead to Patient Conversion rate
An established business (3-5 years) should look at:
Natural Growth rate vs. Actual
Forecast vs. Actual
Marketing ROI per Channel
Goals completion Progress
Avg. revenue by provider
Payroll expense ratio
Cost of goods sold (Cogs) ratio
Avg. Time from first contact to service
New initiatives ROI
3-5 years and 5+ have slightly different KPIs and when you work with our team, we will help you identify these metrics and manage them. As always, my team is here to help you launch or scale your practice. If you have any questions about systems, software, reports and KPIs or how my programs can support you.
Remember, it’s a numbers game, and you need to be in it to win it!
Terri Ross can take your business to new levels, whether you’re looking for exclusive private strategy sessions, corporate sales training, or a keynote speaker for the next major aesthetic event. Book Terri Ross today to take the first steps in giving your business the tools it needs to succeed in this incredibly competitive landscape.