February 3, 2024
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 regularly (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
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:
- Net Profit
- 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 as high as 50% of expenses
- Payroll under 30% of expenses
- Marketing 10% of total revenue
The best time to plant a tree was 20 years ago. The second-best time is now.John D. Rockefeller
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.”
For example:
A new business (opened 0-12 months) should be focused on:
- Total Revenue
- Revenue by Provider
- Revenue by Lead Source
- Total Leads
- Total Appointments Booked
- Total Appointments by service
- Total number of Cancellations
- Global Conversion Rate
- Total Expenses
- Total Profit
- An existing business (1-3 years) can focus on:
- Customer Acquisition Cost
- Marketing ROI
- Staff Capacity
- Gross Profit
- Profit by service
- Profit by provider
- Avg. invoice
- 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
- Machinery Capacity
- Avg. revenue by provider
- Payroll expense ratio
- Cost of goods sold (Cogs) ratio
- Avg. Time from first contact to service
- New initiatives ROI
