9 Metrics to Help You Evaluate the State of Your Practice
By Kelley Mulhern, DC
Physicist William Thompson, better known as Lord Kelvin, introduced a new way to measure temperature in 1848. Although the existence of an "absolute zero" was widely accepted in the scientific circles of his time, Lord Kelvin was the first to calculate the mathematical formula for the scale that bears his name. Like most scientists, Lord Kelvin was a proponent of measurement, and is credited with saying, "If you cannot measure it, you cannot improve it."
"Metrics" are defined as a way to measure something or as the result gained from measurement. They can (and should) be gathered for a multitude of purposes in any business. Let's discuss nine key metrics you should be using in your chiropractic practice.
Understanding Why Metrics Are Important
When used consistently, metrics can help you gain critical information about the health of your business. They can indicate when your practice is strong and growing, and they can raise a red flag when something isn't working as it should. While "the numbers" of your practice aren't all that matter, they represent vital data that must be considered.
Most health-care practice owners calculate and review some simple metrics regularly, such as the number of new patients they see each month or the number of office visits they handle each week. Fewer practice owners calculate additional metrics consistently.
Metrics become more valuable over time. For example, if a doctor says he saw 35 new patients last month, how valuable is that information? What does it really mean? Without context or something to compare the number to, it's virtually useless.
Instead, imagine this same doctor reports that he saw an average of 35 new patients a month for the past 24 months – or that he saw 35 new patients last month when his normal average is 50. Do you see how the consistent use of this metric provides context and comparison and, thus, more information?
1. New Patients Per Month: Most offices don't count every person who comes in for a consultation as a "new patient." Only count those people who have a legitimate chance of becoming a regular patient. You can define a new patient as someone who receives their exam and report of findings, receives their first treatment or commits to a care plan. Whichever makes the most sense for your practice should be the definition you adopt and use moving forward.
2. Office Visits (OV): The number of completed office visits per day/week/month/year. To use this metric in an additional way, you can look at the number of office visits scheduled four weeks from today's date. Several management companies recommend that an office should have 50 percent of today's total office visits on the books by that date. For example, if today is March 1 and you saw 100 patients, look at the schedule for April 1 (or the next business day your office is open). According to this advice, you should already have 50 patients scheduled for that date.
3. Cost to See a Patient: This number tells you how much it costs you to see a patient. If you're going to provide a discounted service to a patient, it's a good idea to know what your cost is so your discount doesn't go below that number. To calculate this figure, add up all your overhead expenses including rent, staffing, utilities, etc., and divide by the number of patients. (You can look at this by day, week, month or year.) For an associate, the overhead would be the sum total of all business expenses, such as licensing, malpractice insurance, continuing education, seminars, organization or association dues, and so forth.
4. Office Visits Per Patient: While this calculation is simple, it's an important practice metric that reflects the number of office visits for a typical new patient. Simply divide the number of total office visits by the number of new patients to obtain this number. (This is usually calculated per month or per year.)
5. Missed Appointment %: Sum any missed appointments for the given time period and divide by the total number of office visits to calculate the percentage of missed appointments. While some missed appointments are normal, if this number gets too high, it indicates you have an issue such as scheduling, retention or communication that needs to be addressed.
6. % Collections: This number tells you what percentage of the services rendered you're actually collecting. In a cash practice, this should be as close to 100 percent as possible. In PI or insurance offices, it may be less than 100 percent. This number is obtained by dividing your total collections by the total services rendered and multiplying by 100.
7. Average Charge Per Visit: This calculation tells you, on average, how much you charge per patient encounter. It's determined by dividing the services rendered by the number of office visits. For example, if you provide $100,000 of services in a given month and the number of office visits totaled 500, your average charge per visit that month is $100,000 / 500 = $200.
8. % Overhead: This calculation helps you to understand how much of the monies you collect each month goes toward office overhead. In general, it should be less than 50 percent. However, if you've recently purchased a piece of equipment, renovated, moved or added a new staff member, this number can be temporarily higher. Divide your total overhead by your total collections and multiply by 100.
9. Accounts Receivable (A/R): The A/R represents the amount of money owed to you for services already rendered. It's a running total of what you're legitimately owed after bad debt, insurance adjustments, discounts, and so forth. Your practice software program should be able to print out an A/R report for your review.
Use these nine common metrics to help identify strengths and weaknesses. Many of these numbers can be generated automatically by your practice software and printed in reports. Alternatively, you can delegate the calculations to a staff member and review them regularly. Once areas of concern are identified, take steps to address the underlying issues.
One final word of caution: Don't get bogged down in the numbers. Yes, they're important, and yes, it can be easy to get overwhelmed by or consumed with them. But more important than the numbers are the human beings you serve. Look at the numbers, but focus on the people in your practice. Serve them well, put their needs first, practice with integrity, and the "numbers" will follow.
Dr. Kelley Mulhern (formerly Kelley Pendleton) is a chiropractor, healthcare marketing consultant, professional speaker, and the author of Community Connections! Relationship Marketing for Healthcare Professionals. For more information or to download free materials, please visit www.dr-kelley.com.
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