Blog

The Four Metrics that Matter Most to the Health of Your Practice

Have you ever heard the saying “drowning in data but starving for information”? There are quite a few iterations of this that can be found online, but the original version of it is often attributed to Gary Cokins just over five years ago.

Imagine this conversation between two practice owners.

Practice Owner 1: “I’m drowning! I’m losing money and I’m spending my entire week studying spreadsheets, trying to understand why. I have clear benchmarks for my entire staff but no one meets them! I don’t know how to fix this and I’m about to go out of business!”

Practice Owner 2: “First, take a deep breath. Second, what are you tracking and what are your practice goals?

Practice Owner 1: “Well, I have 109 metrics that I track on a daily basis…”

Practice Owner 2: “Wait, did you say 109 metrics?”

Sound familiar? The first problem here is that Practice Owner 1 is drowning in data and unable to access any actionable information (learn five other metrics mistakes clinic owners make in this article). I won’t bore you with the rest of the conversation, but the point is that paying attention to everything will sometimes cause you to end up with nothing. Let’s talk about how to take a fresh approach to managing metrics.

Your Four Categories of Data

In general, when managing a therapy practice, there are four basic things you need to know.

  • Are we seeing enough patients?
  • Are my therapists charging enough for the time that they’re spending with their patients?
  • Are we getting paid enough per visit?
  • Is my team collecting the money in a timely manner?

You can separate these four questions into four categories of data: visits, charges, payments, and AR.  These are your canary in a coal mine – when one of them is heading in an undesirable direction, you know you need to act.

Visits:

Your visit is the commodity that you must sell. Selling those visits (filling your schedule) is most likely your primary source of revenue. If you are meeting your benchmarks and targets for visit counts, you’re seeing enough arrived appointments to meet your revenue targets.

Charges:

Even though most payers will not pay your full fee schedule, you need to ensure that you are charging enough so that you will be paid the full allowed amount by all payers. You also need to assure that you are charging for all of your staff’s billable time. Typically, at least 90% of the visit time with a patient should be billable.

Payments:

Sadly, rent cannot be paid with good intentions. You need to be able to pay your bills and have enough left over to meet your revenue goals.  How do you do that? Ensure that your revenue per visit is more than your cost per visit. It doesn’t matter how many patients you see if you’re spending more per patient visit than you are being reimbursed for. Know your cost per visit and set revenue goals to make sure that you’re heading in the right financial direction.

AR:

Feeding the revenue machine is one thing, but what happens if it gets clogged by denials, or by payers who aren’t responding to your bills?  Track your AR, know how quickly your payers pay, and set your team up to act proactively when you’re not being paid in a timely manner. Make sure your front desk team is putting good data into the system and that your billing team has a process for acting quickly when things head the wrong direction.

109 metrics versus four data points. That’s not all that bad, right?  While there are obviously metrics underneath those categories of data that are important to look at (referrals and productivity for example) using these as a foundation will help set you up for success. If you pay attention to these and quickly act to dig into the “why” when any of them head in the wrong direction, you’re taking the first step in moving away from drowning in data and heading towards being able to act on information.

High cancellation and no show rate? Download this tip sheet for six mistakes you could be making.

Download Tip Sheet

Leave a Reply

Your email address will not be published. Required fields are marked *