This month’s blog theme is business metrics for therapy practices. But before we jump into the specifics of what to measure, calculate, analyze, and act upon, let’s take a step back and cover the basics—what are business metrics?
You know the first word in the phrase: business. So how about the second? In addition to referring to a much smarter standard of measurement (the metric system), a metric in its simplest form is a measurement. Put the two words together and you have a business measurement, or a measurement you can use to track and assess a quantifiable component of your practice’s performance.
You already track and assess a quantifiable component of each patient’s performance: you take a baseline measurement, set a SMART goal, and generate new measurement data on each visit to track his or her performance toward that goal. Now, turn that progress-tracking eye to the state of your business.
The key to ensuring that your business metrics are effective is to compare them to your baseline measurements (in other words, your status quo) and industry-wide benchmarks or business objectives (your goals). This provides context for your metrics and tells you how far you’ve come and how much farther you have to go. As this article explains, $20 million in sales in the fourth quarter seems rather impressive—unless you’re Boeing, in which case you’re considering bankruptcy. It’s all about the context. Don’t fall into the trap of assuming everything’s going great without understanding the whole picture.
While we’re on the subject of potential traps, don’t get too attached to your metrics, either. One of the most important things you can do is to regularly evaluate and re-evaluate your metrics to determine if tracking them is still beneficial to your business. If the metrics are no longer applicable—for example, revenue generated from a Yellow Page ad—throw ’em out and find new ones that will provide you with much more relevant data.
You also might hear the term KPI (key performance indicator) being bandied about in a business metric discussion or two. But before you get worried about deciphering yet another business jargon acronym, a KPI is simply an important business metric—one that is imperative in meeting key business objectives. Whereas website traffic may be a helpful business metric to pay attention to, profit-per-visit or customer satisfaction might be key performance indicators. In other words, they’re crucial to your success.
Got that? Good! Because we’re about to jump into some really important business metrics for private therapy practices. Stay tuned to the blog this month to learn more.