This month is all about tracking your clinic’s performance. Now that you know what business metrics are and why they’re so important, it’s time to get to the good stuff—that is, the ones you should actually use. Without further ado, here are the metrics essential to monitoring the health of your practice (in no particular order):
First and foremost, you should know how much money—on average—you make for each patient visit, after subtracting all of the costs associated with doing business. This will help you make all sorts of informed business decisions, like whether you should bring on another therapist, increase your marketing efforts, or cut down on business expenses to ensure you can keep the lights on.
To calculate profit per visit, you need to know your net revenue per visit and your net cost per visit. For the revenue part, figure out the average reimbursement per patient visit you’re collecting from each insurance plan or patient. (It’s a good idea to first separate these totals by insurance carrier so you know which company is paying what. This will help you if you ever need to renegotiate a fee schedule). Then, average all reimbursements per patient visit together to get your net revenue per visit. For the cost part, calculate the total of all the expenses associated with doing business each day—think rent, training, payroll, equipment, utilities, supplies, legal fees, and insurance. Then, divide this number by the average number of patients you see each day. This is your net cost per visit.
Your profit per visit is your net cost per visit subtracted from your net revenue per visit. If this number is positive, you are in the black (operating at a profit). If this number is negative, you are in the red (operating at a loss)—in which case it’s probably time to make two of the three informed business decisions I mentioned above.
You could be the best therapist in the world, but without an efficient billing process, you’ll never see a dime. To ensure that’s not the case in your clinic, start paying attention to the following:
- Percentage of receivables over 120 days: This metric tells you how well your practice is doing as far as timely collecting goes. To calculate this figure, divide the total receivables that are over 120 days due by your total receivables. You’re in good shape if your receivables over 120 days represent less than 10% of total receivables.
- Daily sales outstanding (DSO) or days in receivable outstanding (DRO): Regardless of what you call it, this metric is the average amount of time it takes for you to collect payment from an insurance carrier or patient. To calculate your DSO/DRO, divide your total current receivables by your average daily charge amount (which is your total gross charges for the past year divided by 365). If your DSO/DRO is fewer than 35 days, you’re gold, Ponyboy (if you’ve never read the Outsiders, I recommend it).
- Net collection rate: This measures the effectiveness of your practice’s collection process. To calculate it, divide your payments by your charges for six months, and then multiply that number by 100. You’re aiming for at least 95%.
- Denial rate: This is the percentage of claims your payers reject. To calculate this rate, divide the total dollar amount of all denied claims in a three-month period by the the total dollar amount of all of the claims you submitted for the same time period. Anything less than 10% is ideal.
Rehab therapy is somewhat unique in terms of its business model. As a therapist, your ultimate goal is to help your customers so they get better and no longer need your services. With that being the case, it’s even more crucial that your patients complete every physical therapy visit in their plan of care and that they recommend you to their friends. So customer satisfaction is kind of a big deal—and it’s important to measure satisfaction at various points throughout treatment, not just at the end. As the author of this article points out, “If you’re only gauging patient satisfaction at discharge, you’re collecting heavily biased data: the only people you’re surveying have completed their entire course of care (and thus likely bought into your value proposition early on). This leads to extremely high satisfaction scores, many pats on the back, and absolutely zero actionable data.” Metrics are all about actionable data, so you definitely don’t want that.
One way to track customer satisfaction throughout your customers’ experience is to implement a quarterly survey that contains a Net Promoter Score® (NPS). NPS is a method for determining how happy customers are with a particular company by labelling those customers Promoters, Passives, and Detractors based on how likely they’d be to recommend the company to their friends and family.
But that’s not the only tool in the customer-satisfaction-metric shed. You also can include “a series of attribute satisfaction measures”—which, according to this survey technology provider, include questions like “How satisfied are you with the customer service you received at [clinic name]?” and “How important is customer service in your decision to select [clinic name]?” And don’t forget about questions that uncover things like perceived warmth of therapist or appointment timeliness—things that might differentiate your practice from others and thus, lead to more satisfied customers.
Okay, this one doesn’t actually start with a “C,” but your employees still make up a super important part of your business—so their satisfaction counts as a metric that’s essential to the health of your practice. Not only is happiness good for the goose (the employee), but it’s also good for the gander (your practice), because a happy employee is a more productive employee. Whether you track employee satisfaction by formal survey or informal chat, just make sure you’re tracking it—and taking action based on what you learn.
Hungry for more metrics? Check out this post on marketing- and sales-related metrics. If you have your own metrics to share, please use the comments section below. We’d love to know what you’re measuring in your practice.