You’re a rockstar therapist. Your knack for treating patients is uncanny, and your bedside manner keeps them coming back for more. But is that enough to run a successful clinic? Unfortunately, no. You see, being a fantastic therapist is only half the battle of running a fantastic practice. The rest is pure business sense. The good news is, this stuff is easy to learn; it’s all about taking baseline measurements, making small improvements, and tracking progress. To get you started, here are eight metrics critical to your practice:
1. Profit Per Visit
This is how much money you earn—on average—for each patient visit after deducting all costs associated with doing business. To get this number, take a look at the average reimbursement dollar amount you’re collecting from each insurance carrier or patient per patient visit, and then average them together. (Note: It’s a good idea to get an average for each insurance carrier so you have a general idea of who’s paying what. This can help if you need to renegotiate your fee schedules.) This total is your net revenue per visit.
Next, consider everything that goes into treating your patients and running your business each day—including rent, technology systems, payroll, supplies, and insurance. Divide this number by the number of patients you typically see during the course of each day. This is your net cost per visit. Take your net cost per visit and subtract it from your net revenue per visit. If you end up with a positive number, you’re turning a profit. If not, you’re losing money, and it’s time to explore ways to cut back your spending or generate some additional income.
2. Net Revenue Per Month
This metric refers to the amount you collected for a given month, rather than the amount you billed. It helps you assess the health of your billing processes and the growth trajectory of your business. Once you’ve determined your baseline, you can use it to set business goals. And if an unexpected rise or fall occurs, you can perform data analysis—using a tool such as WebPT Analytics—to identify the cause.
3. Payer Revenue Per Patient
This figure represents the average amount of reimbursement per patient visit you’re getting from each carrier. In other words, if you want to know which payers offer the highest reimbursement rates, this is a stat you’ll want to pay close attention to. To start, identify the payers that make up the largest portion of your clinic’s revenue (usually, about five to ten payers); then, figure out how much each payer reimburses, on average, per patient. To calculate this, figure out the total revenue generated by each payer and divide it by the number of patients with that insurance. This metric can help you maximize revenue from your most-frequently tapped payers, and you can weigh this revenue stat against your cost metrics to determine which contracts are giving you the biggest payout for your time.
4. Revenue Per Therapist
This metric tells you how much revenue, on average, each therapist generates for your business. Remember: If a therapist sees fewer patients than others, it doesn’t necessarily mean he or she is pulling in less revenue. That’s why it’s important for practice owners to go beyond the number of patients each provider sees and account for the average amount of revenue each of them generates per month, per day, or per visit. With this figure, owners can assess whether therapists are effectively managing their time as well as their billing.
5. Net Promoter Score®
The Net Promoter Score® survey is a proven method of determining how happy customers are with a particular company or service by dividing a client base into three categories (Promoters, Passives, and Detractors) based on their answers to this question: On a scale of one to ten, how likely are you to recommend [company or service] to a friend or colleague?
This metric is incredibly important in industries like rehab therapy, where word-of-mouth marketing is a main source of new business generation. Here’s a breakdown of the three NPS categories:
- Promoters (scores 9–10) are loyal enthusiasts who will continue seeking your services and referring others, thus helping you grow your business.
- Passives (scores 7–8) are satisfied with your services but not necessarily enthusiastic or loyal. Therefore, they are susceptible to competitive offerings.
- Detractors (scores 0–6) are unhappy customers who may be willing to speak out about their negative experiences, thus damaging your brand and detracting from your growth.
To calculate your NPS, subtract the percent of customers who are Detractors from the percent of customers who are Promoters. Before you start asking customers where they fall on the scale all willy nilly, though, it’s important to have a plan. And as you develop that plan, bear in mind these five important steps to Net Promoter Score implementation: align, aim, ask, analyze, and act. For more information on successful NPS use, check out this source or this WebPT Blog post.
6. Billing Metrics
There are several sub-metrics that influence the overall health of your billing cycle, and each one is an important measure of how efficient your billing process is. After all, waiting months for reimbursement—or never receiving it at all—is a clear indicator that your practice is not running as smoothly as it could be. Plus, according to an article on financial metrics written for physicians (but quite applicable to therapists), “the sooner you get paid, the more that payment is worth.” Here are a few metrics this article recommends:
- Days in Receivable Outstanding (a.k.a. Daily Sales Outstanding or DSO): The average amount of time it takes for your practice to collect payment (whether it be from a patient or an insurance carrier). To calculate, take your total current receivables and divide it by the average daily charge amount (your total gross charges for the past year divided by 365 days). Goal: Fewer than 35 days.
- Percentage of Receivables Over 120 Days: This assesses your practice’s ability to collect on a timely basis. To calculate, take the total receivables over 120 days due and divide that number by your total receivables. Goal: Less than 10%.
- Net Collection Rate: This shows how effective your practice is at collecting reimbursements in general. To calculate, divide your payments by your charges for a selected time period (this article suggests six months), and then multiply this number by 100. Goal: At least 95%.
- Denial Rate: The percentage of claims your payers deny. To calculate, divide the dollar value of your denied claims by the total dollar amount of claims you submit for a given period (this article suggests three months). Goal: Less than 10%.
7. Marketing and Sales Metrics
While billing metrics are important, you simply can’t afford to dismiss your marketing numbers. After all, if your marketing strategies aren’t effective, you could be throwing a lot of that hard-earned billing revenue right out the window. (Using a patient relationship management [PRM] software like WebPT Reach can take a lot of the guesswork out of employing a marketing campaign that packs a punch—as well as tracking its performance.) So, to ensure your marketing dollars are well spent—and that your sales strategies hit the mark—keep an eye on these key indicators:
- Customer Acquisition Cost (CAC): This refers to the amount of money it costs to acquire a new patient. To calculate, take the amount you spent on marketing and sales over a particular time frame and divide it by the number of new patients you generated within that period. Ideally, this number should be as low as possible. This can help you assess the effectiveness of a specific marketing campaign or sales effort.
- Vacancy Rate: Your vacancy rate is the percentage of unbooked time on your therapists’ calendars. Take the number of hours not booked and divide that total by the number of total bookable hours. Then, multiply that number by 100. If your vacancy rate is too high, focus on reducing cancellations and no-shows, minimizing padding between appointments, maximizing calendar scheduling, and pre-booking appointments.
- Conversion Rate: This metric refers to the percentage of prospective patients who convert to customers as the result of a particular effort or campaign. For example, if you want to know how many new patients book an appointment using a special offer, take the number of new patients who provided the offer code over the phone divided by the number of phone calls you receive from prospects, and multiply the resulting number by 100. You can track your overall conversion rate or narrow your perspective to assess the conversion performance of a particular task or campaign. The latter will help you better understand the effectiveness of your efforts.
8. Employee Satisfaction
In the timeless words of J.W. Marriott, “Take care of your employees, and they’ll take care of your customers.” There are plenty of ways to gauge employee satisfaction, whether it be by formal survey or informal discussion. The key is simply to listen and, according to Marriott, “Treat your employees the way you would like to be treated—provide them every avenue to success. Get their confidence and respect. Have them like and be interested in their job.” It’s no surprise that regardless of industry, happy employees can make a world of difference in a business’s success. And that goes for every single employee in your practice—not just your therapists. After all, it’s your front office staff who give your patients their first impression of your clinic.
There you have it: eight metrics critical to your practice. Of course, there are always more metrics to look at. What metrics do you pay the most attention to? What’s worked in your clinic—and what hasn’t? Tell us in the comments below.