Okay, so you’ve seen us write a metric ton of content about the importance of measuring the data that matters to your practice (outcomes data, anyone?). Well, today that discussion continues as we move to the realm of actual business metrics: key performance indicators (KPIs). KPIs are mission critical measurements that can help you refine your clinic strategy so you meet key business objectives.
To make the most of your clinic’s KPIs, you have to compare them to a set of baseline measurements—which represents the status quo in your practice—as well as industry-wide benchmarks or company goals. This gives your KPIs context, so you know how far you’ve come—and how far you still need to go. Additionally, you’ll want to check up on your metrics every so often to ensure you’re still measuring the things that matter most to your practice. If your KPIs are no longer representative of your practice’s key areas of focus—or they’re no longer indicative of your performance—throw ’em out and replace them with ones that are more relevant to you.
To help you determine which key performance indicators you should prioritize, we handpicked an assortment of those most impactful to patient care and business growth. For an even more exhaustive list, however, be sure to check out our free business benchmarking guide here!
Cost per Visit
Total Costs in a Month / Total Number of Patients Seen in that Month
This is a good baseline metric to measure regularly (we recommend monthly) as it provides a rough estimate of how much it costs to treat each patient. When calculating your cost per visit, make sure you’re accounting for every expense that goes into treating patients and keeping your doors open, including:
- Equipment and supplies,
- Insurance, and
- Technology systems.
Profit per Month
Total Revenue Generated in a Month – Total Costs Accrued in that Month
Profit per month (otherwise referred to as profit and loss, or P&L) determines whether your clinic is making or losing money each month. That said, measuring your profits and losses on a monthly timetable is critical to monitoring your practice’s financial health—and gaining a clearer picture of its growth trajectory, overall.
Revenue per Visit
Total Revenue in a Month / Total Number of Patients Seen in that Month
The point of this metric is to understand how much money—on average—your clinic earns from each patient visit. Not only is this a handy metric in it’s own right, it also can help you determine other important benchmarks. For instance, you can use this data to discover your revenue per patient per payer—which is incredibly useful when evaluating payer contracts. Or, you can look at revenue per therapist, thus helping you gauge which therapists are effectively managing their time and billing.
Business Operations Metrics
Total Number of Unbooked Hours / Total Number of Bookable Hours x 100
This KPI measures the percentage of open, unscheduled time on your therapists’ schedules that should be dedicated to patient appointments. Remember, a high vacancy rate generally indicates one major issue: lost productivity. So, if you’re vacancy rate is high, it might be a sign that you either:
- need to ramp up your marketing efforts to drive patient volume; or
- lower your cancellation and no-show rates (more on this next).
Cancellation and No-Show Rate
Number of Cancelled and Missed Appointments / Total Number of Appointments x 100
Patient cancellations and no-shows are more than just a minor annoyance—they can have a major impact on:
- your therapist’s daily productivity,
- your clinic volume and overall revenue, and
- your clinic’s footprint and future growth.
To reduce this your overall percentage of cancellations and no-shows, consider improving your patient communication strategies and implementing a 24-hour cancellation or no-show fee.
Employee Net Promoter Score® (eNPS®)
Percentage of Promoters – Percentage of Detractors
Distributing regular eNPS® surveys are a great way to measure your employees’ satisfaction and loyalty. To do so, simply send your employees a monthly note asking them, on a scale of zero to ten, how likely they are to recommend your practice as a place to work. Then, you’ll sort employee responses into these three categories:
- Detractors: Employees who score from zero to six are called “detractors,” and are not only unhappy at work, but are also likely seeking other job opportunities.
- Passives: This is the term for employees who score a seven or eight. Although they’re satisfied with their job, they aren’t overly loyal to the clinic.
- Promoters: This category is reserved for employees who score a nine or ten. Promoters are happy and engaged in their work—not to mention incredibly loyal to the clinic they work for.
For more on all things eNPS®, check out this blog post.
Employee Turnover Rate
Number of Resigned or Terminated Employees / Total Number of Employees x 100
This statistic, especially when coupled with eNPS®, is key to gauging employee happiness—and managing your clinic’s employee turnover rate before it becomes a major issue. According to The Society for Human Resource Management, the average replacement cost of a salaried employee is six to nine months’ salary. This means that a high turnover rate is bad from both a morale and financial standpoint. The good news? Clinic leaders have more control over employee turnover than they think. The key is to keep a pulse on the employee feedback you’ve collected in the past and look for trends you can address. Be advised: What you find may require you to make some tough changes—but you’ll be doing your team and clinic a huge favor in the long run.
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Percentage of Receivables Over 120 Days
Total Receivables over 120 Days / Total Receivables x 100
This KPI measures the timeliness of your collection processes. Ideally, you want your clinic’s receivables to process in fewer than 120 days (preferably even faster). Therefore, it’ll behoove you to get this metric to be as low as possible—preferably less than 10%. Anything more than that means you may have a few bugs to work out in your A/R process.
Daily Sales Outstanding (DSO)
Total Current Receivables / Total Gross Charges x Number of Days
This useful collection metric measures the average amount of time it takes for you to collect payment from an insurance carrier or patient. According to our in-house experts, you should aim for a benchmark of fewer than 35 days—with a range of 20 to 40 days, depending on your state.
Net Collection Rate
Total Payments / Total Payments Plus Adjustments During the Same Time Period x 100
Your clinic’s net collection rate represents the effectiveness of your practice’s collection processes—and how often you make adjustments or write off patient balances. The goal is to keep your rate between 50% and 60% each month—though the further back you calculate your rate, the higher it should be. If your rate isn’t quite up to par, take some time to review some collections best practices.
Denial and Rejection Rates
Total Dollar Amount of All Denied Claims During a Time Period / Total Dollar Amount of All Claims Submitted During the Same Time Period x 100
Your practice’s denial and rejection rates represent the percentage of claims that your payers either reject or deny. Because clean claims are crucial to getting paid in a timely manner, understanding how often payers accept your claims can show you where you need to shore up internal processes to reduce errors. Your target denial and rejection rate should fall below 10%.
Number of Active Patients with a Specific Payer / Total Number of Active Patients x 100
Reviewing your payer mix (i.e., how many patients, on average, come from each payer) can help you manage your revenue streams in a more informed way. Once you know your payer mix, you can:
- Predict how future changes to reimbursements will affect your practice’s financial health;
- Better understand each payers’ reimbursement speed cycle; and
- Determine whether your contracts are worthwhile.
If you find you’re being underpaid by an insurer, it may be time to renegotiate your contract or go out of network.
Marketing and Sales Metrics
Customer Lifetime Value (LTV)
Average Revenue per Visit x Average Number of Visits per Episode of Care x Average Number of Lifetime Episodes of Care
Customer LTV may be one of the most quintessential metrics for clinic leaders to track as it measures and identifies opportunities to increase patient retention and reactivation—and, thus, maximize your clinic’s long-term financial health. If your customer LTV is substandard (meaning, a significant percentage of patients aren’t completing their care plans), focus on strategies to increase retention—and therefore, LTV—such as:
- tracking patient satisfaction and loyalty,
- engaging patients throughout their entire care journey,
- increasing patient reactivation rates, and
- diversifying services.
Customer Acquisition Cost (CAC)
Total Dollar Amount Spent Marketing / Total Number of Net New (Scheduled) Patients
This KPI illuminates how much money it costs to acquire a new patient—which can help you assess the effectiveness of a specific marketing campaign or sales effort. Obviously, the lower this number is, the better. Once you calculate your CAC, compare it to your customer LTV to determine the ROI of your marketing campaigns.
Number of Patients Who Book an Appointment After Interacting with a Specific Marketing Campaign / Total Number of Patients Who Interacted with that Marketing Campaign
Your clinic’s conversion rate is the percentage of prospects who convert to customers. In short, it measures the effectiveness of your marketing efforts. You can track your overall conversion rate or narrow your perspective to track the conversion of a particular task or campaign, such as:
- Paid ads,
- Physician referrals,
- Website leads,
- Events outreach, and/or
- Phone calls.
Net Promoter Score® (NPS®)
Percentage of Promoters – Percentage of Detractors
NPS® measures patient satisfaction and loyalty by asking patients how likely they would be, on a scale of zero to 10, to recommend your practice to a friend or colleague. The feedback you receive from this survey can be sorted into the same three buckets as those listed above under eNPS®. Tracking this metric month over month is one of the best ways to identify problems with your patient experience and drive patient retention. WebPT’s Senior Director of Product Manager, Scott Hebert, explains it best in this guide: “The higher your NPS, the more likely you are to have patients complete their full course of care.”
There you have it: everything you need to know about the role key performance indicators play in your practice. Well, almost everything. If you’re looking to take your mastery of metrics a step further, check out our extensive business benchmarking guide—complete with 34 KPI metric-tracking tips that are essential to finding financial and operational success.