How to Review Goals and Adjust for Next Year
By Jim Stoker*
If there was ever a year that required a review of goals and adjusting for next year, this is it.
The COVID-19 pandemic exposed weaknesses in businesses across all industries. While the Payment Protection Program was an effective lifeline for businesses, now is a good time to begin preparing for next year.
Successful physical therapy businesses thrive when three key areas are in balance:
- Quality patient care/engaged patients
- Engaged and satisfied employees
- Financial stability for the business
SMART (Specific, Measurable, Attainable, Reaching, Time-bound) goals for each of these key areas should be established annually and reviewed and adjusted quarterly.
Peter Drucker, a well-known business advisor and known to some as the “Father of Management” is quoted as having said, “If you can’t measure it, you can’t improve it.” Having a system for measuring and reviewing key performance indicators (KPIs) across company departments is a critical first step to establishing the right goals. Assess objective metrics at least quarterly for each of the three key areas outlined earlier. Assess metrics such as Net Promotor Score, clinical outcomes, arrival rates, and visits per new patient against internal targets or national benchmarks to assess quality care and patient engagement.
Staff engagement and satisfaction is also critical to success. KPIs should include annual staff retention, an employee engagement survey, and performance measures that assess revenue, visits, and procedures billed per clinical hour. Happy but complacent and unproductive staff is a recipe for failure as much as burned-out, uber-productive staff.
Financial stability goals should leverage key financial ratios such as expense per patient visit, labor expense as a percentage of revenue, and profit as a percentage of revenue. It can also be helpful to look at year-over-year (YOY) growth of revenue, profit, and company value.
Larger organizations may also want to assess additional KPIs and set goals for areas such as marketing, revenue cycle management, and compliance. KPIs may include customer acquisition cost, YOY growth of new patient (NP) volumes by referral channel, and return on investment (ROI) for marketing initiatives by referral channel. Revenue cycle KPIs may include collections as a percentage of payer allowable charges, days outstanding, and percent of accounts receivable (AR) over 90 days.
While this may sound overwhelming at first, using a consistent system for quarterly assessment of company performance will assist in quickly assessing strengths and weaknesses in an objective fashion and turn your SWOT (strengths, weaknesses, opportunities, threats) analysis into an efficient and thorough process that kicks off your strategic planning process.
Once you have established your most appropriate KPIs, compared them to internal targets and national benchmarks, and established your SMART goals, the next step is to assess the ROI or added profit or company value for improving weaknesses.
An example ROI assessment scenario: An owner has identified procedures per clinical hour (staff efficiency/productivity) as an opportunity to improve in the upcoming year. A 10% improvement in this KPI has been identified as a realistic target and will result in an additional $15,000 in annual revenue per therapist. Since this is a target that improves efficiency of staff time, there is not an additional labor cost for this initiative. The primary cost is associated with change management training required to achieve this goal. This may include the owner’s time in coaching staff or potentially the cost of getting outside help to realize this goal.
The corresponding SMART goal may look something like this: “We will improve our procedures per clinical hour by .5 within the next 90 days.” The critical next step, regardless of the goal, is an exercise in change management. Change management succeeds when the team understands the WHY, appreciates the sense of urgency, recognizes what’s in it for them, agrees with the game plan for success, and ultimately accepts the challenge of achieving the established goals. Getting help with change management is critical to execution of company goals.
In the example above, the team, led by the owner, should identify and agree to the five to 10 key action items that will lead to achieving these important goals. This may include establishing charge capture training, establishing dashboards for clinic metrics, and aligning staff reviews and incentives to ensure expectations are consistently communicated and performance success is rewarded. Consider using YOY growth of company value as an over-arching goal with one to two goals each for quality care, engaged employees, and financial stability. Long-term growth of company value requires success in all three of these areas. Smaller practices may choose to focus on one major goal every 90 days. Larger practices may have as many as one major goal for each key department.
The process of reviewing performance, establishing SMART goals, and consistently following a game plan for successful goal achievement requires a positive business/clinic culture of engaged team members aligned toward the common goals. The March 2020 Issue of Impact focused on “The Team” and provided numerous articles describing the benefits of building a “team” versus having a “staff.” I encourage you to reference this issue again. A well devised plan is destined for failure if the culture of the business does not support ongoing professional growth and the team is not on board with the established goals.
Creating and fostering a team culture is challenging and requires its own action plan including consistent communication and follow up. While reviewing KPI performance and planning for future success, consider the environment and culture in which your team functions. Is there a welcomed sense of accountability that will embrace the plan implementation and goal achievement process? Research available information and resources via your peers, PPS and others to create and support a culture of excellence and success.
Henry Ford is quoted as having said, “Coming together is a beginning, staying together is progress, and working together is success.” Focus and build your team around SMART goals and a commitment to excellence in all aspects of your business to make 2020 and 2021 a success.
Jim Stoker is a senior consultant at 8150 Advisors. He can be reached at jim@8150advisors.com.