Leaders Need Numbers
How to gather and analyze the numbers you need to forecast a meaningful 2021 for your practice
By Phil Cadman, PT, DPT
Unless you have a crystal ball for predicting the future and determining the outcome of your efforts today, it is important to have a method for forecasting your business and providing foresight to the direction that you should continue to move in.
Even the best leaders can’t rely solely on their gut. The fly-by-the-seat-of-your-pants method of business management will likely lead you down the path of hardship and struggles that you may not be able to recover from. So how, as leaders, do we manage effectively and strategize for success?
We have all heard that it is important for us to make goals that are Specific, Measurable, Attainable, Relevant, and Time-based (SMART goals). Having goals makes us accountable for what we would like to achieve in our business and our lives. In addition to setting the goals, we have to write them down and have a way to track them. The third factor in improving the likelihood that we will attain our goals is to share them with others for accountability. In the case of physical therapy practices, we utilize metrics to assist in tracking progress and help us to identify trends and corresponding goals. By using metrics to track our performance, leaders are able to take out some of our gut instinct and biases and see actual data that can allow us to stay the course or alter the path for success.
I could write an entire book deep diving into how many metrics exist and which ones are the most important to track. Your key metrics are unique to you and your business but there are some standard ones for the physical therapy industry that can be referred to as the key performance indicators (KPIs). There is some leeway throughout the industry, and I will provide a few different sources and examples of KPIs for you to use or adapt for your practice, however as the leader of your practice, the ultimate decision remains yours.
Determining which KPIs you will use should be based on your goals and direction that you would like to take. You are not married to these KPIs once you choose them and may decide at some point in the future that you do not want to continue to track them. It is important to not rush this decision and to not make changes quickly when tracking your metrics, but to keep an eye on trends over a few months to see what will influence your metrics. Influencing factors may include time of year, weather, staffing, or even a pandemic. Tracking these metrics will assist in forecasting your year, predicting some of your outcomes, planning for how to improve on your metrics, and changing or modifying practices to improve your outcomes and assist in attaining your goals. This process will utilize objective measurements that are proven in time and analyzed to include external factors to assist your leadership decisions.
By using metrics to guide you, you will allow yourself a better opportunity to have a financially healthy business. They will assist in revealing the truth about the performance of your staff and your business. They also provide objective measurements that will allow you as a manager/business owner to make decisions regarding bonuses, promotions/reductions and other possible staffing changes. Additionally, managing by the numbers will provide actionable ways for you to approach and plan business strategies and goals. You will be able to provide effective feedback to your employees about the business as a whole as well as their personal performance. Finally, you will be able to identify areas within your business that are successful and any areas that may be struggling that may otherwise go unnoticed until too late.
When using numbers to forecast what will happen in the future, unless you really do have that crystal ball, you have to make some assumptions to have a starting point. This should come from past metrics and trends, not just pulled from thin air. You can use historical metrics to predict, or if starting a new program or practice, you can use data from other companies to plug in to your model. Using this objective data will help reduce decisions that are made without support to back them up and will help objectify your direction.
One other recommendation for business leaders and managers responsible for tracking the metrics that you have decided upon: make them automated. Data collection can be very time consuming. Check with your electronic medical record/management company and see what kind of real time reporting is already available to you to make this process easier and less time consuming. Ensure that this data is available quickly and in a format that you can share with your staff so that everyone is able to see the status of each metric being tracked. Not only does this provide your staff with a picture of the overall company health, but it can provide ways to motivate them by seeing how their efforts are being realized by their leaders.
References:
1McDermott E. What are KPIs, What Role Do They Play in Practice, and Which Ones Should PTs Care About? WebPT. https://www.webpt.com/blog/what-are-kpis-what-role-do-they-play-in-practice-and-which-ones-should-pts-care-about/. Published May 25, 2016.
Phil Cadman, PT, DPT, is the owner of Premier Physical Therapy Services in Cincinnati, Ohio. He can be reached at pcadman@premierphysicaltherapy.org or @premierphysicaltherapy.