Take Advantage of Resources to Help Your Practice
By Dr. Cyndi Hill, PT, DPT
How can I tell if I have a successful practice?
Am I seeing enough patients each week? Do we have a good third-party payor mix? How do I know if the revenue I am collecting each patient visit is good…or not? How does my practice compare to others?
As a new, or even seasoned, practice owner we are continually looking for ways to measure how healthy our business is and looking for areas we need to improve. We meet other private practice owners who share some of their results and feel that we may/may not measure up. We feel compelled to find benchmarks that measure our practice against others around us, but what does all of that information really mean? As we reflect on the challenging year behind us and look ahead to the promise of 2021, benchmarking is a valuable tool to help evaluate where we’ve been and where we’re going.
Comparing key performance indicators (KPI) to other physical therapy practices is certainly a good way to see how your business measures up. However, proceed with caution as these numbers can be deceiving if you do not have all of the information. For example, a practice seeing 500 visits each week sounds extremely lucrative. But what if that practice has five locations with underproductive therapists? Their measure of success may actually be seeing 800 visits each week. Or what about the clinic who reports $70/visit? At face value, their collections may sound low until you hear that their cost per visit may be minimal and they are showing 10% net profit margins.
Look at KPIs that make sense for your practice and only benchmark them against practices in your region of similar size and scale. KPIs must be compared to what results in financial success otherwise you may be wasting your time with unnecessary data. Think of the KPI as the vital signs of your practice, just as you would look at the vital signs of a patient.
For instance, you may decide to look at the heart rate of a patient doing exercises in their session. You see that their heart rate is 100 bpm. Without any additional information, you may think that this is a decent rate for an exercising person, as we’ve learned where a “good” average tends to fall. But what if we learn that the patient had only been doing straight leg lifts on a mat table? Would we still consider their heartrate to be “good”? We may need to think again about whether or not this patient is having a productive exercise session or not. Our focus for this patient may need to change in order to know if we will be successful in meeting their goals.
Understanding the context of these metrics will help as you evaluate your year and make plans for the year ahead.
PPS BENCHMARKING RESOURCES
The Private Practice Section has many resources that allow a private practice owner to access benchmarking data; however, the benchmarking data must be tested and analyzed and shown to provide beneficial results for your individual practice. Understanding how a benchmark relates to your specific situation and how it ultimately equates to financial success is key when deciding how and when to use it for your practice metrics. For example, what if your practice meets the benchmark for your region of $80/visit but your cost per visit is $75? Furthermore, what if your practice measures up with other practices who are seeing 500 visits per week, but you realize your arrival rate is 80%? You can see that utilizing these specific KPIs in isolation can lull you into a false sense of security if you are not digging deeper and tailoring it specifically to your situation. A KPI does not mean anything if it does not make you profitable.
Let’s face it: as practice owners, we are all looking for ways to be successful. Whether we want to open more practice locations, hire more staff or simply be content with our current situation, we want to find ways to measure that success.
Recognize that you may not be able to measure your success by that of another practice, particularly in the wake of COVID-19. Look at benchmarks that you may want to use, but make sure that they will actually work for your individual practice. A wise practice owner understands their key performance indicators and uses the benchmark with a grain of salt.
Cyndi Hill, PT, DPT, is chief operating officer of Kinetic Physical Therapy in Chester Springs, Pennsylvania. She can be reached at firstname.lastname@example.org and p (610) 428-6464.