Using a Balanced Scorecard for Practice Improvement

People in office illustration

Make informed decisions and watch your practice thrive

By Jerry Henderson, PT

I have had the opportunity to visit hundreds of physical therapy clinics across the country, and I have found that most physical therapy owners have a laser focus on providing great care to their patients.

While this is gratifying, I don’t believe this singular focus on providing great care is enough, if our profession is to continue to grow and hopefully prosper. I believe each private practice needs to create a simple, comprehensive, and actionable scorecard to make informed decisions.

SOAP Framework

Oddly enough, I think we do a pretty good job of this in the clinic, partly because of the universal understanding that a scorecard can help clinicians make rational decisions and measure progress against benchmarks. The Subjective, Objective, Assessment, and Plan (SOAP) format (as part of the Problem-Oriented Medical Record), which was pioneered by Dr. Lawrence Weed decades ago, is still used today with minor variations.1

Using the SOAP format, the analysis of a patient’s need for treatment includes data from multiple sources including the patient’s subjective report and objective clinical findings. After analyzing the available data, the clinician provides an assessment that is influenced by the clinician’s clinical judgment and informed, in part, by knowledge and past experience. Based on that assessment, a treatment plan is made that includes specific interventions to address the problem, with specific goals and timelines. As the treatment plan is executed, the clinician will assess progress against the specific goals and timelines in the treatment plan. And, of course, the plan can (and should) change as more is learned about the patient’s situation. In other words, the patient’s problem is analyzed using all available pertinent data. Using that data, a decision is made on the most logical treatment, and the data is systematically reviewed to measure progress.

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It seems strange that we often don’t apply the same systematic rigor to practice management. I believe that part of the problem is that we are not typically trained to use a similar framework for practice management to analyze the important data from multiple sources, assess the data, plan a solution, execute the solution, and monitor progress.

Multiple Sources of Information

Selecting the right practice management metrics is a little like selecting the right tests and relevant subjective information from your patient. It is partly based on your own knowledge and experience, but using a balanced scorecard provides a framework you can utilize to steer you in the right direction.

The importance of utilizing multiple sources of information in practice management is critical. The balanced scorecard is designed to offer an equalized view utilizing financial and operational metrics. Financial types often measure gross margin or return on investment, practice consultants often measure operational metrics like units per visit, and clinical mentors may measure patient satisfaction or outcomes.

Focusing exclusively on any single type of metric is short-sighted and will not provide a balanced overview of what’s best for the clinic. Doing so will get you results based simply on what’s measured. For example, if you only measure revenue per therapist, you will likely get an improvement in revenue per therapist, but it may be at the expense of something else, like patient satisfaction. If you only measure patient-reported outcomes, your outcomes will likely improve, but it may be that your cost per patient visit skyrockets.

How to Create a Balanced Scorecard

Selecting measurements from different perspectives is central to the balanced scorecard, and can be done by answering a few questions from each perspective:

  • Financial Metrics: How do we look from the owner’s perspective?
  • Internal Business Perspective: What must we excel at?
  • Customer Perspective: How do customers perceive us?
  • Innovation and Learning: How can we continue to learn and provide value?

Let’s take a few examples from each perspective that might be utilized in a typical PT practice.

Financial Metrics

Pretend for a second that you are a cold-hearted capitalist, focused on the bottom line, and not an empathetic health care professional. Metrics you might consider:

  • Revenue per visit
  • Visits per patient
  • Revenue trend
  • Gross margin

Internal Business Perspective

Obviously, we are in this business to help our patients recover from injury and disease, so the internal business metrics might focus more on outcomes:

  • Patient-reported outcomes
  • Clinical outcomes

Customer Perspective

We need to think carefully about identifying all of our customers, and I believe we serve more than just our patients, we also serve their families and employers. And, like it or not, referring physicians and payers are also our customers in a sense. Selecting metrics that measure the satisfaction of each one of these constituents is important:

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  • Referring physician satisfaction – This is very difficult to quantify but very important. I would suggest that surveying your physician referral base is not going to provide much valuable information. In my experience, physicians appreciate an informal conversation, and really appreciate it when you ask them a very simple question: “What can we do to make it easier for you to work with us?” The answer to this question is often surprising and valuable.
  • Patient satisfaction – Typical patient satisfaction questionnaires are not likely to provide much useful information. You will find that patients are typically happy with their therapists, less happy with the front office, and least happy with the billing and collections process. Measuring Net Promoter Score is much more valuable, and that the NPS should be collected early so you can identify detractors and promoters quickly and take action.
  • Payer satisfaction – Again, this is very difficult to quantify but an important piece of information. Have you ever even attempted to develop a relationship with a payer representative? It may be that one simple change in a report, like including the patient’s ID number in the footer of your clinical reports, makes it easier for the payer. A well-designed survey directed at provider relations for some of your larger payers may yield unexpected dividends and valuable information.

Innovation and Learning

Any balanced scorecard should include metrics that assess learning and preparing for the future. Of course, clinical knowledge and skills are important, but they are not the only aspects of innovation and learning that we should measure and manage proactively:

  • Clinical continuing education units (CEUs) and certifications
  • Client-facing articles and resources
  • Business continuing education
  • Health care trends

Take Away

As the old saying goes, we are sometimes way too close to the forest to see the trees. I believe this is especially true of physical therapists, who tend to look at the world through a clinical lens. To get around this “perspective problem,” find a good friend with a general business background and little to no intimate knowledge of health care in general and physical therapy in particular. Buy them a cup of coffee, or adult beverage of choice, and describe the balanced scorecard concept, then ask them for their ideas on what to measure, particularly in the financial, business, and innovation/learning section. You may be surprised at what they recommend.


1 The Problem-Oriented Medical Record Lawrence Weed. Accessed August 2018.

2 Larry Weed’s 1971 Internal Medicine Grand Rounds. Accessed August 2018.

Jerry Henderson, PT, is the co-founder and vice president of clinical strategy at Clinicient in Portland, Oregon. He can be reached at

Copyright © 2018, Private Practice Section of the American Physical Therapy Association. All Rights Reserved.

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