Whether you have just started your own private practice or you are considering it, one of the most important things you must consider is how you are going to measure the health of your business. As therapists, we absolutely love those objective measurements, but what does that mean from a business perspective? Enter key performance indicators, aka KPIs, the critical data-driven measurements that can help you build or refine your clinic’s strategy to see how far you’ve come and how far you still need to go.
So what exactly are KPIs and why do they matter?
KPIs are measures of an activity that can be quantified and are critical to the success of any business. They help you to set performance improvement initiatives and provide you with the data to compare your clinic to industry-wide benchmarks to measure success and track improvements. KPIs need to be measured regularly (i.e. weekly or monthly) to ensure the success of your clinic well into the future.
Here are 6 KPIs, from the American Physical Therapy Association, that you should be keeping track of in your therapy practice:
- Visits per new patient: The average number of visits a new patient is seen in your practice
This metric provides you with a quantifiable and objective number of how long each patient was treated in your clinic. For an outpatient clinic, you typically want to aim for 10-12 visits per patient. For a specialty clinic, such as chronic pain pr, sports medicine, the target number of visits is likely going to be higher based on the amount of care patients’ with these diagnoses require to return to their prior level of function.
- Arrival rate: ((1- Cancellations + No Shows)/(Total appointments scheduled) x 100
Arrival rate is the percentage of patients who showed up for their scheduled appointments. This is a crucial KPI because you want to know how many patients are showing up to their appointments, especially if it is a treatment session, as no-shows and cancellations can disrupt the plan of care. They can also have a major impact on your therapist’s daily productivity, your clinic’s overall revenue and your clinic’s future growth. Knowing these numbers can help determine changes that should be implemented in the future to increase the number of patients who show up for their appointment while subsequently decreasing the number of no shows and cancellations.
- Visits per full-time equivalent employees (FTEs): Total number of patients seen / number of FTE employees
A full-time equivalent employee is any therapist who works full time for your clinic. This metric will help you to view the clinic as a whole and to determine the next steps for your clinic. Next steps could include: gathering more referrals or needing to hire another therapist to ensure patients are receiving adequate care.
- Cost per visit: Total Costs in a Month / Total Number of Visits in that Month
This is a good metric to measure each month as it provides a rough estimate as to how much it costs to treat patients in your clinic. Be sure that when calculating this metric you are including ALL clinic costs, including the cost of: payroll, benefits, equipment, supplies, electricity, insurance, documentation software and anything else you pay for to keep the clinic’s doors open and your employees happy!
- Revenue per visit: Total Revenue in a Month / Total Number of Visits in that Month
This metric helps you to understand the amount of money, on average, your clinic earns from each patient visit which plays a role in making a profit in your business. Revenue per visit can also help you determine other key benchmarks such as revenue per therapist to determine if your therapists are effectively managing their time and billing.
- Net Income: Annual total income – All expenses and taxes
One of the most important KPIs and measures of business performance. Net income is the overall profit your company has made after you deduct all expenses, including taxes, that you paid for throughout the year. Net income will show whether you are in the red or the green and will also help you to financially plan out next year’s goals, based on where the clinic ended up at the end of the year. Just remember, if your practice is in the red, on average it takes 2-3 years for a business to become profitable!
Last, but certainly not least, although not included by the APTA, your 7th KPI should be patient satisfaction because if your patients are not satisfied, then they will not return, nor will they refer you to anyone they know. Less referrals and patient retention means decreased profitability and no continued clinic growth. One of the best ways to track patient satisfaction is through having each patient fill out a survey at the end of their care. The results will help you identify any areas of your clinic that need improvement and will also provide you with insight so that you can ensure the patient is receiving the appropriate level of care.
Building a successful clinic takes time, dedication and requires proper data tracking to ensure long-term success. By regularly measuring these 7 KPIs, you and your clinic will be on track to meet those business goals you set for yourself.