Are you trying to grow your practice? If the answer is yes, it’s probable you’re trying everything you can think of to attract new patients and boost your profits.
The issue for many PTs is one of expertise. Your training is in physical therapy, not in marketing or business – and you may not know some of the simple things you can do to grow your practice.
One method is to track key performance indicators, or KPIs, to pinpoint areas where you can improve. But which business KPIs should you be tracking? What do you do with a business KPI once you have the data?
Here are some pointers about which KPIs to track and how to analyze them to grow your practice.
Tracking revenue growth is useful for growing your practice because it can help you learn about your growth rate and pinpoint areas for improvement. For example, if you’ve added patients and added staff and your revenue is down, it’s an indication that you should consider raising your prices to accommodate for your increased overhead.
While tracking your revenue over time is essential, you must also know where your revenue is coming from. You might discover that you’re earning very little money from selling supplies than you previously thought and decide to reduce the amount of products to your inventory. Often times we want our patients to have easy access to supplies that we recommend; so in this case it’s a beautiful thing to have inventory in your clinic. But you also need to be able to calculate the time it is taking you to order, stock and distribute those supplies. In this case, you’re 30% margins could be more like %5. Is that worth it to you?
Alternatively, you might discover that you need to adjust your prices for some of your cash or elective services. If one treatment is earning you significantly less than another on a net basis, you might need to rethink your pricing structure.
The same should apply with insurance companies that you work with. Your contract with a Medicare HMO may pay you $20 more per visit than a regular PPO, but you must also factor in that you are having to obtain authorization and jump through other hoops that is tying up employee time. You may find it vital to either renegotiate those contracts or drop out of network all together.
While most PT practices get their patients from an array of sources, it’s still a good idea to know if one source is more active and profitable than others.
For example, say you get referrals from doctors in your area and one doctor is providing 20% of all referrals. You might want to diversify your referral sources. Why? Because if that one doctor retires, moves away, or decides to bring physical therapy in-house, you’ll be losing a considerable amount of income as a result. Don’t put all your eggs in one basket!
Cost Per Lead
Whether you’re relying on your practice website to generate leads or putting money into Facebook marketing, you should know how much you’re paying per lead.
Let’s use Facebook marketing as an example. If you’re paying a high price per lead, it could be an indication that your targeting is off. You might be able to save money – and generate more leads – by adjusting your audience and seeing how it affects your cost per lead.
Inbound Marketing Return on Investment
How much money are you earning for the money you spend in marketing? Many physical therapists don’t know the answer to this question, and it’s one that can impede your growth if you get it wrong.
Your ROI indicates how successful and impactful your marketing strategy is. If you spend thousands of dollars on search engine marketing and get only one or two paying patients in return, it’s time to rethink your strategy.
Profitability Over Time
One hugely important business KPI is your practice’s profitability over time. Are your profit margins growing or shrinking? If you’re not seeing the growth you want, you might need to do one or more of the following things:
- Review your expenses and identify potential areas of cost cutting.
- Reduce your costs by digging into the numbers and determining where you’re overspending. For example, are you overstaffed? Are you overpaying for medical supplies?
- Increase your prices. If it’s been a while since you researched your competitors or examined your prices, it might be time to give them a bump to increase your profits.
Remember, your profitability over time isn’t out of your control. Looking at the numbers can help you make the best decisions to fuel your future growth.
If you want to grow your practice, you need to know how much capital you have on hand to achieve your goals. The final business KPI you should be tracking is your working capital.
Tracking working capital can help you grow your practice by giving you practical information about what you can afford to spend to achieve your goals. With this KPI, you can figure out what you have and how to use it to your advantage.
If you want your practice to thrive, you need data. Tracking the business KPIs we’ve outlined here can help you understand where you are and plan the future of your practice.
Want to see how HENO can help you grow your practice? Click here to schedule a free demo today!