What Are Practice Metrics And Why Should I Care?

Wait!  Before you decide this is just practice management mumbo-jumbo, read on.  This is a simple explanation you can use in the real world.

Management experts continually talk about metrics, statistics and Key Performance Indicators (KPIs).  These are all different names for the same thing.  They basically mean, “ways of measuring how well a business is doing.”

Is it healthy?  Is it growing?  Is it headed for collapse?

This is an important subject every business owner should understand, but it is often made overly complicated.  Here is a simple explanation of how metrics relate to YOUR practice:

First, what is a metric?

A metric is a way to measure your practice.  It is simply how many products or services were produced by a business, compared to how many of those same products or services were produced at an an earlier time.  For instance, a practice that sees 150 patients a week is doing better than it was last year, when it was only seeing 100 patients a week, all other things being equal.  A lot of times people just call metrics the practice’s “numbers.”  Ultimately “metric” comes from the Greek word metron which means “to measure.”  They’re just ways to measure a business.

Why are metrics valuable?

Diagnosis in medicine is important as it allows you to determine what is wrong and what to do about it.  In order to diagnose a patient, there must be some way to analyze or quantify the condition of the patient.  It is the same way with organizations.  In order to “treat” the organization, you first must diagnose it.  That requires measuring its condition.  That’s why metrics are important.

What do you do with metrics once you measure them?

The most fundamental use of metrics is to determine one thing: “Do I change what I’m doing or do I keep doing the same thing?”

There are a lot of very skilled ways to view a practice’s metrics that go beyond this, but at the core metrics are most useful simply in telling a practice owner whether he should just let things run or whether he should jump in and do something.  If things are gradually going up, obviously you should keep doing what you’re doing.  If things are gradually going down, you need to change something.  If they’re steeply going down, change something now!  Simple.

How often should I track my practice metrics?

You should minimally track your metrics once a month.  In this way you can see how you did compared to last month, or compared to the same month in previous years.  However, it’s best if you can get to the point where you’re keeping track of each metric on a weekly basis.  This gives you a very close monitor on the pulse of your practice.

What time periods should I be comparing when I look at metrics?

When you look at your practice metrics you are always comparing some time period to an earlier time period.  So which ones should you compare?

1.  Look at the month (or week) that just ended compared to the one right before.  If you just finished July, compare all your numbers to June.  See if you were up or down for the month.  This is where you will find the small tweaks that you need to make in order to keep things moving up.  You won’t see major big-picture shifts in your practice, but you will discover if what you’re doing is working, or if you need to adjust something for next month.

2.  Look at the past 12 months.  Check out the overall direction of the line.  Is the line gradually going up, staying the same or going down?  This is important.  This is where you’ll see long-term shifts in the practice.  If you have declining Collections for a whole year you will need to do something, or likely it will continue to go down the next year too.  A year-long view won’t tell you how to tweak your practice for next month, but it WILL tell you what broad strategy you need to be executing in order to move the practice in the right direction for the long haul.

3.  If your practice experiences heavy seasonal fluctuations, you will need to compare the month that just ended to the same month the previous year, and the same month the year before that.  This way you’ll be able to see changes in the overall growth of your practice.  You can even put these on a line graph showing something like, “Total Production For The Past 5 Julys.”  This method is only required for a practice with large seasonal fluctuations.

What do I DO with all of this?

Now that you have an idea of what’s happening with your numbers, you go look at your practice to find out WHY.  You see the New Patients have been declining ever since October.  Better go back and look at your promotion.  Did you stop sending out postcards?  Now that you have a scientific method of finding out what the state of your practice is (good or bad), you go find out WHY it’s in that state.  The statistical trend tells you that things are getting better or worse, but it doesn’t tell you why.  It’s up to you to go inspect the practice personally and find out what’s going on, so you can come up with a plan to fix it (or, if it’s good, strengthen it).

Why does all this matter?

Keeping metrics puts you in the driver’s seat in your practice.  Without metrics you’re going blind, guided by hunches and guesses.  Once you start regularly watching the practice’s metrics, you don’t have to guess at what’s happening in your practice–it’s right there in front of you plain as day.  Now you’re in control, not relying on fate to ensure your success.

Practice management can be pretty dry.  But it is often the difference between success and failure.  Learn how to use metrics and you’ll have a peace of mind that others only dream about.

Stay tuned next week for the answer to the question: “Which metrics should a practice keep?”

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