Which Metrics Should My Practice Keep Track Of?

Disclaimer: we do realize that this subject can be boring and very dry.  This particular area of practice management may remind you of accounting, taxes or something equally exciting.

We agree.

But bear with us.  It really does need to be said and it is a vital part of managing any business.

We haven’t been able to find any really good articles anywhere that explain which metrics a practice should keep track of, so we had to write one.  The subject is so important for a practice owner that you should probably not only read this, but keep it on file to refer back to in the future.

Ok, so now that you’ve been warned it’s technical, let’s move on.  We promise we’ll write more emotionally gripping and inspiring articles later.

Metrics, or a practice’s “numbers,” are just ways to measure how well a practice is doing compared to how well it was doing at an earlier time.  That’s fine.  But that’s a lot of work, and no one really defines how to keep track of them.  Which metrics should a practice use?  How do you find them?  How do you view them easily once you have located them?

Below, we tell you which metrics are most important for you to keep track of and give you a step-by-step procedure to stay on top of them:

DENTAL PRACTICE METRICS

Total Dr. Production

This is the total production of all the doctors added together; the total production of all doctors in the practice.  This is the gross number of services rendered by doctors, before write-offs or free service.

Total Hygiene Production

This is the total dollar value of service produced by all hygienists in the practice.  This would be calculated by adding the gross production of each hygienist together.  This is counted before write-offs or free service.  It includes anything done in the hygienist’s room—including the doctor’s exam and x-rays.

Total Gross Production

Calculated as Total Dr. Production + Total Hygiene Production—in short, the total production for the entire practice.  This is the total dollar amount produced in services and sales.  Another way of stating it is the total dollar value of services delivered, before write-offs or the value of free or discounted service is deducted (including such service provided to staff, families of staff, other professionals,–as well as pro bono work.)

Adjusted Production (Net Production, Collectible Production)

This is the Total Gross Production minus write-offs or adjustments of all types (except does not include bad debt write-offs).  This gives the production figure that is actually collectible.  Any amount of the “Production” statistic that is actually legally owed to you should count as part of the “Adjusted Production” stat.  Whether it is difficult or easy to collect the legally owed money is another matter.  Any components of “Production” which are monies that the practice cannot legally collect would not be counted as part of “Adjusted Production.”

Patient Visits

This is the total number of patients seen by the practice.  This includes all patient visits for all doctors and hygienists.

Average Production Per Patient Visit

This is the dollar amount produced on the average for each Patient Visit.  This is calculated by dividing Total Gross Production by Number of Patient Visits.  This gives you an idea of how efficient your practice is.  Are you really giving your patients all the care they need, or are you selling your services short?  A practice can be seeing an avalanche of people, but if they aren’t effectively getting compliance to their treatment plans, they won’t be doing as much production as a practice with a higher “Production Per Visit.”

Collections (Gross Collections)

The amount of money actually collected by the practice.

Net Collections

This is the collections minus refunds, repayments, bounced checks, etc.

Number of New Patients

This is the number of individual new patients paying for and receiving treatment in the practice for the first time.  Does not include reactivated patients who have bought anything in the past, regardless of how long ago it was.

Net Profit

This is the profit of the practice and is what the practice would make for the owner, as though he were not a service provider.  Does not include compensation for the owner as a doctor, as an executive or as a landlord.  This is figured by: Total Collections minus cost of sales, direct costs, taxes, overhead, all other expenses and payments to owner as a provider, manager and landlord.

VETERINARY PRACTICE METRICS

Total Production

This is the total dollar amount produced in services and sales.  Another way of stating it is the total dollar value of services delivered, before write-offs or the value of free or discounted service is deducted (including such service provided to staff, families of staff, other professionals,–as well as pro bono work.)

Transactions

A Transaction is simply an individual invoice for services rendered and/or products sold.

Collections (Gross Revenue)

Defined as total dollar amount that was actually collected from clients for services and products; gross revenue.

New Clients

This is the number of individual new clients who purchased a product or service from the practice for the first time.  Does not include reactivated clients who have bought anything in the past, regardless of how long ago it was.

Average Client Transaction

This is the average dollar amount for each transaction.  It is figured by dividing the Total Production by the number of Transactions for a given time period.  This shows how well you’re presenting and closing clients on recommended products and services.

Average Client Transaction

This is the profit of the practice in terms of what the practice makes for the owner, not considering any other service he may provide.  Does not include compensation for the owner as a doctor, as an executive or as a landlord.  This is figured by: Total Collections minus cost of sales, direct costs, taxes, overhead, all other expenses and payments to owner as a provider, manager and landlord.

 

HOW TO TRACK YOUR METRICS:

Ok, so those are the metrics a practice should be keeping track of.  There are more, but the rundown above gives the basics.  Now that we know what they are, we should talk about how to keep track of them.  You’ll have to have these numbers in some sort of format where they can be viewed and updated.  What format is best for this?  A simple line graph.  The best method of viewing and comparing metrics is a simple line graph with each month running from left to right along the bottom and then the values of metric along the left-hand side running from top to bottom.

Now, how do we assemble such a graph?  There are a lot of different methods.  Below we will give you one way to do it–a step-by-step rundown of how you can find and track metrics.  There are other ways to do this with pen and paper, but this can be more time consuming.  The easiest way to approach this is to find someone who knows how to use the basic computer programs of your office and get their help setting all of this up.

1.  Finding The Numbers 

No matter which practice management software you use, you will be able to get these numbers out of there.  Export the numbers into an Excel spreadsheet.  If you need help on how to export these numbers, contact customer support for your software company.  This should be a relatively painless task for someone who is familiar with computers.

Depending on the exact software and how much you use of it, you may need to also get some other numbers from your accounting software, such as QuickBooks.  Again, this is a fairly simple matter of exporting numbers.

2.  Export Them By Month

The simplest way to approach it is just to export your numbers for each month.  That way you can see your Production for January, for February, for March, etc.  You want the total value for each metric for a given month.

3.  Keep Track Of Them In A Spreadsheet

Now that you have the numbers exported, arrange them into a spreadsheet, like Excel.  The easiest way to do it is just have all of the dates running along the left-hand side of the spreadsheet, and all of the different types of metrics running along the top.  This way you have a grid.  On the left-hand side of the grid you’ll have the earliest months at the top, with later months running down the side.  Looking across the top of the grid you’ll be able to see the different types of metrics.  In this way you’ll be able to see each of your metrics for any given month.

4.  Create Graphs

It is very easy in Excel to create graphs, or “charts.”  Create a line graph for each one of your metrics.  This way you can see how if your numbers are going up or down.  It is very easy to see what is happening with your practice, once you can see a visual representation of the numbers.  Your line graph should have the months along the bottom (x-axis) and the practice numbers along the left-hand side (y-axis).  This will be very frustrating for someone who doesn’t know how to use Excel, but will be a no-brainer for someone who can use the program.  If you don’t know how, get someone to help.

Conclusion

This can be complicated for someone who doesn’t know how to use computers.  However, there are many different ways to figure this out.  One simple way is just to get graph paper and use a pen to mark the lines monthly for each metric on their own sheet of graph paper.  Here we’ve just laid down a simple way to do it, using a computer program most people have.  The bottom line is that you just need to be able to see your practice’s metrics on a line graph, with the months running along the bottom.

We realize that this can be tricky for someone learning to do it the first time.  Therefore, if you have additional questions or want to see if you’re doing it right, feel free to write us.  We’ll do our best to point you in the right direction.

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