Physical therapy providers have the distinct reward of benefiting their local communities. At the end of the day, the best part about opening a clinic is likely forming relationships with and helping patients. However, clinics are also a business, and require the same marketing, sales and profitability of any other industry. For a therapy clinic to be profitable, understanding metrics is crucial. After all, providers need to be able to make informed decisions about running their practice, whether it be how you seek out new patients or how you reward loyal ones. Included in this introductory guide is a basic definition of metrics and key performance indicators, as well as a list of three key metrics that could prove important to your clinic.
WHAT IS A BUSINESS METRIC?
A business metric is simply a measurement that helps you quantify a component of your practice’s performance, according to TechTarget, a technology buyers guide. In general, you’re likely familiar with many common metrics such as return on investment, churn rate, sales revenue, etc. However, for many small business owners, knowing what these metrics are and utilizing them are two different stories. Forbes notes that there are numerous common metrics that major corporations track incessantly, whereas many small business owners only do so haphazardly. Each industry has niche metrics that are specific to the field, and for clinic owners it’s no different. To be successful as a business, therapy providers must not only have a grasp on what the metrics are, but also be able to use them diligently to monitor the health of their business.
WHAT IS A KEY PERFORMANCE INDICATOR?
A key performance indicator (KPI) is a term often used when discussing practice metrics. A KPI is the value that’s given to your office’s success in achieving set business objectives. For instance, patient satisfaction may be a KPI you track using surveys. Or if you are taking a closer look at staffing, you may require the use of scheduling software to see how much overtime certain employees are working. This collected data allows clinic owners to make informed decisions in regard to specific business decisions, such as hiring new therapists. Overall, KPIs present the necessary information to take actions that better your clinic, whether it be regarding your marketing budget, client retention methods or scheduling procedures. Essentially, KPIs allow you to map out the progress or failures of your clinic, and hence can help you decide on a future course of action that is best for you as a practice owner.
3 METRICS TO LEARN MORE ABOUT
Depending on the goals for and specialty of your practice, there are a variety of metrics you may want to begin tracking. Here’s an overview of some measurements you can learn more about:
1. Lifetime value (LTV)
LTV is a simple metric that consists of two variables: price and customer retention. To calculate the lifetime value of a patient, you must merely multiply the price you charge for a session by the amount of times you see him or her. For example, if you see a patient for five sessions at a cost $5.00, his or her LTV is $25.00. According to TheraVid Blog, a source on physical therapy and rehabilitation, since the price of a physical therapy session is a fixed cost, the best way to increase LTV is to retain the patient for a longer duration of time. This demonstrates the vast importance of finding and retaining patients in your clinic.
2. Customer acquisition cost (CAC)
The customer acquisition cost is the amount of money it costs your clinic to attract a new patient. To utilize this metric you must first find the total cost of your marketing and sales campaigns, then divide that amount by the number of new patients (over a specific amount of time). The time element of this equation can be decided in accordance with your marketing plan or other promotional efforts. If your CAC seems remarkably high, it can serve as a cue to reconsider your marketing budget and strategies.
3. Patient retention rate (PRR)
The patient retention rate is somewhat more health care specific. Again from the TheraVid Blog, PRR is the difference between the amount of visits a patient attends at your clinic and how many visits insurance approves. In general, you’ll want patients to attend as many sessions as insurance approves, since this increases your overall LTV for a patient. Together, LTV and PRR are key metrics that are pivotal to your long-term clinic profitability. To ensure the longevity of your clinic, make sure to utilize these metrics, as well as other KPIs, regularly to monitor the welfare of your business.
This article is brought to you by PREFERRED Therapy Providers Inc. PREFERRED is the nation’s leading payor management services network. Our expertise is working with physical, occupational and speech therapy practices – from single clinics to multiple clinic locations.