It's mid-April. It's important to examine the financial impact of your team. We've discussed the importance of having access to timely, accurate, and current financial information so that you can easily and quickly know the health of your practice. Establishing a small number of high-impact key performance indicators for your practice and using them frequently are very important. We recommend using the Data Dashboard at IsMyPracticeHealthy for this purpose. If your practice is bleeding or ill, you don't want to wait 6 or 9 months to learn of it. Similar to decisions you have to make about purchasing a piece of equipment, you must constantly assess the financial feasibility and effectiveness of your team. Your practice will be ill if you spend too much on labor.
How much is too much? Only you can decide how much is too much, because there are many variables that impact this decision. Generally, labor as a percent of revenue should be between 30% and 45% as a percent of revenue depending upon the make-up of the practice, with many of the healthiest practices in the 35% to 40% range. If you are much higher than this range, you may want to explore ways to make adjustments, whether it's not filling a position that opens up or sending staff home when your schedule isn't busy. There are numerous adjustments that can be made to bring your labor costs to a level that will ensure a healthy practice. Using the data dashboard provides an early indicator of whether this labor cost is out of the ideal range so that you can make appropriate adjustments. Get current financial information immediately so that you know the financial impact of your team!
