To ensure a healthy practice, it is crucial to have access to up-to-date financial information and metrics. Metrics are key performance indicators that help you monitor the health of various key areas of your practice. These metrics won't always tell you what is wrong, but they can alert you to the fact that something isn't right, and they will help you know where to look for the cause of the disturbing trend. Using these metrics in a timely manner can make the difference between a negative trend being corrected early, compared to going undetected and uncorrected for weeks, months, or even years. Every practice should have a short list of 5 to 10 performance metrics that are kept current and made available in a timely manner (as close to real-time as possible) to management. These metrics can be in the form of a short list, a dashboard, or some other brief format for a specific period of time. For example, some practices monitor labor costs daily, using scheduling data compared to labor data to make staffing decisions even midday. In other words, they may decide to send someone home if the ratio of labor to appointments or labor to revenue is too high. The important thing is to develop your short list and use it to help ensure the health of your practice.
Some potential metrics that you might want to track include:
Revenues
Inventory costs (Cost of Professional Services)
Labor costs
Accounts receivable
Number of new clients
Number of transactions
Client Satisfaction
Cash available
Develop your short list of high impact metrics and start using them today! Establish a regular schedule to receive current data, and schedule a set time to review them. Some may be daily, others weekly or monthly, but get started today!
