By Terri Ross, Terri Ross Consulting

One of my favorite sayings, and a critical component I teach to all my medical practice consulting clients and in my proprietary "7 Fundamentals to a 7-Figure Practice" training, is, "Inspect what you expect."

If you don't have systems, processes, procedures and a way to track your business analytics, or you don't know your numbers or even what numbers you should be tracking, you are setting yourself up for failure.

Even if you do have the best practice management software in place with a comprehensive dashboard that is integrated and updated hourly, it only works if you're using it to your advantage—running reports on a regular basis (weekly, monthly, quarterly and yearly) and reviewing the right key performance indicators (KPIs).

No matter what stage your medical practice is in, there are so many business decisions you need to make. The bottom line is without knowing your numbers, you cannot scale, you cannot make informed decisions and you cannot course-correct.

I have worked with hundreds of medical practices, and I have found that most do not know which metrics to use and are not using KPIs at all.

I have seen practices spend thousands of dollars in marketing efforts without tracking what is actually working and converting. Without knowing how many leads your marketing dollars are generating and how many of those leads are converting into clients, you are literally throwing money down the drain.

Critical Numbers and Common Benchmarks

When I work with my clients one-on-one, or when they attend one of my live sales trainings or complete my online course, we take a deep dive in what baseline KPIs are needed and how to figure out the calculations. (You can sign up for the wait list for my next "Mastering the Art of Sales" live training here or purchase my online course "Practice Foundational Elements (PFE): Your Road Map to a 7-Figure Medical Practice" here.)

Here are some of the most critical KPIs to measure:

• Net profit
• Revenue per hour
• Average revenue per invoice
• Revenue per provider and procedure
• Conversions rates (phone, web, consults)
• Operational—staff capacity and productivity
• Lead acquisition cost—what is converting and how much is it costing?

Here are some common benchmarks to keep in mind:

• High-performance medical practices should run at a 70% capacity. If you are getting close to 65-70%, you need to hire someone else.
• Rent should be no more than 4% of total expenses.
• Costs of goods should be 30 – 40%; injectables can be as high as 50% of expenses.
• Payroll should be under 30% of expenses.
• Marketing should be 10% of total revenue.

If you are looking at these numbers and benchmarks and are lost, or know yours are out of alignment, trust me—you are not alone. I am here to help. My team can perform a practice assessment, starting with the pre-work of a gap analysis, an enhanced 21-page deep dive look into your practice where we analyze your entire practice and data and give you a plan of action with recommendations that will improve the health of your business. Click here to learn more.

Expert Advice and Best Practices on Reports/KPIs

Here is some advice and a list of suggested best practices from my colleague, Senior Practice Analyst Randy Torban of Symplast.

KPIs should be viewed by the day, week, month, quarter and year, and comparisons should be made year over year. Going back three years helps with trends, which in turn helps with forecasting.

The KPIs medical practices, medical spas and aesthetic clinics should focus on can be determined by how long the business has been in business.

For example, a new business (in its first year) should focus on:

• Total revenue;
• Revenue by provider;
• Revenue by lead source;
• Total leads;
• Total appointments booked;
• Total appointments by service;
• Total number of cancellations;
• Global conversion rate;
• Total expenses; and
• Total profit.

An existing business (one to three years) can focus on:

• Customer acquisition cost;
• Marketing ROI;
• Staff capacity;
• Gross profit;
• Profit by service;
• Profit by provider;
• Average invoice;
• New vs. existing patient ratio;
• Percentage of returning patients; and
• Lead to patient conversion rate.

An established business (three to five years) should look at:

• Natural vs. actual growth rate;
• Forecast vs. actual;
• Marketing ROI per channel;
• Goals completion progress;
• Machinery capacity;
• Average revenue by provider;
• Payroll expense ratio;
• Cost of goods sold (COGS) ratio;
• Average time from first contact to service; and
• New initiatives ROI.

Three to five years and five-plus years have slightly different KPIs, and when you work with our team, we will help you identify these metrics and manage them. As always, my team is here to help you launch or scale your practice. If you have any questions about systems, software, reports and KPIs, or how my programs can support you, schedule your 15-minute discovery call here.

Remember, it's a numbers game, and you need to be in it to win it.

Terri Ross brings more than 20 years of sales and management experience to the field, having worked with leading-edge medical device companies such as Zeltiq, Medicis, EMD Serono, Merck Schering Plough and Indigo Medical, a surgical division of Johnson.

Ross' vast knowledge and experience as a sales director managing upwards of $20M in revenue and successful teams has allowed her to become a renowned plastic surgery management consultant helping aesthetic practices thrive.

To optimize revenues and business performance, Ross' practice management consulting services help physicians evaluate practice processes including, but not limited to, overall-operating efficiencies, staff skill assessment, customer service and operating efficiency strategies. The goal is to develop a comprehensive plan of action to improve productivity, quality, efficiency and return on investment.