Key Performance Indicators (KPIs) are one of the most overused and misunderstood terms in physical therapy practice management. Too often when onboarding a new client we find that practice owners and office managers are focused on data or metrics that do not really measure business performance and it is our job to alter their perspective and suggest the correct KPIs they should be monitoring and how they can use this data to achieve their desired result.
What Are KPIs?
A Key Performance Indicator (KPI) is actionable data that helps keep your practice on track. KPIs are vitally important for every size practice and should be viewed as important guideposts to help you manage, develop business strategies, set goals, and drive financial results.
Here’s Why They’re Important
Every month you probably review some basic financial reports about your practice: charges, payments, collections, etc. with the express purpose of trying to an understanding of the health of your practice, but this data without context is just raw data. Unless a number tell you something that you can turn into an actionable strategy it’s not a KPI. For something to be a KPI it needs to tell you what we can do to make things better, or if what you’re currently doing is working (or not), and what actions we need to take to keep moving in a positive direction.
KPIs That Actually Drive Revenue
Let’s say you set a goal to increase revenue for your practice 30% over the next 12 months. And every month you check and see where your collections have ended up. Although this is important data for your practice, just monitoring this number is only half the work. Revenue is the end result of a lot of work that was done in the weeks and month before. Instead of just watching your monthly collections, what if instead you monitored KPIs that actually drive revenue? For example, therapist average timed units per patient visit (actionable data.) Timed units directly influence practice revenue. If you monitored this KPI and found that your average timed units were low (below 3.2), you could use this KPI data and develop a plan to get your average timed units up (strategy development.) You could offer your therapists additional coding training to help them better code and document their time spent with patients. After you executed your training plan and your average timed units go up, you should see an increase in your revenue, which gets you closer to achieving your overall goal (financial results.)
Data Driven Management And Goals
Remember- when reviewing month end reports for your practice, unless those numbers tell you to do something, it’s not a KPI, it’s just raw data. Raw data without context does not help you take action or move your practice forward. At BMS we have developed rehab specific reporting and KPI tools which not only help us determine our own service performance, but help our clients evaluate the performance of their business. If you’re interested in a free practice evaluation or just would like to see the KPI tools we have available to our clients contact us today.