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Critical Financial Numbers You Must Know

Posted By Administration, Thursday, July 18, 2019

financial meeting

By Terri Ross, Terri Ross Consulting

In order to maximize the profitability and success of your office, you need to take an accurate and realistic snapshot of where you are by the numbers.

  • Do you know your return on investment for every procedure and treatment you offer?
  • What percent of patient leads do you retain?

Patient retention is directly linked to how well your front office staff listens, engages and responds.

In order to become a top-performing practice, every working part of your office—the staff, systems, processes and protocols—must be performing at optimal speed. Be diligent and organized in your record keeping. Take a quarterly snapshot of your office. If you know where you are, you can make a sustainable plan for future optimization and growth.

Here are the key numbers you need to know.

Budget

  • Startup costs: Property, building, equipment, technology, staff and marketing all go into startup costs.
  • Payroll: When your business is off the ground, payroll makes up a large part of your bottom line. Know how much you pay your personnel in wages, taxes/insurance and bonuses throughout the year.
  • Equipment: This includes initial cost, maintenance and materials required to run, update and optimize equipment.
  • Marketing: Any expense targeted towards attracting new patients falls into this category, from pamphlets to website development and networking events.

Return on Investment (ROI) = (Gain – Cost) / Cost

  • Procedures: Know how much every procedure costs you to perform, including supplies, time and personnel involved. Your potential gain per procedure is based on these expenses.
  • Technology: Know how much a piece of new equipment costs to acquire and maintain. You’ll need to include maintenance and supply costs in your calculations of ROI for every piece of equipment in your office.
  • Marketing: Knowing your ROI on marketing strategies allows you to quantitatively measure how successful a specific marketing tactic is. Know how your patients found your office and why they return—online marketing, networking at the right events, etc. Read more about how to calculate your marketing ROI in this article from Forbes.
  • Website position: Know the numbers behind your website—how many people visit the site per day, what pages they go to and stay on, and what your bounce rate is, and modify from there.

Rates

  • Conversion/close rate: How many prospective patients do you land? How many are retained as long-term patients?
  • No-show/cancellation rate: On average, how many patients make an appointment and don’t show or cancel in advance?
  • New patient rate: The number of new patients you bring in per month and year.

Room Revenue Assumptions

  • Number of rooms: The total number of procedure rooms.
  • Hours of operation: How many days are you open?
  • Average treatment price: Taking an average of all procedures offered, what is your average price?
  • Average length of procedure: On average, how long do your procedures take? This includes operating preparation.
  • Treatments per day: How many treatments do you complete per day? Are any days busier than others?
  • Revenue per hour: Based on the numbers above, what is your average revenue per hour?

Goals

  • New patients: Set a goal for the number of new patients retained per quarter. Using the LAER model I developed, you can train your staff to engage, respond to and retain patients.
  • Revenue: Based on where you are, what is your projected revenue? Set your revenue goals and make the necessary changes (processes, protocols, staff) to get there.
  • Revenue per hour: To reach your revenue goals, how much do you need to generate per hour? An average room should do between $600 and $1,000 per hour.
  • Price strategy (vs. competitors): Based on your current and desired revenue—and keeping competitor pricing in mind—develop an informed and realistic price strategy.

How does your office look by the numbers? Do you have attainable revenue goals and the infrastructure, protocols and staff in place to get you there? Click here to download the assessment and complete Terri's 10-point checklist.

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.

Tags:  Business and Financials  Guest Post 

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