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Grow My Practice – Why Your Healthcare Practice Should Use a Business Scorecard

When it comes to running a healthcare practice, chances are you understand firsthand the value of good file documentation.

Keeping client records up-to-date is an important component of delivering quality care. Ensuring inventory records are current is critical for smooth day-to-day operations. And making sure financial information is tracked is important for managing cash flow. Without good record-keeping, your whole practice can suffer.

But what about keeping records of key performance indicators, or “KPIs” for short? 

KPIs are commonly tracked in larger corporate settings, but they can also be very useful for small practices. In fact, setting up a scorecard to track your KPIs can give you a competitive advantage and help you achieve your business goals sooner.

In this article, we discuss what a KPI scorecard is, why your practice should have one, and what components typically go into creating a scorecard for healthcare practices.

What is a Healthcare KPI Scorecard?

Before we explain what a KPI scorecard is, let’s first back up and define a “KPI”. 

A KPI (key performance indicator) is a measurable and quantifiable performance metric that’s used to track progress over time. A KPI provides a target for you and your team to work towards. They show you where your clinic is excelling or struggling, and provide you with important insight when making business decisions.

Some quick examples of common KPIs include: gross margin, revenue per day, client satisfaction score, no show or cancelation rate, website traffic, and so on. But one size doesn’t fit all, and adapting KPIs from different industries may not provide you with the information you need as a healthcare practice owner. 

If a KPI is the individual metric, then a “KPI scorecard” is a visual representation of all your practice’s KPIs. A KPI scorecard allows you to get a snapshot of the progress you’re making towards your KPIs by providing a visual overview.

A good KPI scorecard gives you the tools you need to communicate up and down your practice, including to owners, staff, patients, and investors. They can also provide insight about successes, risks and opportunities.  

Understanding the difference between lead KPIs and lag KPIs is critical as you create your scorecard. Leading KPIs indicate where you want to go, and lagging KPIs show what you’ve achieved. For instance, if you’re interested in improving gross margin (calculated as: sales – cost of goods sold), a lead KPIs could be your daily no show/cancelation rate (<8%) and daily schedule efficiency (>92%). A lag KPI could simply be your monthly gross margin. 

Now that we’ve defined what a KPI scorecard is, let’s examine why creating one can help your business. 

Why Use a KPI Scorecard for Your Healthcare Practice?

In a busy practice, no one wants to take on extra administrative work. But when updated on a daily basis, a KPI scorecard provides valuable insights into your practice’s performance and indicates elements of your business that need attention. 

Here are five reasons you should consider implementing a lead measure KPI scorecard for your healthcare practice:

1. Provides Clarity and Focus

In the busy rush of day-to-day treatments and client interactions, it can be easy to lose sight of the big picture. Your KPI scorecard helps you standardize your evaluation metrics, focus on where your opportunities for growth are, and see what might be holding you back. You stay on track with your goals, and don’t get bogged down with less important metrics. 

2. Enables Quick Decision-Making

When opportunity knocks, or when disaster strikes, you need to be able to react quickly. For instance, how quickly was your practice able to adapt when the pandemic changed the way patients receive treatment?

Your scorecard helps you see your whole practice at a glance, and adapt quickly when market conditions and customer needs change. It also helps you address internal challenges before they become real vulnerabilities. 

3. Improves Communication 

At its core, healthcare practices are people-focused businesses. You have patients, clinicians, administrators, suppliers, owners and investors to answer to. Having a well-documented KPI scorecard streamlines communication between all parties. You know where your business is headed, and you can show that direction to anyone who needs to know. 

4. Identifies Opportunities for Improvement

At the end of the day, growth for growth’s sake is a losing proposition. Hiring more staff without dealing with existing scheduling and productivity inefficiencies is a recipe for burnout and poor financial performance. A KPI scorecard helps you proactively identify areas for improvement, which can only support growth and improved efficiency in the long run.  

5. Increases Accountability

Using quantifiable metrics in your scorecard makes tracking progress easy, but also requires leadership from management and accountability from your entire team. The scorecard means you can see what areas of your practice are making progress and which are lagging behind, as well as who is responsible for addressing these.  

What Should Be Included in Your KPI Scorecard?

A KPI scorecard can be designed in many different ways. But when it comes to tailoring it to your healthcare practice, there are four key areas you should consider:

  • Client experience
  • Internal processes and procedures
  • Practice growth
  • Financial performance

Together, these four pillars provide a whole-practice view of your operations and can help identify elements that are excelling, and others that need catching up.

Let’s take a closer look at each.

Client Experience

Chances are, you offer services in a competitive marketplace. Patients usually have many choices for the clinic they choose. Offering the best patient experience in town keeps clients coming back to you, and increases your chances of friends and family referrals.

Evaluating patient experience helps you understand who your target patients are and what you have to offer them compared to your competition. An effective patient experience KPI scorecard will evaluate metrics like patient satisfaction score, retention rate, and referral rate.

Internal Processes and Procedures

Having internal processes and procedures that are documented and well-communicated will keep your practice operating smoothly. They’ll also help ensure your business doesn’t go to pieces the day a team member calls in sick, or when you go on vacation.

The KPIs you include on this part of your business scorecard could measure elements like finding schedule efficiencies and maximizing clinician productivity.

Practice Growth

Your practice has the potential to grow in a variety of ways. Evaluating this regularly helps you embrace these opportunities when they arrive, and can also proactively identify issues that might be holding you back. 

The quantifiable metrics under this heading of your KPI scorecard can include things like new referrals per day, average revenue per treatment, and revenue per day.  Tracking these metrics might help you identify when you need to hire your next clinician or reach out to a new referral source 

Financial Performance

Ultimately, revenue is vanity, profit is sanity and cash is king, even in caring professions. If you want to drive growth and secure investors or buyers, you need to show that you have both solid topline revenue growth, and that your practice is profitable and maximizes the use of your assets, both human and capital. 

This area of your KPI scorecard might include metrics like total revenue, profit margin, and free cash flow.

Need Help Getting Started?

If you’re running a busy healthcare practice, finding the time to design and implement a KPI scorecard might feel overwhelming. But you don’t have to go it alone. And the work you put in now will pay off in spades in the future.

If you need help, our team at ELEVATE Practice Intelligence is ready to assist. Book a free consultation today to see how we can help you measure your performance today, and create a thriving business sooner.

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