KPI's are measures of your businesses performance in a key areas, including productivity, financial measures & core non financial measures, such as new patient conversions & plan patient numbers.
Key Performance Indicators - KPIs. Discuss...
KPI's are measures of your businesses performance in a key areas, including productivity, financial measures & core non financial measures, such as new patient conversions & plan patient numbers. We would recommend completing your KPIs at least monthly. This (to a degree) can even be monitored daily, by utilising cloud based accounting software (Xero, FreeAgent etc) and ingenious KPI systems such as Futrli that plug straight into those accounting software packages, generating the report directly.
I'm sure most of you have heard of KPIs, but what actually are 'KPIs' and how are they relevant to your Dental Practice? Let us try and shed some light on this most mysterious of conundrums...
Below is a list of what we at C&E Consult, think are the absolutely key generic KPIs for your Practice, along with a brief description of the why's and wherefores. This isn't an exhaustive list or role/department specific and the KPIs will vary from Practice to Practice (dependant on size, NHS/private etc), but it's good to have a starting point.
Please note that there will need to be targets attached to all of these KPI's, but that's a calculation for another glorious, sunny and positive day. This is also where team bonuses come to the fore, but again that's one for another day. Anyway, until you actually measure any KPIs within your Practice in the first instance, it is difficult to set any meaningful targets, which aren't a 'finger in the wind job!'
So, in no particular order...
Clinician Productivity (Financial):
This is a great starting point and will help you measure whether your clinical team are measuring up. This also gives you an instant and daily guide as to whether your chairs are being fully utilised and have patients sat in them! What measure you use to actually get this information is open to discussion and can be tailored to meet your Practices specific needs - this can be as simple as the chair time occupancy as a percentage e.g. this week we had 93% chair time occupancy. However, this does not give you any idea of whether your pricing in relation to the occupancy is productive. At Hartley Dental (Charlies Practice), we use a system called Average Daily Yield (ADY), which is a measure of productivity in cold, hard £'s. This is also used to help calculate our Hygiene Teams pay. Get in touch to find out more...
2. Sundry Sales (Financial):
Sundries will never make you mega money, however they are a useful addition to your Practice income. Pricing these correctly is essential, but that is an easy calculation - the cost price (Don't forget VAT), plus 50% of that cost price = retail price... right? Anyway, moving on... this should be a simple financial measure of how much your practice generates in £'s from selling sundries. It is important to have a target number in mind here, if you are a single Dentist Hygiene led Practice, with at least the same number of Hygiene days as Dentist days - start at a minimum of £500 per month as a target. We would also recommend breaking the result down against each clinician also, to see who is selling the most.
3. Monies Owed or Bad Debt (Financial):
Your appointments software should have a specific report relating to this and it is essential that you keep a check on the level of money owed to the Practice by your patients. There will almost always be a certain level of debt, where arrangements are already in place for payments with those patients. However, this is an area that is often politely ignored, as team members don't like having the 'money conversation' with patients - keep on top of this area.
4. Costs (Financial): There are a lot of costs within your Practice and there are two ways in which you should measure these. One is a straight £'s amount and the second (and more important) measure is the cost as a percentage of your top line income. So look at measuring, as a minimum:
Laboratory work cost (remember not to panic completely when this number is high, it will relate directly to the amount of work you have completed in the month i.e. more Orthodontic work = higher lab costs. This helps make it easier to measure whether you are charging enough for those treatments),
Materials spend,
Salaries & Wages,
Directors dividends,
Consultancy costs,
Clinical waste costs,
Subcontractor costs,
Advertising & Promotion costs,
Stationary/office cost spend.
To work out the percentage spend (as mentioned above) simply complete this sum: Spend/income X 100. Then you need to decide what are acceptable levels for this percentage - as a guide, materials should be no more than 6-10% and if they are, your fees almost certainly need to rise. There is a degree of variation here due to deals with suppliers etc - but focus on your fees rather than trying to nail DD and Co for an extra discount!
5. Income (Financial):
Often referred to as 'turnover,' or, 'top line,' this is the money your Practice takes, before any of the business costs are attributed to your Profit and loss account. This also forms the key number when it comes to your Practice being valued for sale incidentally.
Again, if you have cloud based accounting software, you will have a live P&L report, that will give you a daily update on this number. This all comes back to your fees and how you section out your appointment book for appointments, but get this measure in there - really important!
This can be broken down further into income from specific types of treatment also e.g. whitening, Ortho, Endo. This is recommended for Practices which have a specialist or visiting specialist.
6. Profit (Financial):
This is the ultimate measure for your business and it's success - once all is said and done. No profit = no business, or one on a slippery slope anyway. Another simple measure here, which yet again can come from that all important P&L in your cloud based accounting system. This really does need to be measured against a specific target, and this target will vary depending on the type of Practice you have, the amount of clinicians, location etc. Have a rolling target measure as well i.e. 'profit over the last 6 months.'
This can be broken down further into profit from specific types of treatment also e.g. whitening, Ortho, Endo.
7. New Patient Value (Financial):
A simple measure of how much money you have made from new patients, in a calendar month. Your appointments software system should give you this number at the click of a button. If you've had lots of new patients, yet this number is very low - something is very wrong!
8. Enquiry Conversions (Non Financial & Financial):
This is NOT new patient conversions, it is simply how many enquiries were made to the Practice from potential new patients versus how many actually booked a new patient appointment (ideally one that involves a fee - see previous blog RE 'freebies'). So if you had 36 enquiries and 19 of them booked new patient appointments, your team have a converted 53% (rounded) of those enquires. Aim high in this area - 60%+ target.
You should also be measuring where the enquiries came from e.g. internet advertising, social media, direct telephone call, referral. These should be in direct relation to where/on what you spend your advertising and marketing budget.
You can also then subsequently measure how much each enquiry has cost that month e.g. Marketing/advertising spend of £1,700 and 36 enquiries. Therefore, £1,700/36 = £47.22 per enquiry. This is a great number to help focus the attention of your front of house team, "Laura/Michael - did you know that every time you answered the phone to a new patient, or replied to one of their emails it cost £47.22?!" They will soon sit up and take notice and guess what... your conversion rates will improve (coupled with some half decent Front of house and sales training of course).
This is exactly the same for the conversions - Marketing/advertising spend of £1,700 and 19 conversions. Therefore, £1,700/19 = £89.47 per patient! This also gives you a good idea of what the starting point is for your new patient assessment fees...
9. Conversions To Active Patients (Non Financial & Financial):
This is a measure of how many patients who had new patient assessments in a calendar month, are now 'active patients.' This means on plan or signed up to Ortho/a full restorative treatment plan. So again, if 11 of the 19 became active patients, your team converted 58% (rounded) of those patients to 'active patients.'
It's important to make the differentiation between points 8 and 9 here.
10. Total Patients Seen (Non Financial & Financial):
Simply, how many patients you have seen during the month - your appointments software should be able to give you this information easily. Then divide this number into your income to give you an average spend per patient e.g. £65,000/578 = £112.47 per patient. A useful number.
11. Plan Patient Information (Non Financial/Financial): This area is absolutely critical in the continued success and indeed value of your Practice. This gives you a core income each month and is a great reflection of whether your Practice is truly health and prevention led. Some simple KPIs for each type of plan you offer:
Number of new joiners,
Number of leavers,
Current months plan numbers versus the previous months plan numbers,
Current months plan numbers versus the same month the previous year,
Income for the current month versus the previous months income,
Income for the current month versus the same month the previous year.
12) Associate:
If you have an associate - you need to measure whether having them is actually bringing you any benefit. There are three main areas to measure:
Associate productivity,
Associates profit contribution,
Customer satisfaction (I know I contradict myself a little below, but this can be a specific measure relating to the associate only).
It is really important that the associate brings value - so move away from the 'we pay 50%' twoddle and get them on the right pay structure from the off - this takes time and effort to get right - but is very, very important. A big consideration.
13) Treatment Coordination (TCO) Free Appointment Conversions:
If you have a TCO and offer free appointments - make sure you measure specifically how many of these freebies are converted by the TCO and how much £££ they make you.
Share this information with the TCO and make sure you set clear targets for them to attain - this is a sales role and making sure it pays it's way is really important. I'm not saying we should be 'hard selling,' or the PM/BM to manage like a cold calling contact centre manager - just make sure the role brings real value to your Practice. Use some of the measures above, but specifically for the TCO.
Things To Avoid/Not Include RE Your KPIs:
1) Patient satisfaction scores - this is something we would recommend assessing separately. This is a specific issue and one the CQC will like to see stand alone evidence of e.g. specific action plans,
2) Every single little detail - although some people will tell you to measure absolutely everything - don't. Focus on the important stuff, or the KPIs will just become a sea of numbers, which you go through the motions with each month just to get it done. Your P&L will soon throw up anything that you need to include, but be realistic and precise,
3) Sharing the KPI's - Remember that not all KPIs should be shared with the team - be shrewd in this area. Salaries and wages may be one to avoid here FYI.
4) Worrying about what everyone else is doing - seek qualified advice on the formation of your KPIs from a business coach and your accountant - please don't always rely on what you see in Practice Manager Facebook groups - although there is some good advice out there for sure! Focus on your business and it's needs, be a leader not a follower!
So there it is, a bit (a 'BIT?!' I hear you yell...!) of an overview with regards KPIs and what to include. Everyone has a different opinion on what should be included and how this should be measured - but I would invite you to visit Charlies Practice in Plymouth and see how things roll here, before you potentially raise any eyebrows... If you want to take those steps to success C&E Consult are here to help!\
Have a wonderfully productive day everyone!
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