Written By Michael Tetreault, Editor, Concierge Medicine Today
Key Performance Indicators (KPI), also known as Key Success Indicators (KSI), help a concierge medical practice define and measure progress toward organizational goals (Source: About.com). Once a private practice has analyzed its mission, identified all its audience, and defined its goals, it needs a way to measure progress toward those goals. Key Performance/Success Indicators are those measurements.
Many aspects of your concierge medical practice are measurable. In selecting your KPIs, limiting them to topics that are essential to reaching your quarterly and annual goals is very important. Keeping the number of KPIs you follow modest enough to keep your staff’s attention focused on achieving those same KPIs is also crucial. Let’s take a look at a few here.
There are a variety of ways to measure patient satisfaction. Verbal questions with later documented notes, patient feedback forms, social media surveys, social media comments and recommendations recorded on your Practice Facebook or Google+ Business Page — and other such methods are great ways to quantify and examine patient satisfaction. We might think that after a month or two of operating in the new year that everything is going smoothly, but there are usually small things that patients pick up on and can suggest that you (or in many cases, your staff) could do better. Documenting and examining these KPIs quarterly or even annually at the very least will help you make small, and sometimes critical, improvements.
The most successful concierge medical practices are the ones that communicate regularly with the majority (if not all) of their patients on a routine basis that makes their customer (I.e. patient) feel like the doctor is reaching out and maintaining a connection. It doesn’t have to be face-to-face either. Many times, a simple text, Skype visit or phone call will suffice. However, if your front-office employees are not specifically asking each patient whether they’ve visited your practice in the past and ‘is there anything else we can do to improve your next visit?’ … this KPI can be difficult to track and start to increase annual patient attrition. One example we can all relate to is a recent trip to the grocery store. We’ve all heard a check-out counter employee ask us ‘did you find everything you were looking for today?’ While this type of service may seem inconsequential, it still means something in the service industry. Think about what questions you’d like to be asked and ask your employees to do the same. You’ll probably be surprised at the responses.
FACT: The majority (approx. 61%) of concierge medical practices in the U.S. currently employ 1 to 2 employees per clinic. (Source: ConciergeMedicineToday.com, 2012)
Did you realize that a significant number of patients leave their concierge practice each year because of ill-tempered or rude personnel employed by the doctor’s office? That’s right. Often the staff member has been employed for several years and the doctor believes they are indispensable. The following staff performance indicators will help you keep track of data so you can monitor how well your employees are impacting the success of your practice. Pay attention to the total labor cost indicator, especially if you’re a relatively new concierge-style medical practice owner (less than 5 years), because it centers on how your staff impacts your renewals and patient volume.
- Total labor cost: Total labor cost is one of the largest expenses you’ll incur as a medical office owner. In a lot of concierge-style medical practice office settings, approximately 38% of the practices’ annual expenditures are paid to employees and part-time staff. Hence, the reason you must consistently keep track of this. According to an article in the Houston Chronicle, labor cost should range on average from 25 to 35 percent of your total expenses. Total labor cost includes salary or hourly wages, benefits, insurance, retirement, and bonuses that you pay to yourself and your employees. (Source: SmallBusiness.chron.com)
- Labor hours: How many hours do your employees work during a certain time frame? You should compare these hours against your sales to measure the productivity of your staff.
- Turnover: Count the positions you employ, and then divide this number by the number of people you’ve employed during a certain period of time. For example, if you have two staff positions and you’ve employed six people in the last year, your staff turnover is 1/3 or 30 percent.
- Patient Attrition: How many patients DO NOT renew their membership annually? Survey these patients to determine their reasons. If is often advisable to have an outside or objective party conduct the survey as a patient may be reticent to reveal dissatisfaction with the staff or doctor’s service directly to a staff member or to the doctor directly.
We ask routinely hundreds of concierge medical doctors ‘what is your largest annual expense?’ Our responses from 2009 to present tell us that concierge-style doctor’s offices spend about 38% of their annual income on Staff/employees followed closely by Leased Office Space/Mortgage at 24%. In a close third, Malpractice Insurance at 19% and equipment at 5% and rising. (Source: Concierge Medicine Today)
RELATED ARTICLE(S) … Interested in more helpful business tips for the concierge doctor and direct care physician from successful healthcare entrepreneurs, check out CMT‘s our INNOVATORS PANEL or visit www.ConciergeMedicineToday.com.
Marketing and advertising indicators
This list of indicators is more important to concierge medical practice owners who actually spend money on marketing. And a large majority of doctors do. Most concierge doctors spend as little as 5% on marketing and advertising each year where some doctors choose to spend more – surveys tell us as much as 14% of their annual income. Many new concierge medical practice owners start up without putting any funding into this area, and thus don’t need to track this data. While it can be very difficult to grow a private-pay practice in a difficult economy, most concierge medicine doctors are thriving … increasing their annual revenue each year in the first five years from $100K per year to $400,000 or more per year.
Since 2009, Concierge Medicine Today has been asking doctors in these offices two important questions. First, ‘how long does it take to recruit or persuade a new patient to become a patient in your practice?’ Second, ‘what form of marketing is most productive when trying to attract new patients to your practice?’ The answers to these questions are very important. (Source: AskTheCollective.org, 2009-2012)
How long does it take to recruit or persuade ‘one’ new patient to become a patient in your practice?
- 49% – Four or more months
- 23% – Three to four months
- 4% – One to two months
- 13% – Two to four weeks
- 11% – One to two weeks
What form of marketing is most productive when trying to attract new patients to your practice?
- 16% – Hire a Marketing/PR Firm
- 14% – Letter with Brochure
- 13% – Word of Mouth Referral
So, with a natural attrition rate of roughly 10% (Source: ConciergeMedicineToday.com, 2011-2012), is only one of the following ways listed above enough to sustain a practice year after year? A doctor will know when they consistently track and measure the following KPIs in this category:
- Marketing and public relations (PR) costs
- Response rates
- Sales inquiry conversion rate
- Press mentions
MARKETING TIP #423! If you ask patients for e-mail addresses in order to provide them with special offers or for patient referral bonuses — this type of marketing costs you considerably less than having to advertise and market for a new patient in your local newspaper or networking event.
Sales and Service Indicators
These indicators center on your bottom line. Your sales and service costs will determine whether your concierge medical practice is succeeding financially.
- Service cost percentage: How much do you spend per to make sure your practice is ‘servicing’ your patient to the level they’d like? This may include equipment expenditures, magazine subscriptions, beverage delivery, television/cable costs, vitamins, recipe cards, etc. Think of these as the non-medical and non-health related add-ons that patients know makes your practice different from other doctor’s offices in the area. These services are not part of your square footage fee in your lease agreement or mortgage.
You usually calculate these costs as a percentage of your total business expense. You measure it by adding your purchases for the week and comparing those figures to your weekly sales. Depending on the type of services you serve and provide to your patients, this number can range from 5 to 15 percent. (Note: Doctors offices who choose the route of operating a franchised practice model will have a lower service cost potentially due to the buying power, cost control systems the franchisor can bring or limitation of services they accept inside a new franchised practice.)
- Weekly sales: This number is one of the standard sales-related numbers that every doctor’s office looks at. As you may expect, weekly sales can vary widely from one practice to the next. The key number to look at is any change you find from week to week and how it compares to previous years.
- Sales per head: One of the most used performance indicators is sales per head, which you calculate by dividing your total sales by the number of patients you serve. To do this, you must make sure your point-of-sale system or your employees and staff are properly accounting for the number of patients each sale covers. You can calculate your sales per head at different times or shifts throughout the day, week, month or quarter. For a more detailed understanding of this metric, you can track your sales per head each week or month to look for reasons for positive or negative trends. For example, your sales per head may trend downward when you run discounted product-related (i.e. add-on) specials.
- Best (and worst) selling items: Check the weekly sales from your receipts or point-of-sale system to help you determine which services from your menu items are either consistently selling out or simply taking up space on your menu board.
For more business tips, articles related to the concierge medical marketplace and trends, visit our TRENDS Blog at www.ConciergeMedicineToday.com.
About Concierge Medicine Today
Nearly a decade ago, Editor-In-Chief, Michael Tetreault created Concierge Medicine Today to fill an information void he found when he began researching concierge medicine and retainer-based medicine in Atlanta, GA. Michael, with his background in public relations, journalism and healthcare advocacy, found that there was no central repository of concierge medicine, direct primary care or retainer-based information anywhere on the internet, and with that, the idea for Concierge Medicine Today (CMT), Concierge Medicine Canada and The Concierge Medicine Research Collective were born.
Concierge Medicine Today (CMT), is a news and multi-media organization that is the industry’s oldest and most respected national trade publication for the concierge medicine and direct primary care marketplace. Our web site is the online destination for people and physicians to go deeper into the top stories driving the conversation and generating the national buzz about concierge healthcare and direct primary care.
I have been covering this industry for nearly a decade now. I have kept an eye on many of the concierge doctors that have opened since 1996 and watched as many have succeeded beyond their wildest dreams. At the same time, I have seen many concierge doctors flounder. Ouf of the thousands of stories we’ve reported, written and researched over the years, one thing is clear — running a concierge practice is not an easy road to follow. If done properly it can be the most rewarding venture doctors will ever enter into. With thousands of unique visitors every month, ConciergeMedicineToday.com has become the leading digital resource for timely, trusted health news and concierge medical information.
Originally PUBLISHED: FEBRUARY 14, 2013 [Updated: March 29, 2013] –