There are many different KPIs to evaluate your clinic’s financial health. From monitoring trends in your clinic’s gross income and expenses over time to analyzing your profit margin, we utilize several KPIs to help you understand how the other KPIs are translating into financial success.

Monitoring Expenses and Identifying Outliers

Analyzing graphs of your expenses, and looking for outliers – large, unusual expenses that occur on a single day or through an isolated period – is important for your clinic’s financial health.

Tracking down the source of these types of large expenses can help avoid erroneous or even fraudulent expenses. It can also provide insights into how you may be able to better tighten up your monthly budget to increase net profits.

Tracking Gross Income and Attended Visits

Likewise, tracking your gross income to ensure it is changing predictably with changes in your attended visits is very important. If, for instance, your attended visits are going up, but your gross income is going down, it becomes crucial to look more closely at your billing efficiency KPI. This will help ensure you are not losing money due to billing issues.

Once the problem is identified through analysis of other KPIs, developing a plan to turn that trend around and begin to collect the money due to you is crucial.

Other KPIs for Your Clinic’s Financial Health

Additional KPIs that readily identify the financial health of your clinic are your profit margin, gross revenue and gross expenses per attended visit.

• Achieving a High-Profit Margin

In the services industry, it is typical to operate near a profit margin of 10%. Our clinic was operating at slightly over 20% in 2021 when we sold it, despite the large expenses we took on to build out a new facility. We were able to achieve that margin by closely monitoring our KPIs, keeping positions staffed, and overall running a clean, friendly clinic that welcomed everyone in for therapy.

• Improving Income and Profit Margin

As mentioned, evaluating the billing efficiency and gross revenue per attended visit can increase income and thereby increase your profit margin. Besides, by monitoring and decreasing your expenses per attended visit, you can improve your profit margin and increase net profits.

Expenses will typically increase as your clinic gets larger; however, you’d ideally like to see the expenses per attended visit remain relatively constant. If those are increasing, re-evaluating your budget and cutting out extraneous expenses may be needed to maximize profitability.

Partner with KCD Pros

At KCD Pros, we evaluate and assess all these KPIs for you with our custom KPI solutions. We’re confident that if you follow our advice on managing your KPIs and put similar efforts into managing other facets of your clinic, you, too, can operate at margins well above industry standards.

Contact us today to learn how we can help you achieve financial success for your clinic.

Does clinic efficiency matter? Losing track of your clinic’s productivity and client show rates can be detrimental to your profitability.

Our third entry on the FAQ page goes into a fair amount of detail about why, so we won’t go back through the math here.

Let’s summarize by saying poor productivity can cost even a small clinic hundreds if not thousands of dollars per month.

Monitoring Productivity Trends

How do you prevent poor productivity from creeping into your clinic? First and foremost, you need to monitor your productivity trends. You can do this in a variety of ways, including:

Firstly, you can monitor a graph of your clinic’s overall productivity over time. This can give you a good feel for how your overall clinic is changing and moving forward.

Secondly, you may even want to monitor these graphs for each provider. This is especially important if they are responsible for managing their schedules. They may be lax in rescheduling or filling in cancellations.

Thidly, a time series graph can help you monitor whether they are improving or worsening on these trends.

Last but not least, you may also wish to monitor trends at your individual locations, by insurance, or by discipline.

Utilizing Time Series Graphs

It’s also a good idea to monitor snapshots of the productivity of each individual provider over a specified period, such as per pay period.

Most clinics will pull that data as part of payroll – a spreadsheet that will tell you the number of scheduled hours a provider worked; the number of productive hours one is seeing patients during that time; overseeing assistants; doing paperwork; and the resulting hour-based productivity.

This is an excellent tool to get a quick glimpse of your providers’ efficiencies over a given time period.

Snapshot Assessments of Provider Productivity

In addition to encouraging employees to improve their scheduling trends, a great way to improve productivity is to remove patients with poor show rates from the schedule.

Routinely identifying patients with the worst show rates and evaluating whether or not the show rates warrant action is critical to your clinic’s health.

If you have a patient with a poor show rate over a specified period of time, you may want to pull a show rate trend graph to assess how long their poor show rate has been a problem.

Sometimes it is a short-term problem due to health issues or other short-term problems. It may, however, be a chronic problem with a patient.

Enhancing Scheduling Trends

With that information, you can contact them to inform them their continued failure to attend scheduled visits may result in their removal from your clinic.

This warning typically gets people in for their scheduled visits more routinely. If it doesn’t, be sure to follow through with removing them from the schedule.

It is helpful to set a policy that patients agree to in writing, stating they will maintain a minimum 80% show rate. This protects your right to dismiss them from your clinic due to poor attendance.

As we’ve shown in the FAQ, poor attendance doesn’t just mean limited profit. It actually COSTS you money to see them if it drops low enough.

Monitoring and improving your clinic’s productivity and client show rates are essential steps toward achieving financial stability and growth.

By leveraging time series graphs, snapshot assessments, and proactive patient management strategies, you can ensure your clinic operates at its highest efficiency.

At KCD Pros, we provide comprehensive consultation services to help you implement these tools effectively. Contact us today to learn how we can support your clinic’s success.

When it comes to client retention, a couple of often overlooked KPI groups deal with monitoring new clients and potentially lost clients.

Growth KPIs somewhat cover the logic behind monitoring the numbers of new patients or lost patients over time.

Monitoring these KPIs helps ensure the stream of incoming and outgoing patients is not radically changing for the worse. The question is: why would you want a list of new or lost clients?

Why Track New and Lost Clients?

Communication is a critical component in building a clinic that is well-liked in the community. Additionally, it is key to receiving favorable feedback on social media and in online reviews.

How often do you read a comment on social media that someone felt like they were just a number at any given clinic?

You likely established your clinic with the idea that your clients wouldn’t feel that way. In addition to creating a homey feel in the clinic, reaching out to patients when they first arrive and after their last visit can be a way of letting them know they are important to you.

It’s also another way to show you appreciate their trust and patronage.

The Importance of Communication

The new patient list allows you to reach out to new patients to make sure their first visit was favorable. It also allows you to ask if they have any follow-up questions.

This list can also be used to ensure your front office is following up on any required scheduling and setting up for routine visits if necessary.

Utilizing the New Patient List

The potentially lost client list may be even more important. Many clients in a therapy clinic will leave due to discharge. In other cases and clinics, clients may stop scheduling because they’re angry about something.

Some clients will be very vocal about things they don’t like while attending a clinic. While you can address many of their concerns on the fly, others may get mad and leave without ever saying a word.

Once they leave, they may be quick to post a bad review online or make nasty comments about your clinic on social media. These actions hurt your reputation without even giving you an opportunity to correct the situation.

This potentially lost clients list is your opportunity to correct these issues before they cost you clients. Reach out to the people on this list. Ask them how their experience was and if there’s anything you can do to win them back.

Oftentimes, they may simply want to see a different provider in your clinic. They might also need a better explanation of why treatment is proceeding the way it is.

At the very least, reaching out shows them they are more than a number – you care about them. This outreach almost always makes them think twice about posting a nasty comment about your clinic online.

Make sure to read more of our blog posts to see how our KPIs and consultation can help your clinic thrive!

You’ve probably noticed that we’ve tried to stress the importance of the Predictive Modeling Tool on our KPIs page.

You may be wondering what this really means. What is this Predictive Modeling Tool?

Kevin Vought’s Expertise in Modeling

Kevin Vought has spent his career developing and running computer-generated models for a number of situations.

As a graduate student, he worked at Los Alamos National Laboratory developing a contaminant transport model. It was used to evaluate how tracers could move through the groundwater at the Nevada Test Site.

Throughout his career, he’s gone on to develop atmospheric, coastal, groundwater, and other contaminant transport models.

He’s received numerous accolades including awards and a promotion to a global director position at a large international company for his modeling work.

These models helped save millions of dollars by guiding construction, treatment, and other development projects in more cost-effective directions than how they were initially planned.

The Predictive Modeling Tool for Clinics

When his wife’s clinic began to really grow, he realized he could help guide and direct the growth by developing a predictive model that simulated the company.

In the model, changing specific parameters affects other parameters based on the mathematical relationship between them.

As with the other models he built and utilized throughout his career, this one earned them tens, if not hundreds of thousands of extra dollars. It also grew the company in a more appropriate direction.

Making Informed Expansion Decisions

The model can help you make complex decisions – such as when it’s time to expand.

It will account for the additional rent; the additional variable expenses like toilet paper, soap, and electricity; and the income that will be added from any waitlist you may have.

The aforementioned takes into account the different rates of reimbursement each new client may bring in through their insurance; the cost of each new provider; and the cost of any new administrative employees that may be required.

With the help of the model output, you may need to hold off on expanding. Perhaps you can expand more quickly than you thought due to the wait list income. A simple change may also help keep the costs down.

Whatever the result, you can know the outcome before you go beyond the point of no return.

Predictive modeling is a powerful tool that can help clinic owners make well-informed decisions about their growth and operations.

Additionally, there are numerous simpler and equally complex scenarios the model can be used to simulate. Contact us if you have any specific questions about this or any of our other KPIs!

Since starting up KCD Pros, we have received numerous requests for information regarding how we went about selling our clinic. I have written this post to let visitors know what we did and didn’t do in selling our company.

Understanding the Sale Process

First and foremost, seeking a buyer was not on our list of considerations. Therefore, we cannot help guide visitors on how to find buyers. Our therapy clinic was approached by a few different companies expressing interest in buying it for at least two or three years leading up to the sale.

I know there are brokers out there who can help you find buyers, but my understanding is that they charge a fairly substantial percentage of the final sale price. Be aware of the fees associated with using them.

As far as the sale process goes, it was very lengthy and tedious. From the initial contact to closing, it took about 6 months. We were able to very quickly respond to all of their requests for data and information.

They wanted to see and analyze pretty much every aspect of the company, including:

• Graphs upon graphs of growth and profitability
• Tables of the number of clients per insurance
• Copies of all our contracts with insurance companies
• Years’ worth of bank statements
• Copies of our QuickBooks entries
• Copies of all the BAAs we had with vendors who were potentially handling PHI, etc.

It’s a HUGE risk because if they don’t like the look of something and end up buying another competitor, they know EVERYTHING about your clinic and can use it to fight for growth and new clients in the area.

The Importance of KPIs in the Sale

My wife and I firmly believe that our strong understanding of our KPIs and our ability to very quickly hand that data over to the potential buyer helped add enormous value to the sale price.

If she had been on her own to answer many of their questions, she would likely have been unable to do so in a comprehensive and speedy manner.

This may have resulted in the buyer pulling out of the deal or at least lowering their offer substantially.

The buyer almost seemed disappointed many times when we submitted a new table or graph showing our growth and stability as well as our understanding of the importance of these metrics. They could see their costs increasing with every answer we submitted.

Determining the Sale Price: EBITDA and Multipliers

For the sale price, they calculated the price based on our EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization – basically your net earnings before taxes).

They allowed us to add extraneous costs back in to count toward the EBITDA. For instance, they approached us while we were in the middle of building out a new facility.

That build-out cost several hundred thousand dollars. They let us count that money as part of our earnings, and not take it out of our net since it was not a typical operational cost.

The negotiation part of the EBITDA process is the multiplier. There is a multiplier that takes your net earnings and multiplies it by a factor to determine the sale price.

Based on our research online and our understanding of the strength and market position of our clinic, we were able to increase their original offer on the multiplier.

Know Your KPIs

The bottom line is: whether you are seeking out a buyer yourself or you are approached by a prospective buyer, you MUST know and understand your KPIs to get top dollar for your company.

If you don’t know what your growth has been for the past five years to the tenth of a percent, why would a buyer take a chance on spending top dollar on your clinic?

Growth is just one of many KPIs buyers analyze very closely, so expect to go well beyond that if you truly expect to build value and attract attention to your clinic.

At KCD Pros, we’ve experienced firsthand how critical this knowledge is and are committed to helping other clinic owners navigate this challenging process with confidence and success. Feel free to contact us if you need help.

One of the key KPI categories to monitor is the scheduled and attended growth of your clinic. It’s important to monitor the overall clinic growth as well as each location and discipline.

This practice allows you to evaluate the effectiveness of management at each location and the strengths and contributions of each discipline.

Analyzing Clinic Visits for Growth

Analyzing visits is useful to assess growth from the perspective of billable or potentially billable visits.

Assessing growth based on attended or scheduled hours helps gauge employee scheduling and hiring needs.

Last but not least, assessing growth from the standpoint of unique clients served helps quantify the growth of the company—in terms of the number of clients attracted and served by the clinic.

These three aspects of growth are very important and useful in guiding the hiring, marketing, and monitoring of the clinic.

Assessing Employee Scheduling and Hiring Needs

There are many reasons to monitor growth. A couple include:

A decrease or stagnation in size could indicate that you are losing patients.

• A deeper analysis of your data to find the source may be required.
• Routinely performing a deep analysis may help avoid long-term stagnation or downturns from occurring.
• To help prevent negative growth or stagnation, you must look into the number of clients that have been lost recently. Options should be explored and acted upon to deal with the loss of patients.
  • Are they receiving poor treatment from your providers? Are they unhappy with your front-end staff? Is your facility dirty and in need of upgrades? Are your private pay prices competitive enough?
  • Many factors can drive clients away. Routinely monitoring the rate at which patients leave, routinely surveying patients for their thoughts about your clinic and their provider, and working to improve your patients’ experiences are important.

A lack of growth can also indicate that your clinic is taking on fewer new clients.

• A routine analysis of the number of new clients coming into the clinic should be conducted.
  • Seasonal or economic trends can cause declines. Decreases can also be caused by poor representation on social media, a lack of positive reviews, growing competition in the area, or other factors.
  • No matter the cause, recognizing the downturn and enacting a plan to fight against it is critical to the success of your clinic. Catching these downturns early is critical.
• Routine analysis of these KPIs will allow you to track the success of new social media postings, new marketing tactics, and other outreach efforts.

The Role of Routine KPI Analysis

At KCD Pros, we generate graphs of growth, client acquisition, client loss, and tables of patients due for a new survey.

We can also help you analyze them and generate a game plan for how to keep moving forward and keep growing. We don’t just drop a pile of data on you and wish you luck.

Partner with us to unlock your clinic’s full potential and achieve lasting success.

A key KPI, monitored within our Predictive Modeling Tool, is billing efficiency. Sometimes referred to as the net collections ratio, the billing efficiency will tell you the percentage of your total actual collected gross compared to your theoretical total possible gross.

It adds up your total collected gross revenue over a given period (from your bank records) and divides that by the total number of all your attended visits times each visit’s reimbursement rate. We assume each visit was reimbursed at your contractual rate with each insurance. If you actually received less than that agreed-upon rate, your efficiency will drop below 100%.

Why 100% Billing Efficiency Matters

Ideally, you want this number to be very close to or at 100%. This would indicate that you have successfully collected 100% of the money you are owed from the insurer you bill to for each visit.

It further indicates that all your insurance companies are abiding by your contracted reimbursement rates.

Factors Affecting Billing Efficiency

Your billing efficiency can fall below 100% for many reasons:

• Insurance companies could deny claims after you’ve seen the patient
• rivate pay patients could default on payment
• ne or more of your payors could fail to pay your contracted rate
• … and more.

If your efficiency drops below about 95%, you must analyze your billing team’s practices very closely and isolate the cause of the problem.

You may need to consider replacing your billing team if the problem is significant enough. Many clinic owners will respond well before the efficiency drops even that low.

Our Experience with Billing Efficiency

When we first began accepting insurance, our first biller misrepresented her capabilities and did a very poor job. Unfortunately, as the owners, we should have possessed the billing know-how to recognize her shortcomings. The problem was we didn’t know how to work with insurance reimbursements during that time.

We hovered on the verge of bankruptcy for over a year until we began bringing in new billers who identified huge holes in our billing practices. It was about that time that I began monitoring our billing efficiency and found we had been operating down below 80%.

That means over 20% of all the earnings we should have been receiving were being forfeited to the insurance companies.

What did that mean to a company financially? Assuming we should have been grossing about $500,000 per year at that time, we were turning around and handing over $100,000 of the profits back to the insurance companies due to our lack of proper oversight.

Given the very tight margins in running healthcare clinics today, that lack of oversight was nearly a death sentence for us.

How to Monitor Billing Efficiency Effectively

Using our KPI system makes this an exceptionally quick and easy KPI to monitor. It gives a very quick, but very accurate overview of your billing system’s health.

Billing problems can make even the strongest clinics go bankrupt in a matter of months. Don’t fall victim to assuming your billers are doing what they’re supposed to do. Ensure that they are!

Don’t leave your clinic’s financial health to chance—actively monitor and optimize your billing practices to secure a prosperous future.