DATA DRIVEN PRACTICE MANAGEMENT

Benchmarking & Data The KPI Cycle

Key Performance Indicators Strategic Planning

DATA DRIVEN PRACTICE MANAGEMENT

PRESENTATION AGENDA

Any practice must be profitable to survive, which means effective & efficient mgt are key not only to survive, but also to thrive Revenue; third party payors;

vendors; hearing aids & services;

itemize vs bundle; common elements too

Increasing competition & searching for success tools; Today demands

audiologists under-

ALL PRACTICES TODAY REGARDLESS OF SIZE OR SETTING

Be Smart about Business Generate a Profit

Must Cover Expenses

Know Costs & Hourly Breakeven

Goal

2

1 Embrace Change

Utilize Quality Business Tools

Proactive Management based on Data Driven Facts versus Feelings; the days of Passive

Practice Management are gone!

STRATEGIC PLANNING…

“If you don’t know where you

are going, how will you know

when you arrive?”

A PRACTICE OWNER:

• Should know what they want the practice to look and be like in the future

• Establish practice and provider operational goals that tie to the specific vision for the practice

• A Strategic Plan should:

• Assess the full practice potential

BUSINESS INTELLIGENCE: • Can be:

• Activity

• Tool

• Process

measure

Profitability

Rate

track & act

turnover ratios

KEY PERFORMANCE INDICATORS a.k.a. KPIs or KEY SUCCESS INDICATORS

A set of quantifiable measures that a company or industry uses to gauge or

compare performance in terms of

meeting strategic and operational goals.

HEARING INDUSTRY KEY PERFORMANCE INDICATORS H A K P I s = D R I V E R E V E N U E • Return rate • Close rate • Exchange rate • Binaural %

• Average Sales Price (ASP) • Units sold

• Level of technology sold • HAs sold to new vs existing

P R A C T I C E K P I s = M A N A G E R E V E N U E

• Gross production by

location/code/ provider • Write-offs and adjustments • Adjusted production by

location /code/provider • Total collections by

location/code/provider • Collection by third party

payors

• Appointments by provider • Accounts receivable

KEY PERFORMANCE INDICATORS

• KPIs should be:

• Specific

• Clear

• Measureable

• Monitored or tracked for specific time frames

• The number of KPIs is less important than

FOR THE MOST VALUE

• KPIs should be tracked for:

• The practice overall

• By location

• By individual providers

• Clinical associates

KPIs: MEASUREABLE, CLEAR, TIME SPECIFIC, NON-AMBIGUOUS

2

INITIAL KPI PROCESS:

• Establish the practice’s operational goals • Identify the KPIs that will most impact the

practice’s ability to achieve those goals • Set appropriate goals:

• Utilize industry benchmarking or best

KPI

QUESTIONS

AROUND THE

TOPIC

DID YOU TAKE HOME MORE MONEY IN 2014 COMPARED TO 2013? • More - Up by 5-10% or more

• Less - Down by 5-10% or more • No change

IF YOUR TAKE HOME INCREASED OR DECLINED IN 2014, DO YOU KNOW WHY?

• Yes • No

DID MORE NEW PATIENTS VISIT YOUR PRACTICE IN 2014 COMPARED TO 2013?

• Yes • No

CAN YOU IDENTIFY YOUR PRACTICE STRENGTHS AND AREAS IN NEED OF IMPROVEMENT?

• Yes • No

DO YOU USE YOUR PRACTICE DATA TO HELP MAKE DECISIONS ABOUT YOUR PRACTICE?

• No • Yes

• If yes do you track via:

• PMS?

• Excel spreadsheets?

• Applications?

QUALITY PRACTICE MANAGEMENT IS ALL ABOUT DATA • Data & numbers tell a story

• Good or bad, that story should guide practice management decisions & actions

• Data allows you to make decisions based on facts versus feelings

• If you understand & use your practice data, you knew the answer to every questions I asked

• If not, you’ve identified an opportunity for

improving your practice management style and

• You must have computers!

• Understand all of the available modules in PMS • Use Your Practice Management Software for:

• Scheduling

• Invoicing & billing • Marketing

• Patient communication • Know and use reports

• Assure data accuracy with practice systems & associate training

DATA DRIVEN MANAGEMENT

The days of manual tracking are gone!

“Business intelligence is moving away from gut-feel strategic choices and

moving toward an evidence-driven rational approach to business.”

Define the core business strategy and objective Step 2

Step 3

Step 4

Step 5

Determine KPIs to track – define thresholds & success

Measure performance over time Adjust tactics based on results and success metrics

Review and revise: learn from mistakes and brainstorm to identify options for moving

forward based on facts not feelings Step 1

BENCHMARKING

Serves as a standard

against which others may be measured or judged

A point of reference from which measurements can be made

BENCHMARKING

What is the value?

• Provides comparative data to identify practice strengths & weaknesses

• Techniques can be applied to improve all areas of a practice:

• Front desk

• Billing

• Sales

• Clinical

What should be benchmarked? • Data driven KPIs

TYPES OF BENCHMARKING

Internal:

• Compare your practice metrics, numbers & Key Performance Indicators (KPIs) from previous years, months, weeks & days Competitive:

• Know & understand how your practice is doing compared to other similar practices, keeping in mind:

• Location

• Mean income for location

• Quality of services

• Products sold, etc. Strategic:

BENCHMARKING DATA

Utilizing data in a competitive market can maximize your return on investment (ROI) associated with:

®

$70,000

$60,000

100%

MOVING TOWARDS BRIGHTER IDEAS

What can you do today to support your practice’s future success?

Helps practices understand how well they are performing: • Compared to the industry

• Compared to the competition

• In relation to practice strategic goals and objectives

Using practice data allows you to track and act:

• Identify strengths & weaknesses

• Deploy improvement processes

• Monitor success and failure

• Increase the value of your practice

Total Gross Revenue

$1,205,717 - Audiology Services &

Other $180,858 15% - Hearing Aids $1,024,859 85% ASP

$1,700 603 Net HAs sold

Return Rate 15% 709 Gross HAs sold (to get to net units)

Binaural Rate (78%) 1.78 398 Gross Number of Customers Sold Close Rate 35% 1138 Sales Opportunities/ Appointments

Average KPIs for Audiology Practice

WHICH KPI MOST IMPACTS NET REVENUE?

• Average Hearing Aid Sales Price (ASP)

• Hearing Aid Return Rate

0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 HA KPIs Close Rate ASP Return Rate Binaural • Close Rate : 35% ↑ to 55% adds $688,981 • ASP: $1700 ↑ to $2100 adds $283,698 • Return Rate: 15% ↓ to 5% adds $141,849 • Binaural Rate: 78% ↑ to 85% adds $47,416 KPI DATA FACTS

HOW TO USE DATA

• Compare your KPIs to national averages

• By practice

• By provider

• Use data during performance reviews

• Set minimum standards

• Pay bonuses based on improvements

• Identify your practice strengths and areas to improve (weaknesses)

• Create an action plan for improvement

HEARING INDUSTRY KEY PERFORMANCE INDICATORS H A K P I s = D R I V E R E V E N U E • Return rate • Close rate • Exchange rate • Binaural %

• Average Sales Price (ASP) • Units sold

• Level of technology sold • HAs sold to new vs existing

P R A C T I C E K P I s = M A N A G E R E V E N U E • Gross production by

location/code/ provider • Write-offs and adjustments • Adjusted production by

location /code/provider • Total collections by

location/code/provider

• Billings & collection by third party payors

• Appointments by provider • Accounts receivable

SET GOALS BY KPI & TRACK FOR SUCCESS

BILLINGS VS COLLECTION BY THIRD PARTY PAYOR

KPIs: MEASUREABLE, CLEAR, TIME SPECIFIC, NON-AMBIGUOUS

DATA DRIVEN PRACTICE MANAGEMENT: PRACTICE ANALYSIS via P & L

P&L Review: Annually? Quarterly? Monthly?

Where does all the money go?

20-30% 20-25%

Typically highest expense item in a

dispensing practice

Depends not only upon salary, but also

benefits; insurance? PTO? Continuing Ed?

License fees? Auto? Professional orgs?

Clinical and office expenses

BENCHMARKING YOUR P & L

30-35%

3-5%

15-25%

Will vary depending upon age of practice

& referral sources, but aged practices still need to market

& replace patients

Historically, could cover with

hearing aid battery sales

Can vary from 10-30% and depends upon many factors;

age of practice, benefits paid, COG,

productivity, third party payor %, etc.

BENCHMARKING YOUR P & L

7-10%

• Evaluate with data • Identify areas to improve • Define thresholds • Measure performance over time

• Adjust tactics based on results and success

metrics

• Review and revise

30%

25% 20%

7% 4%

14%

Hearing Aids Employees Clinic Exp

Marketing Rent Other

DATA DRIVEN PROCESS & BENCHMARKING

DATA-DRIVEN MANAGEMENT…TAKE-AWAYS

• Most audiology practices have potential to improve

• Utilize all modules of PMS - Understand & use reports in PMS • Accurate data entry is essential and key to success

• Track KPI performance by company, location, provider, code • Benchmark your data:

• Internally across time for change (↑ or ↓), which allows you to objectively identify practice strengths & weaknesses

• Competitively to groups and/or the industry to set goals • Be persistent, but reasonable:

• Set KPI standards and goals

• Consider compensation based on performance including KPI improvement - be specific

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