We all know the importance of getting check ups. As practitioners we are always encouraging our patients to come in for their regular check ups, whether it be for their spine, brain or other body systems.
How often do we do check ups on our business to see how successful it is? If your business is in a steep decline this will often be apparent through falling patient numbers and revenue.
But if the decline is gradual you may not see the warning signs until it is too late. Taking some time to give your business a check up will help you catch and correct deficiencies before they become major problems. The good news is that the check up need not be painful and onerous. Some simple calculations can give you the information you need.
Likewise, doing a health check on your practice is important even if it is doing well. While you may be doing things right, you may be able to find areas that could be improved to make your business even better.
So how do you go about doing a health check on your practice?
Firstly decide what period of time you are going to do your check-up over. I would suggest doing a monthly checkup to start with. If you keep these figures you can chart any change in your practice over time. If this is your first time, do monthly calculations for the last 6 months (or longer or shorter as you desire).
Secondly you need some numbers. These numbers are your practices “vital signs”. You should be able to get these easily from your practice management software. If not, consider our Icon Practice software (for more details click here). They are the raw numbers, in this case, for the last month. If you are doing this for the first time, get monthly totals for the last six months.
The numbers you want are:
- Total new patients visits,
- Total patient visits (including new patient visits),
- Total revenue (also called income), with and without stock sales if possible.
These raw numbers alone can give you some good information. Generally more new patients and more patient visits is a good thing. Like wise more revenue is a good thing also.
You can do some things with these numbers though to give you a window into the efficiency of your practice.
How well are you retaining your patients?
We all know that patients who fail to complete their course of care are more likely to have a poorer outcome than those who do complete. Those who have been in practice for some time will also know that patients often have other priorities, often financial, that discourage them from completing care. Your patient retention is a measure of how well you educate your patients of the importance of continuing their care.
What you need is an easy way to measure you patient retention. This is done with a simple statistic called the patient visit average (PVA). To calculate your PVA, take the total number of patient visits including new patient visits over the period you are measuring and divide it by the number of new patient visits for the period you are measuring.
PVA = Total visits/New patient visits
This tells you how many visits on average your patients have in your practice. The older your practice, the higher this figure will tend to be, as you have patients having maintenance care, and patients returning after a break in their care.
For people practising physical treatments such as chiropractors, myotherapists, osteopaths and physiotherapists, a PVA between 1 and 3 is very poor, and you can be sure your patients are not getting the most from their care. 4-6 is poor and could be improved. 6-8 is probably average. 8-12 is good, and above 12 is good number for your patients. This takes into account that patients don’t just need symptoms relief, but also rehabilitative care to support their system through ligament and soft tissue remodelling.
How much does a patient visit bring into the practice?
You might be inclined to simply quote the value you charge for your consultation as your revenue for each visit. However this doesn’t take into account concession and no-charge visits, or stock sales. If you calculate how much you actually make per visit, you might be in for a nasty, or pleasant, surprise.
The average visit value (AVV), will tell you the revenue that you bring in for each visit on average. To calculate it, take the total revenue for the period and divide it by the total visits for the period. You can either use the revenue figure with and without stock.
AVV = Total revenue/Total visits
An AVV (excl stock) that is way below your consultation charge indicates that you are providing a lot of discounted consultations. You may need to revise your discounts policy. Alternatively, a figure higher than your average consultation may indicate that your PVA is too low. Check the PVA for confirmation.
The AVV (incl stock) compared to AVV (excl stock) can give you an insight into how well you are marketing your stock. If the two figures are close, then you are not selling much stock to your patients, and vice versa.
Your total average patient revenue.
Having worked out your average visit value and your patient visit average, you can now easily calculate the total patient revenue (TPR). This is how much an average patient brings into the practice over their lifetime.
This figure is important as you can use it to work out how much you can spend to acquire a new patient. In theory as long as you are bringing in more per patient than you are spending to acquire one, then you are on a winner. In truth it is more complex than this, however it give you an idea of how you are doing.
To calculate the TPR multiply the patient visit average by the average visit value.
TPR = PVA x AVV
Combining and interpreting the information.
With these 3 basic calculations we have taken your raw practice figures and used them to give you a deeper insight into how well your practice is running.
Your patient visit average gives you an insight into how well you are educating your patients about the importance of their care. Low figures may indicate you need to spend some time improving the skills of yourself or your staff on patient education. Or focus on improving your office procedures to ensure patients don’t slip through the cracks and drop out of care.
You average visit value lets you know what you are actually earning on average for a patient visit, and can give you insight into how well your are marketing any stock you sell in your practice. It may also indicate a need to look at your discounts policy.
Finally, the total patient revenue is the amount each patient will spend in the practice on average. You can use it to guide your marketing decisions by telling you how much you can spend to acquire a patient. In some marketing circles this is referred to as the Life Time Value (LTV) of a client.
I would recommend calculating this information monthly and recording the results so you can chart the information. Over time you would like to see all of these figures increasing. Decreasing figures are a cause for concern and indicate a need to reassess you office procedures, and possibly seek outside help.
Our Icon Practice software can provide you with these figures over whatever period you set with a few clicks of the mouse. Click here for more information and to start your free trial.