Running a private physical therapy practice is like running any other business and requires monthly, quarterly, and yearly reporting of metrics. Unfortunately, you probably didn’t get much business education while in PT school. Thank goodness for the internet, am I right?
Business metrics are a handful of numbers you should be consistently tracking and measuring throughout the lifespan of your practice.
If you don’t track these metrics in your business, you won’t know if your business is profitable and growing or decaying, making it very difficult to properly manage your business.
Sales is defined by Forbes as income from customer purchases of goods and services, minus the cost associated with things like returned or undeliverable merchandise. Sales data should be correlated to marketing costs, reimbursement/price changes, other costs of sales, etc. Over time you will see growth, decay, or stagnation.
Gross margin is calculated as your practice’s total sales revenue minus its cost of goods sold, divided by the total sales revenue, expressed as a percentage. The higher this percentage, the more you retain on each dollar of revenue to cover other expenses and enjoy as profits. Tracking gross margin is important for growing companies because increasing volumes will likely improve efficiency and lower cost per unit.
Take all of your revenue (sales), and subtract all of your expenses. This is your profit/loss.
“Overhead costs are fixed costs that are not dependent on the level of goods or services produced by the business,” (Forbes). These costs can creep up and catch you off guard if not tracked properly. These costs include the salaries you pay your employees and the rent you pay for your clinic location. Inflation can be budgeted for each year, or adjustments can be made to prevent your spending from increasing too much on these costs.
Do you know how many of your patients cancel? It shouldn’t be a guess or estimate… this is an actual percentage. A good percentage to strive for is under 10%.
Basically, productivity is measured by how many “billable” activities a therapist completes in a workday. By tracking productivity, you can eliminate any inefficiencies or wasted time in your practice.
Tracking your monthly website traffic is a great indicator of your practice’s reputation and presence online. You can use tools such as Google Analytics to track your website traffic and see what visitors are spending time doing on your site.
What percentage of referrals convert to actual patients in your clinic? Again, don’t guess. This is a real number. And a really important metric you should know in your business.
You can gain access to an entire online library full of systems, templates, and procedures that make tracking metrics easier. These resources have been proven effective and are used by thriving PT practices all over the country.
Learn more about the business of physical therapy with our suite of guides on business metrics and management.
For a comprehensive list of 14 metrics you should be tracking in your physical therapy practice, download this guide.
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