Despite my original beliefs, I have come to realize that my husband, David, is a typical male. He refuses to ask for directions. When traveling recently, I brought along MapQuest directions from the airport to our hotel. David took one look at the well laid out plan and insisted that he knew a shorter way. Once again, his “instincts” were wrong. My frustration mounted as we drove in circles for what seemed an eternity. I encouraged him to stop and ask for assistance, but he insisted that we “were close.” When we were still “close” an hour later, I had to wonder,
“How can he know where he is going, if he doesn't know where he is?”
When I finally called the hotel and asked for directions, I learned we were actually on the other side of town.
My husband's “instinct” for direction is similar to many people's “instinct” for business. Keeping a business on course requires more than following your hunches. If you don't have a sound plan, it's easy to get off course.
While tracking business performance is essential, it takes time that many practice owners and managers don't have. However, there are easy-to-implement tools that can simplify this process. They're called Key Performance Indicators, or KPIs, and they can pare down an overwhelming amount of information into meaningful data. KPIs can serve as a monthly report card of how well the business is performing. Sycle.net, the most common office-management software in this industry, automatically tracks basic KPIs.
Here are some suggestions on how to use KPIs to get valuable information on the health of a business:
* Hearing aids sold per month: Most practices derive a majority of their revenue from selling hearing aids. A simple barometer of the health of the business is whether hearing aid sales are increasing or decreasing compared to prior months or to the same time last year.
* Return for credit: This statistic represents the number of hearing aids that were purchased by patients and returned for a refund. However, it may mean much more than that to a practice, as it indicates how many patients were dissatisfied with the result provided to them or with how they were treated by personnel in the practice. When a patient makes a return, always investigate what the problem was and use that information to reduce future returns.
* Average close rate: This number is derived by dividing the number of patients who made a purchase by the number of all patients who were tested and received a recommendation for hearing aids. Industry trends indicate that the average close rate is 50%. That number is especially impactful in light of the results of a recent study of 500 patients conducted by Don Minchow (Hearing Review, June 2010). He found that as few as 3% of patients who left hearing aid offices without purchasing returned to the same practice when they decided to purchase. Increasing your close rate by even a small percentage can dramatically increase profitability.
* Number of patients coming for an evaluation accompanied by a third party: A survey by Robinson and Hanes published in this journal in March 2004 found that 65% of patients who were accompanied by a significant other purchased hearing aids, while only 35% who came without did. The person scheduling an appointment for either a new patient or one coming in for a re-evaluation needs to actively solicit the third party by saying something like, “You will need to bring a person with a familiar voice to your appointment so Dr. Kasewurm can complete her testing.”
* Percentage of binaural fittings: The latest Hearing Journal dispenser survey results published in the May issue showed that binaural fittings had reached a high of 83%. Since patients with binaural hearing loss usually hear better with two aids, converting a monaural to a binaural fitting will increase revenue and may also increase patient satisfaction.
* Number of calls converted to appointments: When a prospective patient calls your practice, the objective of the person who handles the call is to set an appointment. Everyone who calls and does not make an appointment represents potential lost revenue. You no longer have to wonder what a receptionist is saying. CallSource is an excellent resource that will actually record phone calls coming into your practice so you know how many incoming calls are being converted to appointments. Or you can simply keep a tracking sheet at the front desk where the receptionist records the number of calls versus the number of appointments scheduled.
The laws of business indicate that a business is either growing or it's dying. Tracking KPIs can be a simple and effective way to determine which direction your practice is headed.