DATA DRIVEN PRACTICE MANAGEMENT

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2 DATA DRIVEN PRACTICE MANAGEMENT PRESENTATION AGENDA Introduction Strategic Planning Key Performance Indicators The KPI Cycle Benchmarking & Data How to Use Data to Manage

3 Revenue; third party payors; vendors; hearing aids & services; itemize vs bundle; common elements too Any practice must be profitable to survive, which means effective & efficient mgt are key not only to survive, but also to thrive AUDIOLOGY ROADMAP Increasing competition & searching for success tools; Today demands audiologists understand both clinical & business perspectives

4 ALL PRACTICES TODAY REGARDLESS OF SIZE OR SETTING Be Smart about Business Generate a Profit Must Cover Expenses Know Costs & Hourly Breakeven Many audiologists find themselves working harder to generate the same or less profit than prior years or find growing the practice year after year challenging!

5 KEYS TO PRACTICE SUCCESS 1 Embrace Change Utilize Quality Business Tools 2 Proactive Management based on Data Driven Facts versus Feelings; the days of Passive Practice Management are gone! Goal

6 STRATEGIC PLANNING is a comprehensive process for determining what a practice should become and how to best achieve established goals

7 QUOTE: unknown author If you don t know where you are going, how will you know when you arrive?

8 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 Link the practice s objectives to the resources and actions that are required to achieve the defined goals and success

9 BUSINESS INTELLIGENCE: Can be: Activity Tool Process That creates clarity and supports decision making Key Performance Indicators represent such a tool

10 Performance relative return margins measure Benchmarking Sales track & act growth ratios Rate ROI Profitability turnover ratios relation

11 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. Quote by: Investopedia

12 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 New vs existing patients Referral source analysis Average production per day Ancillary products sold

13 KEY PERFORMANCE INDICATORS KPIs should be: Specific Clear Measureable Monitored or tracked for specific time frames The number of KPIs is less important than choosing KPIs that will provide the right data and potential to positively impact the practice

14 FOR THE MOST VALUE KPIs should be tracked for: The practice overall By location By individual providers Clinical associates Support associates

15 KPIs: MEASUREABLE, CLEAR, TIME SPECIFIC, NON-AMBIGUOUS 1 2 3

16 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 practice data from professional organizations, vendors or other big data companies

17 KPI? QUESTIONS AROUND THE TOPIC

18 IS YOUR GROSS PRODUCTION INCREASING, STABLE, OR DECLINING IN 2014? Up by 5-10% or more Down by 5-10% or more No change I don t know

19 IS YOUR NET PRODUCTION INCREASING, STABLE, OR DECLINING IN 2014? Up by 5-10% or more Down by 5-10% or more No change I don t know

20 ARE YOUR COLLECTIONS INCREASING, STABLE, OR DECLINING IN 2014? Up by 5-10% or more Down by 5-10% or more No change I don t know

21 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 I don t know

22 IF YOUR TAKE HOME INCREASED OR DECLINED IN 2014, DO YOU KNOW WHY? Yes No Not sure

23 DID MORE NEW PATIENTS VISIT YOUR PRACTICE IN 2014 COMPARED TO 2013? Yes No I don t know

24 CAN YOU IDENTIFY YOUR PRACTICE STRENGTHS AND AREAS IN NEED OF IMPROVEMENT? Yes No Maybe

25 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? Accountant/Bookkeeper?

26 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 better identifying your practice s strengths and weaknesses

27 Data driven practice management is about securing and utilizing accurate data efficiently DATA DRIVEN MANAGEMENT The days of manual tracking are gone! 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

28 Anthony Bojorquez Business intelligence is moving away from gut-feel strategic choices and moving toward an evidence-driven rational approach to business.

29 5 STEP KPI CYCLE Step 1 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

30 BENCHMARKING What does it mean? A point of reference from which measurements can be made Serves as a standard against which others may be measured or judged

31 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 TARGET GOALS

32 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: Combines Internal & Competitive benchmarking results to establish goals to help you get to desired levels

33 BENCHMARKING DATA Utilizing data in a competitive market can maximize your return on investment (ROI) associated with: Employees Marketing Operations and more!

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35 2010 Bureau of Labor Statistics

36 $250,000 $140,000 $90,

37 $250,000 $120,000 $70,000

38 $200,000 $120,000 $60,000

39 98% 100% 100%

40 MOVING TOWARDS BRIGHTER IDEAS How will your current decisions impact your future success? What can you do today to support your practice s future success?

41 Benchmarking using Audiology Care KPIs 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

42 Average KPIs for Audiology Practice Total Gross Revenue $1,205,717 - Audiology Services & Other $180,858 15% - Hearing Aids $1,024,859 85% ASP $1, Net HAs sold Return Rate 15% 709 Gross HAs sold (to get to net units) Binaural Rate (78%) Gross Number of Customers Sold Close Rate 35% 1138 Sales Opportunities/ Appointments Industry Benchmarking Data

43 WHICH KPI MOST IMPACTS NET REVENUE? Average Hearing Aid Sales Price (ASP) Hearing Aid Return Rate Binaural Rate Close Rate

44 800, , , , , , , ,000 0 HA KPIs Close Rate ASP Return Rate Binaural KPI DATA FACTS 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 Together w service revenue = +$1,513,018 potential for this practice doubling revenue without seeing many more patients!

45 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 Monitor provider and practice performance regularly

46 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 New vs existing patients Referral source analysis Average production per day Ancillary products sold

47 SET GOALS BY KPI & TRACK FOR SUCCESS KPIs: MEASUREABLE, CLEAR, TIME SPECIFIC, NON-AMBIGUOUS

48 BILLINGS VS COLLECTION BY THIRD PARTY PAYOR KPIs: MEASUREABLE, CLEAR, TIME SPECIFIC, NON-AMBIGUOUS % 80% 5 96%

49 DATA DRIVEN PRACTICE MANAGEMENT: PRACTICE ANALYSIS via P & L P&L Review: Annually? Quarterly? Monthly? Where does all the money go? What is the highest expense item in a practice?

50 BENCHMARKING YOUR P & L Hearing Aids Employees Clinic Expenses 30-35% 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

51 BENCHMARKING YOUR P & L Marketing Rent Owner s Comp 7-10% 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.

52 DATA DRIVEN PROCESS & BENCHMARKING Evaluate with data Identify areas to improve Define thresholds Measure performance over time Adjust tactics based on results and success metrics Review and revise Hearing Aids Employees Clinic Exp Marketing Rent Other 14% 4% 7% 20% 30% 25% Net Revenue

53 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 GET IN ACTION!!!

54 QUESTIONS

55 CONTACT ME THANK YOU Kathy Foltner, Au.D. Phone: Foltner Consulting, LLC 111 East Chestnut #42K Chicago, IL ADDRESS