Just recently I was asked by a physio (who was not a client) what one key KPI they should focus on. So, I asked them why they were only wanting to know one. They replied that they thought they only needed to focus on one thing at a time and 1 KPI at a time. I had to ask where they got the thinking from? They had heard it from another physio practice owner. (To put things into perspective this person owned and operated a very small, mediocre, struggling practice.)
Now this physio is heavily involved in the swimming community, as I am. So, I said, hey let’s go and ask the swim coach what is the number one thing, every swimmer should focus on if they want to be elite. We asked, and the coach looked at us as if we were nuts. He said there is no one thing needed to be an elite swimmer. You’ve got to have an efficient stroke which has multiple considerations attached to it; you’ve got to be strong and powerful; you need endurance; you need fast reaction times off the blocks; and so on.
So, let’s just consider this, if it’s good enough for an athlete to understand all their metrics, knowing that if they do not understand them then they’ll not reach their potential, then surely as a business owner it is important for you to understand each and every metric, what it means and how to shift them. After all, this is so much more important than a sports event. This is you and your family’s livelihood.
What the experts say
Dennis Reid, a world authority on KPIs said, “A major factor business’s fail, is they do not track their critical KPI’s and if they do, they are unable to improve the deficient statistic once they identify it”. He also mentioned that if you don’t inspect an activity or behaviour then don’t expect it to happen. KPIs are “the mechanism” of inspecting the various activities and behaviours essential to your end-product.
Throughout the world, I find many physio business owners allow their staff to work in an autonomous fashion. Where they as individuals determine what is gold standard, what the ideal customer service provided is, and determine the clinical standards by their own set of standards, rather than what has been deemed by the leadership team as being best-in-class.
If you want your business to be a financial success, then you need behaviours that correspond to a successful business environment. You’ll need to know the scores around the specific metrics that matter, – and more importantly how to move them. I’m sure that now you can see that knowing a number without a strategy to move it is frustrating and creates a negative attitude to KPIs and there’s no need for this negativity if your team understand why these are important.
And there are 4 main reasons why people struggle with KPIs:
- They don’t know what to measure
- They don’t know how to move them once they are measured
- And thirdly – I want to be transparent here, in working with private practice physio business owners around the world, we’ve found that an awful lot are suffering from stress, information overload and are overwhelmed. There are many things to do and a huge variety of activities to choose from. Too much information leads to action paralysis, and no one has given them a clear path from A to B.
- Another factor is that owners fear KPI’s because they know that this is going to shine a light on the ugly truth, and they would rather bury their head in the sand.
What we are going to do now is touch on is a pathway you need to do to overcome these. Let’s start out with this question before we even delve into KPIs, what they mean, and how to move them.
Why are you in business?
I want to consider this question: Why are you in business? What’s the end point? How do you know if you are winning? Knowing what you want your business to produce for you is your most important KPI.
Understanding your KPI’s is essential in understanding how your business is tracking and whether you’re winning or not. Your KPIs are the incremental journey points along your roadmap and so you’ll know that you’re tracking in the right direction. You need to know them, study them but also know how to shift them.
The real magic is in knowing what needs to move, in what order and by how much. Let me be very clear. We all have the same amount of time, it’s what we do with that time that’ll determine how successful we are. Here is a simple guideline to understanding KPIs and being able to move them so you can reach your end destination with confidence.
We measure to move philosophy
The only KPIs we measure are the KPIs we can move. Let me repeat that “The only KPIs we measure are the KPIs we can move” In retail there’s a saying “If you can measure it, then you can move it.” The same should apply to us.
However, your team can feel like they are being judged or micromanaged if they don’t fully understand KPI’s The Aim and Objectives of KPIs, is make sure they are quantifiable, meaningful, relevant and most importantly – constructively used.
Your objective as a business owner is to measure and then move those numbers until you have reached an agreed position of being gold standard in every aspect of your operation.
When it comes to KPI discussions with practice owners, those that don’t fully understand the ideal KPI focus, think the solution to their problems is just greater numbers coming through the door – so they only focus on new marketing skills
However, think about the marketing rule of “The cost acquisition of a new patient or client” – knowing that it costs you 6 – 10 times more money to get a new patient as compared to re-engaging an existing one – consider this:
- Do you need more patients to reach your practice potential?
- Or is it “to better service the patients you currently have?”
- Or a combination of each
KPIs are the only mechanism which can tell you which of these applies to your practice with clarity.
The most important number in your business is your profit. What’s the point of being in business without making a profit? I do want to reinforce here, that your objective as a business owner is to have a business which works independently from physical presence and creates a significant growing profit, year in year out. That’s a true business and its our objective to help you reach this position. However, without a constant focus on your KPIs, profit and activities that shift these numbers, you’ll always flounder. Therefore, knowing your KPIs and building a gameplan around them, using proven strategies and tactics, to move the numbers that matter is a central fundamental to building a thriving and prosperous business.
We have found at times, that some businesses that are generating greater revenue are not creating the profitability to match.
This comes down to understanding a particular type of KPI, found in the Management Information System (or what we term the MIS report), which tracks the financial performance.
The 5 Essential KPI Categories
There are five main categories of KPI’s that we exist to move:
- Financial results (MIS)
- Lifestyle metrics
- Productivity KPIs and KPAs
- Patient satisfaction
- Staff satisfaction.
You should measure each of these categories and have a process to move them.
Financial Monthly Management Information System
First let’s focus on your financial results. We recommend using a format known as a Management Information System (MIS Report) which is a snapshot of the monthly finances produced at the end of each month. This is not a profit and loss report for taxation purposes, it’s much more powerful. It puts you in a proactive position, knowing what’s currently happening in your business. This allows us to do is look at a glance over the last month, to identify any areas in the business that are outliers which are either sensationally or underperforming.
Measuring your patient satisfaction across service areas and for individuals is an important metric to measure allowing you to make any required changes to ensure your patients aren’t just content with your service, but rather, raving fans.
Your staff are the lifeblood of your business. It is essential to ensure that there is staff-longevity, as this affects your financial and cultural success.
It is recommended that quarterly reviews incorporate a staff satisfaction component and that you have a program in place to ensure your team are more than content, even delighted while working for you.
Key Performance Indicators (KPIs)
Once you understand your MIS report it’s then essential to know which KPI’s need to be moved to enhance the financial results. This allows profit maximization.
Once you’ve identified an issue in the MIS and know which KPI needs moving, we then identify the Key Performance Activity (KPA) which needs to change, resulting in the desired shift in the KPI which then creates desired figure in the MIS report. It’s these daily actions in the business (KPA) which need focusing on and then performance coaching to.
Key Performance Actions (KPA’s)
Think about KPAs as the ideal activities, skills, or behaviours which can shift a KPI. In essence you are working backwards.
You measure your MIS to identify underperformance from a financial perspective.
Then analyze your KPIs to identify which number if moved will correct the MIS findings.
However, trying to get therapists to move a KPI without the skills required creates a negative environment. Therefore, you should understand which Key Performance Activities (KPA) which when they are moved will change a particular KPI which will in turn change the MIS.
You can then performance coach individuals to their KPAs over a 6-week period, which should move the KPI required, which then moves the MIS report findings in the desired direction.
If marketing is the heartbeat of business, then KPIs are the backbone. Within every elite performing business, their KPIs are defined, measured and are a true reflection of what they stand for from a clinical excellence and customer service experience. Knowing and measuring them allows the team to be performance coached on a regular basis on the activities, skills or behaviours that will shift them in a positive manner.
This is a brief overview on a very important topic. For a more in-depth understanding take advantage of our free video training KPIs that Count!