6 Key Levers Every Practice Must Monitor for Financial Success
Running a clinical practice isn’t an easy feat. Running a successful practice can be even more daunting. There are some key performance indicators that you must be on top of to ensure that you achieve financial success for your hard work.
As a part of our ongoing training at the BHRT Training Academy, we conduct monthly Master’s Level training to help support providers in our training program. We offer training topics such as clinical education as well as other practice management information.
Here are some great tips from our recent Master’s Level training with Matthew Gillogly, where he addresses six key levers every practice must monitor to succeed financially. Levers such as key business challenges, like how much you should be spending on ads and how much to charge to get off the “rollercoaster” of revenue ups and downs.
He compared these levers to monitoring patient vital signs—this is a must!
Matthew offered our providers a free copy of his book for the cost of shipping.
Read on for a summary of the topics he covered in our interview.
Number of New Inquiries a Week
How many new inquiries do you have coming into your practice every single day? How about every week? And how does this tie into your overall financial success?
A common channel is spending money on lead generation activities but not having these converted to paying customers.
The new inquiry is a key metric for any business, especially with a high potential spend per customer.
New inquiries refer to everyone who has reached out and showed interest via phone, web, and walk-ins. Matthew compares this to a kind of “pulse rate” for your business and needs to be tracked as an important vital sign.
Some questions to consider:
- How many of these new inquiries need to book an appointment for you to make a profit—70%? 98%?
- Where does this 70% come from?
- How much is not making this goal eroding your ad spend?
- Why are you not making your percentage goal?
- Where are your staff possibly missing the mark?
Matthew recommends having a script for all staff to follow to close more sales, especially phone or in-person inquiries.
Number of New Patient Evaluations a Week
Patient evaluation numbers can help to give a sense of certainty when it comes to bookings, and monitoring this can pave the way to financial success.
This is an example of a set metric that you can monitor from anywhere. You can understand how well your staff engages with leads and follow the evaluations as they come in.
If these numbers come up short, you can then hone in on the problem and make adjustments: for instance, a staff member not following the script.
Matthew says: “The number one investment that you need to be spending on is advertising. You can master these numbers, and you can create patients on-demand. You can make money on demand.”
Number of Conversions to Programs
Marketing for wellness practitioners can be a challenge, and part of this is that you should be converting 50% of the people that come in for a new patient evaluation into treatment that day.
Matthew emphasizes the fact that your business must convert new customers fully for that to count. That doesn’t mean that someone makes a casual inquiry. It means that they are sold on a program.
So, how do you sell them on a program?
Follow that script! Do the work on the front end. Make sure there are real people there to talk with them live on the phone.
The point here is to create demand for your products and services. You won’t need to be pushy about selling when you prepare and educate your patients, and your marketing is targeted well.
As Matthew says, “the patient will ask you to close them.”
Average Revenue Per Transaction
If you’re already running a wellness business, you know that this will probably be a key indicator of how well you can earn revenue. Again, this comes back to a key point of his, and that’s ad spend.
Your average revenue per transaction will help you understand how much you should be spending on ads.
To achieve financial success, most of his clients ”…make anywhere between eight to one to 12 to one on their ad spend, provided they’re following these steps.”
Cost to Acquire the Average Revenue
The cost to acquire is the number of new patients who paid and patients who signed up for a plan divided into the amount you spent advertising. So let’s say for the week, I spent $5,000 in advertising for the week.
If you have ten patients come in, that’s $500 per patient. But what if the average revenue per transaction is $450, you’re losing $50 per appointment per patient.
You need to see at least a four to one difference between the acquisition cost and the average revenue per transaction.
Monthly Recurring Revenue
Do you know how much you need to charge to get off the “revenue roller coaster” and enjoy financial success consistently?
Honing in on your monthly recurring revenue can help you in a myriad of ways, including:
- Understand trends through time
- Revealing where you can be raising your rates
- Investigate customer retention levels
- Budget forecasting
Matt stresses that your monthly recurring revenue should be 25% of your total revenue.