“Efforts and courage are not enough without purpose and direction.” – John F. Kennedy
Many dentists and optometrists have no problem setting goals for their practices: They want to see more new patients, to increase their profit margins, and to invest in newer equipment. However, unless practice owners utilize the principles of KPI, they may find themselves falling short of their goals without knowing why.
KPI stands for Key Performance Indicators. These measurements help an organization determine whether or not it is reaching its goals. A KPI can be anything: the percentage of new customers, the number of clients served, the profit margin, or even a graduation rate. What makes a KPI so important to the success of an organization is that KPI enables businesses to:
Create specific, measurable goals that directly affect the business’s bottom line
Evaluate whether or not the methods used are successful in reaching these goals
Provide accountability for personnel and programs
They key behind performance indicators is that to be effective, they must be both specific and quantifiable.
For example, let’s say that your practice decides that one of its KPI goals is going to be gaining new patients. Before using this as a goal marker, some very specific items should be defined. Following is an example:
What does it mean to have a “new patient?” Is this someone who just comes in once for an emergency and rarely comes back, or is this someone who has regular checkups each year? Be sure to define what constitutes a new patient. In addition, is there a certain age demographic you are trying to target? How are you measuring the increase? (Quarter to quarter, year to year?)
While focusing energy on new patients, you should not forget to put measures in place to retain regular patients. For example, a dental practice may have a large number of new patients, but if they lose several regular patients, they are adversely affecting their practice, even though they reached the “goal” of securing new patients.
KPI monitoring forces practice owners and managers to look at both the macro and micro, providing vital information on not only the smaller steps needed to reach their goals, but the overall picture of how these steps are affecting the whole practice.
In order to be effective, KPIs must be:
• Quantitative: They can be measured and expressed in a numerical form. “Improve customer service” is not a quantitative KPI indicator. However, “increase patient satisfaction scores by 20 percent during this quarter” provides a measurable goal.
• Directional: It should be easy to determine if a company is improving (or missing the mark).
• Practical: KPIs must complement and reinforce the company’s brand, processes and philosophies.
• Actionable: There should be concrete steps and processes that can be put into motion to create the desired change.
Not only is KPI monitoring vital to the success of your practice, but it also important to work with someone who not only can accurately and objectively interpret the KPI data.
