Benchmarking Basics Your Key to Business Success
Tracking key statistics and comparing Them to others in the industry can provide a valuable tool for continuing to improve your bottom line.
By Chuck Felder, PT, DPT, MBA
Have you ever wondered if you are managing your business well? Business benchmarks can help you know the answer.
Wikipedia defines benchmarking as comparing one’s business processes and performance metrics to industry bests and best practices from other companies. Benchmarking is used to measure performance using a specific indicator (cost per unit of measure, productivity per unit of measure, etc.) resulting in a metric that is then compared to others. Benchmarking may be a one-off event but is often treated as a continuous process in which organizations continually seek to improve their practices.
Most industries have benchmarking information on all aspects of their business. Our physical therapy practices have multiple areas where benchmarks exist at some level. This article is aimed at key benchmarks for the business aspects of your practice. Clinical outcomes and comparisons are outside the scope of this discussion. Typically, benchmarks are useful in helping determine best practices and operating a healthy, efficient, and effective business.
Our field provides some unique challenges with varying third party payer rules across the country that impact how we charge, how we get paid, and what type of productivity one can expect. The starting point is looking at your individual business. Often practice owners are so busy working in their business that they have little time or energy to work on their business. Developing a set of key performance indicators that quickly provide an overview of the health of the business facilitates keeping the business healthy over time. The good news is, these key metrics can be easily gathered with a little planning. Staff members can gather the data, and a key trusted staff member can put it all together for the owner or manager.
Once you have your individual business data over a reasonable time frame, then you are ready to compare to others. However, a key factor is to make sure the data is standardized so you are comparing apples to apples. In other words, if you are comparing yourself to other practices, make sure that everyone is using the same definition for key metrics and reporting using the same standards.
Chuck Felder, PT, DPT, MBA, is a PPS member and owner of HCS Consulting in Corona, California. Chuck has been collecting PT data for the last 14 years and annually publishes the PT Benchmark Report. He can be reached at email@example.com.