Attention practice owners! Take charge of your business to ensure it’s well positioned for the road ahead.
- Measure the health of your business with 5 key performance indicators.
- Plan ahead to improve profitability, growth and the value of your business with 7 key initiatives.
We all know that by establishing regular health and dental checks we’ve got a greater chance of preventing problems throughout our lives.
It’s the same reason for establishing regular financial and strategic reviews of your professional practice. Done regularly, this will help keep you focused on identifying key value drivers to maximise the value of your hard earned business investment and to effectively manage risks, potential weaknesses and/or threats.
Effective financial and non-financial monitoring and strategic planning will help you position your practice to maximise value and make your business investment work for you.
Working ‘on’ vs ‘in’ your practice
Invest time to work on your practice, review key business performance measures and industry trends:
- Review financial performance including key performance indicators and use this to compare and benchmark with other successful and leading practices in your industry.
- Review key trends in relation to government, industry, technology, staffing and resources, client/patient needs and innovation.
- Identify opportunities, strengths, weaknesses and threats.
Start with 5 key performance indicators to monitor the health of your business:
- Measure the growth of the business – patient fee growth, new patients, referrals from specialists/allied health and repeat visits. Review fees per consultation level (A-D) and Practice incentive payments as a % of Gross fees to identify trends. Manage the risks – review of patient complaints, average waiting time and lost patients.
- Measure performance – consulting room utilisation, fees charged per consultation, fees per GP, net contribution per GP, gross profit margin and net profit. Manage the risks by identifying trends and shortfalls compared to other medical practices.
- Measure the financial impact of the investment in new systems and/or processes.
- Measure staff engagement and performance - training hours, 360 degree feedback surveys, GP revenue, productivity, GP profit margin.
- Measure operating costs – as a % of gross fees measure rent, medical supplies, wages (Registrars, Nurses, Administration), IT support, subscriptions and insurance and benchmark with the industry.
After reviewing past performance, focus on 7 key initiatives to improve profitability, growth and the value of your business.
Plan ahead, identify and prioritise key initiatives for the next 12 months aimed at driving revenue growth, improving profitability, cash flow, efficiency, performance and ultimately increasing the equity value of your practice.
Some key initiatives include:
- Establish patient relationships linked to the practice and its brand; not just the individual. Introduce new technology to improve patient service and build effective patient relationships.
- Staff development - consider leveraging from other professionals and team members, increasing the scale of your business, training key staff, investing in professional development to enhance level of care and maximising leveraging within the organisation by introducing an effective structured team. Introducing incentives and rewards to encourage performance improvements would also assist.
- Develop systems and processes to reduce reliance on key people within the practice.
- Reduce potential threats (including the Medicare freeze, changes to pathology rent agreements etc.) by increasing the range of services offered, introduce private billing, select the right service mix to maximise profits and identify cross service opportunities.
- Enhance patient services utilising data analysis and management tools to identify patients who would benefit from proactive collaborative care.
- Maximise room utilisation by effective use of rooms for part time GPs and/or implement a recruitment program.
- Effectively use debt to provide capital to expand and grow your practice by acquiring other practices. This strategy can potentially lead to increased revenue growth, profitability and a higher return on investment.
Business SuccessSuccessful business owners maximise their investment returns by continuing to evolve the way they do business. They continue to set new goals to counter existing weaknesses/threats, take advantage of opportunities as they arise and measure success against these goals. Take charge of your business to ensure it’s well positioned for the road ahead. Select and focus on 7 key initiatives for the next 12 months, reflect and measure the benefits achieved and prepare for your next strategic planning cycle.