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Many of y’all know that I have been using TherapyNotes as our practice EHR for over 10 years now. I’ve looked at others and I just keep coming back to TherapyNotes because they do it all. If you’re interested in an EHR for your practice, you can get two free months of TherapyNotes by going to thetestingpsychologist.com/therapynotes and enter the code “testing”.
Hey folks, welcome back to The Testing Psychologist podcast. Glad to be here as [00:01:00] always. As you can see, it is getting dark in Colorado pretty early here.
Today, we’re talking about KPIs or Key Performance Indicators. You’ve probably heard business consultants or practice owners talk about KPIs. I’ve talked about KPIs here on the podcast, but at best, I think KPIs are a vague concept to most of us since we didn’t have any training or education on this when we went to grad school. So whether you are running a solo practice or a large group, you’ll want to pay attention to at least a few metrics or numbers to keep tabs on the health of your business. That is what a KPI is.
This episode is meant to demystify KPIs a little bit. We’ll talk about what they are, which ones to track in your practice, and we’ll talk about how to track them. I’ll try to cover all the bases with KPIs.
If you are a practice owner or hoping to launch a practice, The Testing Psychologist mastermind [00:02:00] coaching groups are starting new cohorts in January 2025. So whether you’re a beginner or you’ve been at it for a while and feel overwhelmed or you’re an advanced group practice owner dealing more with CEO kind of stuff, people stuff, visioning, and business development, there’s a group for you. You can go to thetestingpsychologist.com/consulting and sign up for a pre-group call to see if it’s a good fit.
For now, let’s get into this discussion of Key Performance Indicators.
All right, everybody, here we are. We’re talking about Key Performance Indicators or KPIs. We’re diving into the what right away. So what is a KPI?
History-wise, there is some loose [00:03:00] research to suggest that 3rd-century Chinese leaders were the first known instance of rudimentary KPI measurement. They measured the performance of Royal family members against expectations. Folks are calling that the first instance of a KPI, but most people would say that KPIs got started in the early 20th century with a guy named Frederick Taylor who was an expert in “scientific management”.
Doing the math, you could guess that KPIs got popular with the advent of the Industrial Revolution when people started paying attention to productivity, for better or worse. And so, here we are, 100 years later, still talking about KPIs.
What they are essentially is that, KPIs (key performance indicators), are metrics or numbers that you track and ideally compare against a standard of some sort. [00:04:00] What does that mean in the context of our practice?
Examples would include revenue per week, incoming calls per week, or conversion ratio for incoming calls, for example. These are metrics, numbers, or statistics that you are paying attention to, and like I said, ideally comparing against a standard or a goal if you want to think of it that way.
Why should we care about KPIs?
KPIs are important because, again, another quote, ” What gets measured gets managed.” If you have no investment in running a successful business and genuinely get a lot of joy and fulfillment from randomly answering the phone, booking people whenever you feel like it, and completing evaluations or not without any concern for being paid, then you may not need to track KPIs; if you’re truly just doing it for fun.
But most of us want some indication [00:05:00] of how our businesses are performing. That’s where KPIs come into play because if you’re tracking and measuring different metrics, you’ll know if you are growing or the practice of shrinking, if you’re collecting the money you’re owed, if you’re charging appropriately, and any number of other things that are relatively important to financial, operational, and logistical health of your practice. Hopefully, that’s enough of a rationale. I like to remember that phrase, ” What gets measured gets managed.” So the things you pay attention to are the things that you are going to have the most control over and can manipulate and tweak as much as you would like.
Which ones of these metrics matter?
I’ll give you two possibilities to start. There are basic metrics that I think every practice should track, and then there are the additional metrics that my practice tracks, and then you can add anything [00:06:00] that would give you the info that you need. If you’re struggling with what to track, I think about the advice of my EOS consultant, and the way that he phrased it was, if you’re on the vacation of your dreams, what metrics would tell you whether you can relax and have another margarita or need to fly home immediately? Those are the metrics you need to pay attention to. Those are the numbers that you should be tracking relatively regularly in your practice.
I’ll give you some examples of that and you can pick and choose whatever you think makes the most sense for you.
Basics, I would say the number of incoming calls. This is a reflection of the health of your referral network. The number of intakes booked. Calls are one thing, but the number that you book is, I’d say, the more important thing. And this is, of course, assuming that people follow [00:07:00] through with testing after booking an intake, but the number of incoming calls, the number of intakes that you book, this will give you another metric, which is the conversion ratio for your incoming calls, which I think is important. What percentage of those incoming calls get booked? I think tracking weekly revenue makes a lot of sense. If you do not collect weekly, certainly bi-monthly makes a lot of sense, but tracking revenue in some kind of regular format. Also tracking completed sessions or billable hours per week, because this is a leading indicator not a trailing indicator of revenue. If you know how many billed hours you had per week, that will give you a little bit of the ability to forecast how much revenue is coming in in the coming weeks. So those are the basics.
Now, what [00:08:00] are some additional numbers that we track?
We’re an insurance-based practice. We are still 78% insurance-based. So we track patient aging and insurance aging; essentially, how much is outstanding on the patient side, and how much is outstanding on the insurance side? We track notes that are more than a week old. So any appointments that do not have a completed note associated, because again, if notes get too old, that can affect cashflow because we can’t submit claims until those notes are finished. We track monthly profit margins. So this is a once-a-month number. We track the percentage of private pay clients because if any of you have listened over the last couple of years, you know that we’ve been making a slow, but steady push toward more private pay clients. So we track the percentage each week.
Let’s take a break to hear from a featured partner.
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All right, let’s get back to the podcast.
Now, what are some other things that you could track?
You could track client satisfaction. You could track clinician satisfaction. There are, honestly many other metrics you could track but if you’re looking for a ballpark, I’m shooting for 6 to 8 numbers that can tell you the health of your practice very quickly. You don’t want to go [00:11:00] overboard with KPIs, especially if you’re tracking relatively regularly. You can have some that you might check in with quarterly or monthly, but as I’ll talk about in just a second, I like a weekly cadence. And so you want to find the 6 to 8 numbers that you can track weekly that’ll give you a really quick glimpse into the health of your practice.
That gets into the how question.
I like to keep it pretty simple, especially if this is a new undertaking for you, simple is always good. We just do a spreadsheet each week with these numbers. We get the numbers from different sources. So most of them, I would say are some combination of reports from our EHR and info from the bank account. So we do some manual calculations from the EHR and, of course, do a little [00:12:00] manual math in some cases to calculate the conversion ratio. But some programs I think will run reports for you and that’s even better. IntakeQ will run some reports. Most EHRs will generate some version of a financial report or a report of how many sessions you’ve completed and things like that. So dig around in your EHR and see what kind of reports you can produce automatically. The less manual process, the better.
Now, this is where we leverage PracticeVital to track our clinician metrics. That’s been a huge time saver. We love it. I’ve talked about PracticeVital on the podcast before. It’s a system that creates dashboards for you and presents your clinician metrics in a very visually pleasing way, which I love. They can track things like completed sessions and cancellation or no-show rates according to CPT code and [00:13:00] things like that, and a bunch of other things. And they’re just really nice. They have a rapid development pace. Anyway, a quick little plug forPracticeVital there. If you want to check them out, I did put a link in the show notes because they’re gaining a lot of steam. A lot of practices are onboarding with them.
Again, don’t get too wrapped up in creating a fancy dashboard right off the bat. I made that mistake probably, I don’t even know, 4 or 5 years ago. I spent a lot of time creating a dashboard and it just, I don’t think it’s necessary. Charts and graphs are nice, but you don’t have to have that. So don’t get distracted with that. You can easily put together a spreadsheet and plug the numbers in. The idea is to start tracking something regularly. I like a weekly check-in so that you’re forced to calculate these numbers consistently and that will help you observe trends as well.
So even if it’s just you in private [00:14:00] practice, you can do a weekly review of your numbers to just get in the habit. So just set aside. It’s like 15 minutes if you’re in private practice by yourself. In our practice management meetings, it takes us maybe 5 minutes to go over all of our numbers or metrics or KPIs, but it gives us a good sense. I like to keep track of things like big-picture views on a quarterly basis. On the spreadsheet, we have all 13 weeks in the quarter just laid out on the same sheet. And so, I can quickly glance across the rows and figure out if things are going in the right direction or going up or down or whatever it may be.
In that sheet, we also have a column for the goals for each number. You might remember that a component of KPIs is that you are measuring against a standard. And that is also present. So we can quickly look and say, are we meeting those goals? [00:15:00] I have a formula in the spreadsheet too. There’s a separate column that will calculate the average for the quarter. You can average from week to week and know if on average you’re hitting your goals. But with any of these financial strategies, something is better than nothing. So just get started. If you don’t have any idea what to track, you can easily start with revenue per week. You can easily start with completed sessions. You can easily start with intakes per week. Any of these things are pretty simple.
If you need some support, you can reach out to a colleague. There are folks out there who know how to do this. You can certainly reach out to me if you would like. I have started offering a consulting option called strategy sessions here in the past few months where you can sign up and just do an a la carte hour without signing up for a full consulting package or a group. We just hammer out some questions over the course of that hour. This will be a great topic [00:16:00] for that if you want to set up a KPI spreadsheet or talk about what’s most important to track or how to do it. So certainly hit me up if you want to talk about numbers. I love doing that stuff, but either way, there’s a lot of information out there. You could Google a lot of information. The idea is to just get started. Remember, ” What gets measured gets managed.” So as much as you can, get the ball rolling on tracking some of those important metrics in your practice.
All right, y’all. Thank you so much for tuning into this episode. Always grateful to have you here. I hope that you take away some information that you can implement in your practice and in your life. Any resources that we mentioned during the episode will be listed in the show notes, so make sure to check those out.
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If you’re a practice owner or aspiring practice owner, I’d invite you to check out The Testing Psychologist [00:17:00] Mastermind groups. I have mastermind groups at every stage of practice development, beginner, intermediate, and advanced. We have homework, we have accountability, we have support, we have resources. These groups are amazing. We do a lot of work and a lot of connecting. If that sounds interesting to you, you can check out the details at thetestingpsychologist.com/consulting. You can sign up for a pre-group phone call and we will chat and figure out if a group could be a good fit for you. Thanks so much.
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