This is the first article in a three-part series on developing and tracking practice performance through Key Performance Indicators
Developing and implementing key performance indicators, or measures that matter, is integral to tracking and enhancing the performance of your practice, increasing value, and recognising areas for improvement.
After all, you can’t control what you can’t measure and in today’s uncertain environment, determining valuable KPI’s will solidify and increase the sustainability of your practice so that it can tolerate another downturn or unexpected event that negatively impacts on revenue or operations.
In this article, the first of a three-part series, we will expand on sustainability as a concept in terms of a practice and highlight areas for consideration.
In the second, we will link sustainability to specific KPI’s and elaborate on how KPI’s can demonstrate sustainability beyond just the bottom line.
Then, we will look outside of those factors beyond your control as a practice owner and into the external environment which will help inform your view of the KPI’s to focus on in the short and longer term.
What does sustainability look like in a practice sense?
Growth will typically feature as a desirable objective in any strategic plan, regardless of the level of formality undertaken in preparing this plan. In order to support and promote growth it is important to ensure that the growth you desire is sustainable and not merely an “adrenaline shot”.
Sustainability in a practice sense can take many forms and a useful perspective to take when it comes to assessing your practices’ sustainability is that of an unfamiliar, external, prospective investor.
While the majority of practice owners will not be looking to list their practice for sale in the short or medium term, it is this perspective that can sharpen focus around where you need to allocate time and attention.
The following factors are suggested elements of sustainability we suggest you consider in your practice. We’ve compiled these through our experience in both acting for current practice owners, aspiring owners, past vendors and practice consolidators:
- Stable workforce – A stable workforce is one with low turnover rates and high engagement. Employees need to be sure that their jobs are safe in order to be engaged and perform well. When stability is stirred, this can cause a drop in performance levels and will hinder the ability of a practice to thrive. A stable workforce is also better equipped to attract and retain doctors which are a scarce and critical resource.
- Secure tenancy with room to grow –A secure tenancy will enable a practice to forecast its cash flow with confidence and assess capacity for future growth aspirations. Security of tenure also provides peace of mind in that practice owners won’t need to worry about the loyalty of their patients when they move to a new premise.
- Positive culture – A positive culture will reinforce employee loyalty, create augmented efficiency, improve productivity and help to attract and retain the best talent. In a workplace with a positive culture, collaboration is often increased which can lead to greater results and an improved bottom line.
- Processes/infrastructure – Well established and documented processes ensure that a practice operates with minimal risk and reduced expenditure. In the event of a downturn or crisis, when there’s a change in the way things are normally run, a deep understanding of processes means that practice owners will easily identify steps that can be fast-tracked or removed entirely to streamline operations.
- Agility – Agility will strengthen a practice so it can respond to a crisis or unexpected event quickly and effectively. Agility is achieved through effective decision making, employee empowerment, simplified but robust processes and good communication.
- Compliance track record – Solid compliance is imperative to a sustainable practice as it minimises risk and means the practice avoids negative exposure, expensive lawsuits and time-consuming audits. It also improves the bottom line and instils greater confidence in the workforce.
While this is not an exhaustive list of elements to consider when assessing the sustainability of your practice, it’s a good start.
For more information on developing meaningful KPIs for your practice, please contact your local William Buck Health Adviser.