How A Retrospective Analysis Can Bolster Practice Profitability
Podiatrists in private practice really have two jobs: taking care of foot and ankle problems, and running a business that makes a profit. While the science and art of solving various pedal problems are described elsewhere in this publication, we will offer a closer look at the second component of being a podiatrist, namely running the business.
Owners of a well managed business will periodically review results with the goal of improving the operation. This article depicts the process of a Retrospective Analysis for Practice Improvement. In order to illustrate this process, we will incorporate statistics regarding the source of new patients for a fledging podiatry practice as an example. (See “Generating New Patients: How Did They Hear About You?” below and “Assessing The Average Costs For Patient Referrals” below). The intent of the article is not so much to focus on the actual details of the analysis (which apply only to this practice) but rather to demonstrate how you can use the review of practice statistical data to influence future business decisions.
One of the important aspects of the business of podiatry is the marketing of the practice. You can market a small business such as a podiatry practice in a myriad of ways, depending on the resources, imagination and philosophy of the owner(s). Marketing methods can also vary widely in cost and effectiveness. The goals of marketing include keeping the existing customers satisfied and attracting a lot of desirable new customers. A well managed podiatry practice has a marketing program that accomplishes both of these goals in a cost effective manner.
A crucial measure of the eventual success of a new podiatry practice is the number of new patients the practice is able to attract. The data found in “Generating New Patients: How Did They Hear About You?” below details the sources of all new patients who came into a podiatry practice during the practice’s first full calendar year of operation. This general practice is located on busy streets in two suburban “blue-collar” towns.
The marketing of a new podiatry practice, with a few exceptions, is often a combination of the SWAG Approach (Sophisticated Wild Arse Guesses) and the Flying Spaghetti Approach (whereby you throw a bunch of stuff against the wall and see what sticks). It is common for this combination to lead to wasted money and results that are less than expected. I have used both of the aforementioned approaches and urge new practitioners to exercise thought and prudence in developing the marketing plans for a new practice. It may also be worthwhile to seek professional assistance or at least the advice of the American Academy of Podiatric Practice Management.
All new patients are not created equal. One of the factors that determine how profitable each new patient is to the practice is how much money it costs to entice that patient to call and make an appointment. In “Assessing The Average Costs For Patient Referrals” below, one can see the direct costs involved with attracting new patients to the practice.
Interpreting The Statistics To Improve Future Promotional Decisions
The first part of the process of retrospective analysis is data collection. Typically, it is more efficient to plan what information will be studied in advance of the practice analysis. For example, in order to facilitate periodic analysis, the practice being analyzed here keeps the following monthly statistics:
• patient charges
• collection percentage (defined as
[collections plus insurance write-offs]
/ patient charges)
• new patient visits
• total patient visits
• charges per patient visit
• collections per patient visit
• expenses per patient visit
• net profits
• accounts receivable
• number of surgical cases
These statistics form the parameters for monitoring the practice and provide clues for areas that need improvement.