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 • collections • 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. The next part of the process of retrospective analysis is data interpretation. You must evaluate the information based on the relevant circumstances as opposed to just blindly accepting and acting upon it. For example, one must consider the following points when evaluating the aforementioned statistical information. • Patients referred by nursing homes and home health agencies tend to require treatment plans with low reimbursements. • Patients referred by individuals contacted via personal marketing efforts show up in the “family and friends” column. • The direct results of paid media advertising campaigns appeared to decrease over time. • Perhaps the reason the advertisements did not directly draw more new patients was due to poor design of the advertisements. Rem Jackson of Newsletters, Inc. points out that the best ads have an offer attached. The ads used by this practice lacked “an offer.” • Perhaps some of the “family and friends” and “doctor” referrals occurred after they were reminded about the practice via the paid advertisements. • Ongoing advertising campaigns hopefully have an indirect benefit to the practice that is hard to measure. • Analysis of the “doctor” referrals revealed it was often the receptionist, nurse, referral coordinator or even the patient who actually picked the podiatrist. • The expensive health club bulletin board ad only drew two confirmed patients to the practice. However, the board had a holder for business cards for the practice, which required a steady supply of new cards throughout the year. • Practice financial statistics reveal that the practice expenses per new patient totaled $177.44 in 2006. The practice revenue per new patient is a confidential statistic.
Forming A New Game Plan For New Patient Referrals
The final step of the retrospective analysis for practice improvement process is analytic action. Analysis without action tends to be a waste of time. The owner of the practice in question made the following decisions after collecting and interpreting the new patient referral source data. • Appreciate the importance of existing patients to the vitality of the practice and continue the effort to maintain and strengthen these relationships • Increased communications and outreach to the local medical doctors (and the associated ancillary personnel) will be a point of emphasis. • Revamp the practice Web site, utilize search optimization and a “request for appointment” tab in an effort to improve the Internet response. Develop a practice brochure that will complement the Web site and the rest of the practice marketing materials. • You should “pulse” paid media advertising campaigns to decrease overall expenditures since it was noted that the effectiveness of media ads to directly draw in new patients faded over time. • Design advertisements from the patient’s perspective rather than the doctor’s perspective in an effort to stand out from the crowd. • Further scrutinize yellow pages advertising. Total expenditures for this form of advertising will likely be reduced over time. • The external sign at the main office was a fantastic investment. Accordingly, when the new satellite office opens next year, the owner will seek to install a large, attractive sign at this location. • Next year, skip the health fair that had a $300 booth fee. • Do not renew the bulletin board ad at the health club.
It is recommended here that private practice podiatrists perform a retrospective analysis for practice improvement. This should include a) collection and documentation of the key statistics of the practice; b) periodic review, analysis and interpretation of the statistical results; c) development and implementation of plans of action to improve operations when indicated; and d) celebration of the successes. Dr. McDonald is a Fellow of the American Academy of Podiatric Practice Management. He is in private practice in Kannapolis and Harrisburg, North Carolina. He can be contacted via www.cabarrusfootdoctor.com.
References 1. Jason Kraus, SOS, Personal Communication,www.soshms.com. 2. Rem Jackson, Newsletters, Inc., Personal Communication, www.gocomplus.com. 3. Glenn Lombardi, Officite, Personal Communication, www.officite.com. 4. T. Harv Eker, Secrets of the Millionaire Mind, HarperCollins, 2005.