4 Metrics to Master for Financial Health in Your Weight Loss Practice
— By Karol Clark, MSN, RN
Effectively managing your weight loss practice finances can be the key to profitability, peace of mind, and sustainable growth.
In today’s rapidly changing health care environment, mastering the financial health of your weight loss practice is an indispensable skill for business owners and leadership teams. Whether your weight loss practice is a new endeavor or one that has been around for a long time, understanding and optimizing its financial strength can pave the way for a secure and thriving future.
It all starts with mastering consistent measurement, reporting, analysis, and trends of four important weight loss practice metrics. This allows you to make informed decisions and optimize your operations so you are better able to predict and navigate change now and in the future.
While this makes perfect sense, many weight loss practitioners are required to do a balancing act between doing what they enjoy doing most — providing quality care to improve the health of their patients and managing various outside pressures and challenges. Some common challenges include: administrative documentation burdens, regulatory requirements, long hours, poor work/life balance, lower reimbursement, team turnover, ever-changing technology, burnout, and limited resources.
This is why it is important to simplify the gathering and reporting of your data that matters most. The good news – you don’t have to do it by yourself! The top 4 metrics to master are outlined below along with success tips for simplified data gathering, reporting and analysis.
4 Metrics to Master
1. Profit Report by Cost Center/Provider: In a nutshell, this report shows you whether or not your various services (i.e. nutritional product sales, medical weight loss, surgical weight loss) and providers (i.e. physicians and extenders) are demonstrating profit for your weight loss practice. The report includes the following metrics specific to each cost center and/or provider as well as a total all-in-one summary reflecting overall practice performance:
- Cost of Goods Sold (if applicable)
- Net Profit/Loss
Your profit report by cost center/provider highlights overall performance. It provides you with important insights into what is working well, what may be lowering overall practice financial performance and where changes need to be made to ensure profitability. This report is easily generated each month through your chosen accounting software.
2. Practice Management Summary: Your practice management summary compliments your profit report. It includes a breakdown of the information regarding your revenue cycle, scheduling, billing/collections and efficiency of patient care operations. Your practice management summary includes the following information:
- A/R per provider including percentage of A/R at 90+ days
- Timeliness of charge entry
- Procedure/Visit charge summary
- Missed charges
- Average reimbursement by payer at least annually
Your practice management summary provides you with a snapshot reflecting the efficiency of your charge entry, claim follow-up, as well as outstanding balances that need to be addressed. If you are a cash-pay practice, this summary allows you to accurately evaluate if services are paid at the time of service(s) while identifying any missed recurring payments or poor payment plan follow-through if applicable. These reports are generated each month through your EMR/billing/collection software.
3. Conversion Rates: Conversion rate refers to the percentage of potential clients (leads) that schedule a consult and/or become a paying patient in your weight loss practice. It reflects the effectiveness of your marketing, lead follow-up, nurturing and sales efforts for turning new leads into revenue-generating patients. By monitoring the conversion rate, you can identify areas for improvement in your sales process, marketing campaigns, or pricing and sales strategies. A higher conversion rate indicates better profitability potential and results in a lower cost per lead.
4. Patient Summary: This category reflects patient outcomes, the level of patient satisfaction as well as the value they bring to your weight loss practice. It includes the following:
- New patient referral source so you are able to determine what marketing efforts (paid and organic) are working best.
- Client acquisition cost which is the amount of money spent on acquiring new patients for your weight loss practice. This metric considers marketing expenses associated with attracting new clients. This helps you determine the effectiveness of your marketing expenses and your return on investment.
- Patient average weight loss outcomes and co-morbid resolution or improvement
- Patient satisfaction
These patient statistics are critical for optimizing your marketing efforts. In addition, they are used for measuring the effectiveness of your weight loss program through measurable patient outcomes and their level of satisfaction. These provide you with the information you need for continuous quality improvement and provides the framework for gathering more patient referrals and reviews.
Success Tips for Simplified Implementation
For any process to be simplified in your practice, it requires the creation of a system or standard operating procedure that includes delineation of responsibility with necessary steps clearly outlined. This will increase the likelihood of team ownership and consistent implementation. Once the system is in place, making necessary modifications are easier to make — Thus, eliminating the feeling that you or your team are always starting from scratch or spinning your wheels. Here are tips for success:
- Identify which metrics you want to track: You don’t have to start with everything at once. Determine which metrics are most important based upon your top frustrations and goals. For most, the profit report by cost center/provider and practice management summary tend to be initial priorities.
- Assign responsibility for data gathering and reporting: This can vary by practice depending upon the size of your team and data confidentiality requirements — especially when it comes to financial reporting. Determine who is best to collect which data points while involving as few people as possible. Then identify one person (even if initially it is yourself), to summarize the data in one place for easy month to month “snapshot” tracking. Be sure to automate data collection as much as possible with memorized reports in your accounting software and your electronic medical record/billing and collection system. This improves efficiency and reduces the chances of human error.
- Set clear objectives: Define specific objectives for each metric you decide to track. For example, if you’re monitoring profitability, you may set an objective for the practice as well as each cost center/provider.
- Establish a regular reporting schedule: Determine the frequency at which you want to review and report your metrics. For most practices, this is monthly. However, sometimes weekly works better if there is something that requires closer monitoring. Create a reporting calendar to remind you and your team about upcoming reporting deadlines.
- Visualize data effectively: Use data visualization techniques if possible so you can present important metrics to your team in a clear and concise manner. Visual representations such as charts, graphs, and dashboards make it easier to understand trends, spot problems and communicate your insights.
- Analyze and interpret data: Take the time to analyze and interpret your gathered metrics. Utilize the expertise of your leadership as well as contracted experts such as your accountant and business consultant.
- Continuously optimize your system: Regularly identify areas for improvement through team feedback, metric relevance based upon your goals and refine your formatting as necessary. By continuously optimizing your system, you can ensure that your measured metrics remain aligned with your business goals.
Remember, simplicity is key. Focus on the metrics that matter most to you and your business and streamline your processes accordingly.