Hello, and welcome Online Marketing For Doctors TV and Podcast show the place to be to grow and scale your practice.
I’m your host, Steven Tait, a strategic medical marketing consultant to medical clinics, and I help them to get them more patients and more profits. Now, today’s episode is called “4 Numbers You Need To Know For a Successful Practice”
Bad things happen when you don’t know your numbers.
- Maybe you’re making decisions based on bad information or incomplete information that skews your thinking.
- Or, maybe you have a leak in your processes that is costing you a fortune, but you don’t see it because it’s hidden in the numbers.
- Or worse, maybe someone is fiddling with the numbers and skimming your profits without your knowledge.
That’s why it’s essential that you “know your numbers,” so you can pinpoint issues before they blow up into big problems.
On this week’s Online Marketing For Doctors TV and Podcast show, we are going to talk about important numbers for you to know, so that you have peace of mind knowing you’re running a healthy business.
Because as they say, “What gets measured, gets improved”. And really, that says it all.
When you first go into solo practice, you may have one simple goal, and that is to bring in revenue. But a lot of surgeons, doctors and medical professionals are surprised to learn that you can bring in a lot of revenue without actually turning a profit.
But how is that even possible? Well, simply put you’ve let your costs grow beyond your revenue, but this happens when you don’t know your numbers.
Maybe you’re making decisions based on bad data. Maybe there was a problem that you didn’t catch in time, or maybe you were so focused on running your practice that your attention on this issue fell by the wayside. Now it’s essential that you grasp the importance of knowing your numbers. So, that you can pinpoint problems before they get out of hand, and you can more easily plan for the future.
Based on my experience, when it comes to a service-based clinic, there are typically four main categories of expenses to manage: operations, marketing and sales, office – admin/legal/accounting/finance, and the management team.
Out of these, operations tend to be the largest expense, and it’s crucial to manage them effectively. Ideally, your operation costs should be kept below 40% of revenue in order to maintain a healthy profit margin and have the resources to hire an experienced management team to oversee the business. Operations costs include everything involved in delivering your services, including staffing, products, and your time.
A common target that many CEOs aim for is a “magic number” of 40, which includes a 10% growth rate and a 30% profit margin. This is seen as a solid foundation for a well-run business.
Marketing and sales are also critical components of the business, as they are not just necessary to sustain and grow the business, marketing and sales is the reason why you stay in the business. Typically, the budget allocated for marketing and sales ranges from 5% to 15% of the projected revenue. However, if you’re aiming for significant growth, you may need to allocate a higher percentage towards the higher end of this spectrum.
In the podcast episode number #98 which I’ll leave the link to that episode, I talked about “What Numbers You Must Know In Practice’s Marketing?” which includes more details about the number in marketing management that you need to know from the owner or manager’s point of view.
But you may find financial information intimidating. So maybe you are trusting it to your accountant and bookkeeper, but think about how much peace of mind you would have, if you knew your basic numbers were in good shape and your practice was strong and healthy, because numbers can help identify where your practice is leaking money.
Now, when you run regular financial reports, you see how much you’re spending on certain expenses and you know to question the expenses when they appear higher than what you planned. For example, you may notice how high your advertising expenses are, and once you’ve identified that, you can question if that’s money well spent or money down the drain.
You would also know which services are making you the most money. Now, you can measure the profit margins of each procedure to know which is more profitable and where the weaknesses are in the ones with the lower profit margins.
You can make adjustments with the expenses and fees for that procedure to decide if it’s worth focusing on, and you would have a clear understanding of how much your practice needs to earn to meet your annual goals, which is pivotal to the question of, do you know your numbers.
Now, when you understand how much revenue you need to bring in to make a profit, it helps establish goals. You will understand what revenue level your practice needs to achieve to break even. Now, here’s the best part. When you keep your numbers in check, it reduces your expenses, thereby adding more profit and more profit means more money in your pocket.
Business is all about the numbers (do you know your numbers?) and your numbers are telling you a story. So, these four numbers should be measured and reviewed regularly since they are the foundation of a practice. Now, here’s number one, lead generation. Where do the best leads come from? how many do you need to generate and what actually generates them?
If you don’t know this, it’s likely you’re going to waste lots of money on things that are generating the wrong kinds of leads. Or potentially worse, you’ll abandon a lead generation tactic that actually is working, so you want to leave it alone. Now of course this means that you must be tracking which leads convert to procedures and which patients are most profitable.
By the way, it’s much harder to increase the number of leads significantly and much easier to double or triple your lead conversion number. Now here’s number two, percentage of leads converted. Do you know what percentage of your leads actually turn into cash paying patients? This is why the question of, do you know your numbers, is so important.
Now the biggest resource killer of all practices is the chasing of leads that are not qualified, not educated about you, and they’re not ready to appreciate the unique value you have to offer. So, when you start to measure this and discover how low your conversion rates actually might be from initial phone call to a patient saying yes.
You want to fix it, it’s too painful. Otherwise, when you see how much money you are losing, when callers don’t book appointments and consults, don’t book paid procedures. Now, here’s number three, cost per patient acquisition. Every new patient comes with a cost. By measuring that cost with some sort of value to your practice, over time, you have a metric that can determine what you can actually afford to spend to acquire. A key aspect to the question of, “do you know your numbers?”
And then go to work on lowering that cost while creating more accurate budget forecasts. So, look at all of your marketing and advertising expenses and compare it to your new patient revenues for that year. Do those numbers make sense? Through careful lead analysis, you can cut the cost per lead greatly by making better spending decisions.
And then lastly, number four, average value of a patient. It’s generally much easier to increase your revenues through additional sales to existing patients than to go out and find new ones. Now you can do this in one of two ways. You can increase the perceived value of your offerings and raise your fees or add on other complimentary services and or products your existing patients also might want.
So, as you can see, there’s no rocket science with this list (do you know your numbers?), but are you really measuring these four significant numbers when it comes to growing your practice? Because the bottom line here is that you deserve better and so does your practice.
When you grasp the question of “do you know your numbers?”, you make better decisions, avoid unnecessary surprises, and have peace of mind knowing you’re on track to reach your goals.
If this was helpful to you, please subscribe and review OMD TV and Podcast Show so you don’t miss future episodes. And share this with your staff and colleagues
And, again, if you want to talk, please leave me a message at our website or email me at [email protected]
If you want to learn more about Online Marketing For Doctors offers and how our team can help you generate more new patients and referring doctors, please reach out to us and book your 15 min discovery call with us and we’ll show you the current problems and opportunities that you might have with your practice marketing.
Thanks so much and hope to talk to you in our discovery call soon. 🥳
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