3 Key Strategies for Analyzing Your Medical Spa’s Business Performance
When making decisions for your medical spa, it’s crucial to interpret the story your data is telling. Whether you’re aiming to expand, evaluate spending on supplies or payroll, assess the feasibility of a marketing change, or decide on an equipment purchase, analyzing your business performance is key.
Create a Scorecard
One of our first steps when partnering with practice owners is to dive into the valuable data within your practice management software (PMS). This software contains extensive information on revenue sources, who generated it, and how busy your providers are. Instead of focusing on data from a single month or year, it’s more effective to track these metrics monthly over time. This approach helps identify trends, uncover opportunities, celebrate successes, and set future goals based on historical performance. Each practice is unique, so understanding your specific numbers allows you to pinpoint what drives them and focus on actions that can improve or correct performance.
Review and Track Key Performance Indicators (KPIs)
With countless reports available in your PMS, it’s essential to focus on the most impactful data. For medspas, the following five KPIs are particularly valuable: Total Net Revenue, Total Collections, Revenue by Provider, Revenue per Hour Worked, and Utilization %. Total Net Revenue reflects production and retail sales after discounts, while Total Collections shows the actual cash flow for the month. Analyzing these metrics over time reveals trends and, when combined with the other KPIs, provides deeper insights. For example, examining Revenue by Provider can highlight disparities in performance among your providers, helping you understand fluctuations in overall revenue and collections.Revenue per Hour Worked is calculated by dividing Revenue by Provider by the Hours Worked. This metric offers insights into provider efficiency, treatment planning, and how your providers’ performance compares to industry standards.To calculate Utilization %, divide Hours Worked by Total Hours Available for each provider. A Utilization rate of 60% indicates that providers have 40% of their time unutilized, suggesting a potential need for more marketing or reconsideration of hiring additional staff.
Keep Financials Updated and Review Regularly
It’s important to review your Profit and Loss Statement and Balance Sheet at least monthly to grasp your business’s financial health. Regularly updating and analyzing these documents helps you track trends, assess cost changes, and evaluate whether your expenses align with your revenue. Beyond just dollar amounts, understanding these figures as percentages provides a clearer picture. For instance, knowing that $45,000 spent on payroll represents 25% of your revenue is more insightful than the absolute amount alone. Tools like QuickBooks can simplify this process by automatically adding percentage data to your financial statements.As a fractional CFO specializing in medical spas, we’ve guided numerous practice owners in interpreting their data, tracking performance, and planning for the future. If you’re interested in learning more about how we can assist you, let’s connect.