The primary metrics that your Medical Spa should prioritize tracking in 2024
Understanding your data is crucial for making informed business decisions. If you haven’t been diligent in tracking your practice’s monthly data, it’s time to make it a priority starting now. While merely measuring and analyzing Key Performance Indicators (KPIs) won’t guarantee success, it will certainly steer you towards smarter decisions as you aim for growth in your Medical Spa in 2024.
This article will delve into four vital KPIs essential for your Medical Spa:
- Total Production
- Capacity Percentage
- Revenue per Working Hour
- Revenue per Appointment
KPI #1: Total Production (by Practice & by Provider)
For Med Spa owners or Practice Managers, grasping Total Production is pivotal for assessing the success of your practice and the contribution of each provider. Among the discussed KPIs, this is likely the simplest to monitor and retrieve.
How to Monitor:
Utilize your Electronic Medical Records (EMR) software, which is invaluable for this purpose. Most EMR systems can track both the practice’s and individual providers’ production levels. If your current EMR lacks this feature, consider investing in software that does.
Significance:
Identifying Top Performers: Tracking provider production highlights your high achievers – those excelling and deserving of incentives to maintain their performance. It also pinpoints areas for improvement. However, comparing providers isn’t always straightforward; factors such as services offered or product sales expertise can influence production levels.
Understanding Trends and Seasonality: Monitoring production aids in recognizing patterns and preparing for business fluctuations. This insight is crucial for planning and ensuring stability throughout different seasons or months, which may yield varying income levels.
Revenue Tracking: This KPI goes beyond production to help understand the actual revenue generated. While seemingly simple, it’s nuanced. Comparing total production with top-line revenue is beneficial. Though the figures may not align perfectly due to factors like credit card payment timings, they should be close. A significant discrepancy between your EMR’s payment numbers and accounting software figures warrants attention, while a minor difference of a few thousand dollars is generally acceptable.
In conclusion, Total Production isn’t just about numbers; it offers a strategic perspective on your practice’s health, guiding informed decisions for growth and improvement.
KPI #2: Capacity %
Once you’ve gathered your production KPIs, analyzing Capacity % is the next step. This metric reveals how ‘busy’ a provider is, calculated by dividing the time a provider spends with patients by their idle time at the office. At Maven, hourly analysis is emphasized.
How to Monitor:
Determine a provider’s HOURS AVAILABLE by subtracting any blocked time from their TOTAL HOURS at the office. Blocked time could include lunch breaks or meetings with the practice manager, as these periods aren’t available for patient care.
Significance:
Tracking Capacity % is critical as it highlights provider workload. Maven’s Capacity Benchmark ideally falls around 75-80%. Consistently exceeding this range might indicate overburdened providers, necessitating workload discussions. Conversely, falling below suggests a need to increase patient caseload, potentially due to a lack of patients or scheduling inefficiencies.
Optimizing providers’ schedules and operational efficiencies can enhance Capacity %, ultimately boosting Total Production and Revenue.
KPI #3: Production per Working Hour
Armed with total production and capacity % metrics, insightful calculations can be made for both holistic and individual provider analysis.
How to Monitor:
Calculating Revenue per Working Hour is straightforward. Start with the previously discussed Total Production figure and divide it by the Hours Worked, as determined in the Capacity % section. This simple calculation reveals how much a provider generates per hour spent with patients.
Significance:
This metric varies across practices and providers. By examining Revenue per Working Hour, you can identify providers making the most efficient use of their time.
Understanding what sets these high-performing providers apart is crucial. Delve into their methods to learn and potentially replicate practices across your team to boost overall efficiency.
In essence, Revenue per Working Hour provides insight into providers’ operational effectiveness, aiding in strategic decisions and, ultimately, a more prosperous practice.
KPI #4: Production per Appointment
Lastly, let’s explore Revenue per Appointment, which differs from Revenue per Working Hour due to varying appointment lengths.
How to Monitor:
Determine Revenue per Appointment by dividing Total Production by the number of appointments a provider completes during a given period. This figure is typically lower than Production per Working Hour as most appointments tend to take less than one hour.
Significance:
Understanding Revenue per Appointment indicates how much is generated per client visit. This metric sheds light on which services or appointments are most lucrative and can inform marketing efforts and service offerings. By strategizing to offer more high-value services, you can aim to maximize top-line revenue.
While Revenue per Working Hour focuses on scheduling optimization and operational efficiencies, Revenue per Appointment shapes marketing strategies, service offerings, and customer engagement. This metric guides you in identifying financially rewarding services and tailoring business strategies to boost profitability.
Conclusion
KPIs are crucial for understanding any business. However, they are only valuable if considered and analyzed before making business decisions. If you prefer not to handle KPI tracking yourself, consider scheduling a meeting with one of our financial experts for assistance.
Addressing Seasonal Trends in Med Spas: Developing Strategies for Busy Periods and Slower Seasons
Your medical spa successfully navigated through one of the busiest periods of the year—the holiday season. From orchestrating holiday promotions and events to wrapping up Q4, these final months often prove hectic for our practice owners.
As we step into a new year, the challenge lies in mitigating and planning for the expected slowdown in the first quarter, a trend reflected in historical data. November and December likely saw a surge in prepaid services through gift card and package sales, with the redemption of these services continuing into the early months of the new year. While provider schedules may appear busy, revenue and collections might not reflect this due to the prepaid revenue received in previous months.
When budgeting for the new year with our clients, we devote extra attention to anticipating and planning for this initial slowdown. Here are three strategies to prepare for the lulls typically experienced by Med Spas in January and February:
- Managing Cash Flow: January and February typically witness lighter revenue streams, alongside increased costs associated with patient treatments. Factoring in rising expenses such as rent and insurance premiums during forecasting is crucial for understanding their impact on the bottom line. Typically, we don’t expect to offset these costs until March due to the cyclical nature of the industry in Q1.
- Promoting Alternative Services: The new year presents an opportune time to actively market laser services, particularly given favorable winter weather conditions for such treatments. Educating clients on the benefits of laser services ahead of the spring and summer seasons can enhance their appeal. Additionally, with many individuals making resolutions to lose weight, weight loss-related services should be heavily marketed as they align with prevalent New Year’s goals.
- Optimizing Provider Availability: If appointment calendars indicate that full provider capacity isn’t warranted, strategically staggering provider shifts can ensure efficient practice operations.
At Fullcycle CFO, we specialize in forecasting and budgeting revenue goals at both practice and provider levels. Our tailored financial budgeting services aim to help you understand and optimize the financial aspects of your practice, ensuring it meets your goals and operates at peak efficiency. Let us handle the heavy lifting of financial management, allowing you to focus on delivering exceptional patient care.
