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Dash to Financial Success in 2020

Wednesday, December 18, 2019 9:00 AM

Aesthetic Medicine, Financial Management

Written by: Glenn Morley

Glenn Morley
Senior Consultant

2019 was “The Year of the Dashboard” for many BSM clients who had not previously prioritized tracking internal metrics. When used properly, dashboards are a valuable tool practices can use to monitor internal key performance indicators (KPIs) such as conversion rates, expense ratios, and sales metrics. By using tailored monthly financial and efficiency dashboards, a large portion of our clients are now managing their businesses with a degree of ease and vigor never previously enjoyed.

While every dashboard developed for clients is customized, many share similar data points. Common metrics include:

  • Charges, adjustments, collections, and the net collection ratio by provider;
  • Provider hours available, hours utilized, utilization ratio, and hourly revenue rate;
  • Overhead, including key overhead expenses that must be closely monitored (e.g., cost of goods sold);
  • Staffing levels; and
  • Net collections per full-time employee.

How Dashboards Can Help

The catalysts for dashboard creation are varied, but as I reflect on 2019, most new dashboards created fell into four categories of need. If one of the action items listed below is a target you’re aiming for in 2020, consider how dashboards can help you hit the mark.

Record, analyze, and report key efficiency and performance metrics. The answers to most operational dilemmas can often be found in data that can be tracked and compared year-over-year. Using solid data analysis as a starting point for presenting recommendations to an owner empowers managers and establishes a professional, respectful dyad relationship with the owner to successfully guide practice success.

Track and manage new business opportunities in real time. These opportunities can include, but aren’t limited to, scaling up to meet growing demand for services, mergers or acquisitions, and a service line expansion that requires a capital equipment purchase. Dashboards allow practices to track and manage key metrics related to these opportunities and effectively adjust in real time.

Evaluate new practice location considerations. As BSM analysts Lisa Marchegger and Nolan Umana counsel, “Compiling the projected financing, construction, equipment purchases, staffing, and operating expense of a new location in one place allows owners to forecast the expected revenue, overhead, financial implications, and impact of a project.” Such forecasting requires the creation of a financial pro forma to understand the financial implications of various business models or needed revenue streams to support the new location. Often, this forecasting leads to subsequent dashboard creation to monitor and manage projected revenues and expenses for the new location.

Track new provider contributions. When hiring and onboarding a new provider, tracking the provider’s revenue, resource utilization, and associated overhead costs is mission central. To paint an accurate picture, effective tracking includes hours worked, hours booked, revenue collected, consultations and acceptance rates, and “days out” for the provider. A monthly dashboard can track these items, and as such, serve as a navigation, coaching, and mentoring tool. It’s objective nature neatly removes the angst that can otherwise accompany productivity conversations, so the focus can remain on meeting goals.

Adjusting for the Future

By providing a snapshot of key metrics, dashboards make reviewing pertinent data fast and easy. This allows practices to manage through problems by making real-time adjustments as well as the ability to seize opportunities with alacrity. Even more importantly, since dashboards serve the dual purpose of tracking internal data month-over-month and year-over-year, analysis is intuitive, with trends more easily and quickly identifiable. Ultimately, being able to simply view this data will allow practices to plan and approach 2020 with clarity.

NEED HELP? Visit our financial management page or contact us to learn about the tools and services BSM offers to help you manage your practice’s finances.  

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