Key performance indicators (KPIs) refer to a set of quantifiable measurements used to gauge a practice’s long-term performance. KPIs are used by dental offices to measure progress towards tangible goals, such as increasing collections by 20% in a year, or improving patient retention rates by 5%. Using these goals to evaluate specific areas of your practice will show you where you can improve in order to better your financial success.
The Different Types of KPIs
KPIs can be organized into several different types, depending on what area of your practice they affect. There are five categories:
- Inputs – Inputs refer to the resources used in producing outputs (see below). For a dental practice, inputs can refer to the supplies used during the day, such as tools and cleaning solutions, along with the time investment from the staff.
- Process – Also called “activity,” these measure the processes used in producing outputs (see below.) For dentists, process KPIs measure the cost of performing procedures, such as how much fluoride is given to a single patient or how much anesthesia is used during a surgery.
- Outputs – Outputs refer to measurements that indicate the amount of work done and what was produced. In most businesses, outputs refer to tangible products. In dentistry, outputs can be used to assess things like how many patients are seen in a day.
- Outcomes – These KPIs are more abstract, focusing on accomplishments and impacts. Patient satisfaction and positive retention rates are two major outcomes practices can focus on.
- Project – Like outcomes, project KPIs are rather abstract. They are meant to answer questions related to milestone progress towards important initiatives. For example, adding a specific amount of new patients via a marketing campaign is a project KPI.
How Can I Use KPIs In My Practice?
One important thing to keep in mind is that KPIs do not have to be tied to financial data. Outcome and project KPIs can help improve a practice’s relationship with their patients and community. Every aspect of a practice can be analyzed and improved through smart use of KPIs. Establishing them is an easy process:
- Write a clear goal for the KPI. Tie the goal to a key business objective, something integral to the organization’s success. Make sure the goal is strategic, otherwise it will not translate into tangible outcomes.
- Communicate the new KPIs to employees. Be sure to not only explain what the goal they’ll be working towards is, but why they’re working towards it. Someone on staff may even have an idea to improve it.
- Review KPIs regularly. Use records and hard numbers to track progress. For example, if a process KPI is set to reduce fluoride use to make stock last 10% longer, compare the amount of fluoride used before and after the goal was introduced.
- Evolve your KPIs if need be. If the results fall short of expectations, fine tune the goals or change directions entirely. Change may bring about a new, more efficient way of getting to the same destination.
Key performance indicators are an effective strategy to get your practice to where you want it to be. They are easy to define and act upon, making them reliable ways to track progress. For more information on KPIs and how they can be used to grow your practice, contact our experienced dental accountants today for more information.