By Lauretta Justin, OD, of Orlando, Florida
Management thinker Peter Drucker is often quoted as saying that “you can’t manage what you can’t measure.” In other words, it’s difficult to know whether you are successful unless success is defined and tracked. The primary focus of administration is to measure, manage and monitor each system of five key areas of your practice as listed below. The most crucial to the financial success of your practice are metrics, key performance indicators (KPIs) and benchmarking, so I’ll start there and briefly review the other four.
Know your terms
As this is the building block for how a practice’s performance is both assessed and achieved, it’s paramount to have a fundamental understanding of these terms.
A metric is a quantifiable measure that is used to track and assess the status of a system or process. A KPI is a measurable value that demonstrates how effectively a company is achieving key business objectives.
Benchmarking is the process of comparing a practice’s performance criteria and business processes to other practices within the industry. Identify a few KPIs for your own practice, and assign a benchmark for each one, according to industry norms. Finally, establish a few metrics to track the factors that affect each KPI. You should know your KPIs like you know the back of your hand. Ideally, you should track them daily, but at least track them monthly.
Business protection: Do everything within your means to limit risk and to keep your business running smoothly. Hire competent
advisors, and meet with them at least once per year to keep your business protected.
Human resources (HR) and payroll: Avoid spending time on activities that generate no revenue, such as HR. Consider outsourcing that and payroll—and if that’s not in the budget now, plan to do so in the future. Remember, your time is best spent on revenue-generating activities.
Communication systems: Business communication is an integral part of running and managing a successful practice. Owners, administrators and employees must be able to communicate effectively with each other, patients, vendor partners and the community. Measure the effectiveness of your verbal, written and electronic methods of communication.
Information technology: All technology (hardware or software) in your practice should be classified into one of two categories: revenue-generating or operation support. Doing so will help you make sound decisions when investing in new technology for your practice.
Remember: What you can’t measure, you can’t manage. What you can’t manage, you can’t control. What you can’t control, you can’t administer.
Read more columns from Dr. Justin under the Editorial tab. Look for her series CEO of You.
You can email Dr. Justin at firstname.lastname@example.org.