Maximising the potential of your practice : Part 1 - Tracking performance

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PROBLEMS WITH MEASURING PERFORMANCE

The problem that many owner managers face is that they do not really know how well their practice performs. Since they do not track performance on a regular basis, they rely on crude indicators such as how many patients had their eyes examined or how much is in the current account at the bank.

Neither of these two measures shows that the business is either profitable or indeed solvent. It is very easy to be busy without being profitable.
Unfortunately, the accountant who prepares the end-of-year financial statements and tax returns cannot necessarily provide assistance. It is not uncommon for accountants to have just one or two opticians as clients. While they may be able to advise that sales are too low or that the overhead costs are too high, they are unable to develop effective pricing policies. Very often they are working on figures that are 18 months out of date. Talking to other opticians or supplier representatives provides a notoriously unreliable picture of what is happening in the market. Neither is this likely to offer accurate, quantifiable data. You cannot attach any real significance to statements such as 'we are up on last year' or 'so and so has cut back on orders'. Often it is in people's interests to provide an inaccurate, anecdotal view of market conditions for their own purposes.
Internal comparisons of patient numbers or sales turnovers with previous periods can also be unreliable. A practice that experienced a fall in sales of 2 per cent in a marketplace that declined by 5 per cent, actually increased market share! 

What you need to do is identify key performance indicators (KPIs) that are relevant in your practice and then set objectives for each that, where appropriate, relate to the wider market.