The 7 KPIs Every Physical Therapy Practice Owner Needs to Run a Smarter Clinic

0:00 Intro now. My toupee is on, right? Your toupee is centered. Centered looks good. Sturdy, welcome back, man. Good to see you again. Good to see you, Jamie. Good to see you. So this is what we're going to talk about. You're going to do some lessons in this sort of ad hoc MBA for the health care provider, the physical therapist, the clinical owner. A bunch of these different things on the syllabus, I think, would would fit your skill set. But what's the first lesson you want to teach? What's sort of the title of this thing? Yeah, this is the financial and operations dashboards. So we're going to get into numbers dashboards, but really why they matter and then what to do with them.

0:41 I feel like you could have as many KPIs as you want, but the more KPIs you have, they become less K. Totally. Yeah, yeah, they do. I, I got a bunch of stories for you. But one of them is, this was a, I don't even have this one kind of prep. But you when you said that, yes, I had a guy with a two and a half million dollar business, he was running with his brother that sent me a forty seven page report when I asked for their KPIs. Too many. How would you even go through that weekly, monthly, quarterly? I wouldn't. That's exactly what we said. I asked him, like, what do you do with this? He's like, I don't know. Me either. It's too much, right?

1:22 I mean, it's like, it reminds me of downtown San Francisco. They gave me a seventy six page lease for a twelve hundred square foot spot. And I'm like, no, it doesn't. I don't know how. I don't know how I'm going to get, you know, taken advantage of, but I'm going to be taken advantage of. And I'm not paying a lawyer to read seventy six pages so we can come back with these. We don't like these seventeen things or whatever. Like, no, right. We're done. So there's information overwhelm. But isn't that indicative of our entire society right now? Yeah, everything's at our fingertips. So we keep everything. Yeah, and we have a hard time sorting through.

2:04 So I love what you just said, because yeah, the key, we want to focus in on the key things, and then we want to interpret them. So another story real quick, this is why this is so important. had a guy reach out to me this is a one point two million dollar business about four and a half fte therapists right um they've spent seventy six thousand dollars the previous year on advertising on marketing advertising and i you know immediately said well why why and and by the way this is why benchmarks suck okay um he said well you know i'm supposed to spend five to ten percent on marketing and i said who told you that well the people selling marketing right of course so that's what worked right yeah like well that okay timeout and said, Look, what I want you to do is go back and I asked him, Do you know what a customer acquisition cost is?

3:00 And he he didn't know, I explained it to him. And for those listening, it is what it says customer acquisition costs, it is how much does it cost you to acquire a customer. So, you know, given the formula said, Hey, you got seventy six thousand dollars need to figure out how many people came through this channel to his credit, they tracked a lot of data. So he had the data. So he could go figure it out. I got a text later that night around six thirty or so. I was out at my kid's soccer practice. It was wintertime. It was dark. And I remember being there near the sidelines. I wasn't running the practice or anything. But I got a text and said, hey, you know, my CAC customer acquisition cost is seven eighty seven.

3:40 Do you have time to talk? And he's East Coast, right? So that's like nine thirty at night, his time. I know he was stressing out and I'm like, yeah, sure. I was talking to him from the field and he had gone back and looked and they had acquired ninety seven new patients over the past twelve months through this channel with seventy six thousand four hundred and seven dollars, whatever it was, ended up being seven hundred eighty seven dollars customer acquisition cost in a practice where they made about twelve hundred thirteen hundred dollars per case at around a ten fifteen percent profit margin so they were making one hundred fifty dollars per new patient profit he was literally and again this is the numbers we're going to throw it all at you but he was literally seeing four other patients that he was generating through his other marketing channels primarily word of mouth referrals all that kind of stuff in order to pay the marketing company for the one patient So they were seeing, for every patient they saw through that channel for the seventy six thousand dollars, he had to see four more new patients to break even before he started to make a profit.

4:51 And, you know, that's the thing with marketing every, you know, I had, you know this, but I had practiced for over twenty years. And whenever marketing folks would approach, I would say, well, this is our, in our case, our customer acquisition cost target is fifty dollars. If you can do it for less than fifty dollars, I will, I will pay you till the cows come home. Right. We will have a years, years, years long, decades long relationship. Nobody, nobody ever wanted to commit to it or do it. Very few even tried. You know, because and and again, back to that benchmark thing, we're going to get into some numbers and show you the dashboard and all that stuff. But benchmarking against industry standard or other practices loses your context.

5:35 And if you're in a practice that makes five hundred dollars profit per patient or a practice that makes one hundred dollars profit per per patient, your your tolerance for what your customer acquisition costs for your marketing spend and all is different. right? Your if your margins are different than what you can spend is different. Like for me for to acquire a coaching client, if I spent seven or at seven dollars, I'd be happy. Because that relationship lasts for a long time. I you know, pay it off in the first few months, it will then turn into a long term relationship. I don't need that many new clients, you know, all that kind of stuff. So it works.

6:16 But for a PT practice, show me you know i can name maybe two that make more than that profit off a full patient case maybe two right all right so when you're working with someone and you say where's your dashboard and either they show you and it's overwhelming or underwhelming or they don't have one where do you start where you know where do you want to begin this lesson with kpis Yeah, so this is one for everybody to write down. is you need basically so in a standard we're going to go with a standard practice okay so if you're in um something a little different if you're in canada if you don't build units if you have speech therapists you know they're going to be some things that don't apply depending upon you know the specifics of your practice and again this is why we customize everything but in general there are seven seven not seven that's five seven um Seven Chinese.

7:20 So seven metrics that are kind of the key from which you can figure out a lot of their stuff. Okay. And I'm saying they're key. I'm not saying they're comprehensive. Okay. But you don't need forty seven pages either. Right. right so we're going to start with real simple revenue and expenses okay that's two you know what your gross revenue is you know what your total expenses are if you don't have a handle on those or or aren't able to pull them out and i've talked to plenty of practice centers who who aren't they stumble um we'll go back to that in a minute but You need to be able to know what your monthly revenue is and have that written down somewhere. You need to know what your monthly expenses are.

8:01 From that, we can figure out your profit and other things, right? We're gonna use those numbers in other calculations. But revenue and expense, visits, and new patients. Okay, that's four. Okay, leads, which almost nobody tracks, right? Okay, but if you're spending money on marketing or effort, by the way, when I say money, I'm not just saying meaning money, time, energy, effort, you know, all that goes into it. If you're spending any of your resources on it, you should be tracking it. Okay. But the leads, and then the other two are the units so that may not apply to everybody but the units build for most and then the ftes and by ftes i mean full-time equivalent clinical staff all right and people get really confused by this one too we're probably not going to do a deep dive on what each number means, but an FTE is forty hours of available clinical time.

8:59 OK, so if you have a manager that's got thirty two hours of available time and they're managing eight hours, that's point eight. Right. If you've got a part time person that's twenty four hours a week, that's point six. So you add those up, though, because that's going to define what your capacity is. And then we use that in looking at your business design, because that's the other thing I've run into a number of times, Jimmy, is You know, people will think that they can grow out of their anemic cashflow and business, and that may or may not be true. And I've had others be like, well, I have to cancel these contracts because it's killing me. And it's not the contracts that are killing them. It's the operate, but, but we need to look at the viability of the practices.

9:41 I've looked at two within the last couple of months, they're in network, you know, and of course the big push is everybody needs to cancel all insurance and whatever. They're all evil. I don't think they're particularly great, but we're looking from a business case in your situation. And in both cases, if they were run well and efficiently, they would have, they would have like an and a profit margin respectively. So that's a viable PT business. You don't have to go cancel contracts. You got to fix other stuff, but that's exactly what some of the numbers and data tell us. Okay. Do you want to bring this on the screen? Is this something people should be seeing now?

10:22 I have the seven, people can also go to my website, Sturdy Coaching and look at connect the dots. I don't have those outlined here on this piece though, Jamie. The other thing I want to bring up though, is when we look at these numbers, like what you've just shown. So this is a summary, we'll go over this real quick, but this is a demo dashboard and I can send the link to anybody. We'll put the link in the notes and give it to you, but they can look at it. And this is fully customizable by the way, right now I'm working on another one that we're launching today for another client. later this afternoon. And this is kind of based on a true story. It's anonymized and a little bit tweaked, so it doesn't give away anybody, but these are essentially real insights.

11:02 So what we've got is year to date through October, you know, two point two million dollars in gross charges, one ninety six in profit, one point two million in revenue. We've used bank deposits here. We do reconcile posted and down below we looked at posted uh payments and then bank account to make sure that there's not a big discrepancy um that's the other thing numbers allow you to do is kind of reconcile and make sure that you're uh you know then what the billing company is posting and telling you is actually hitting your bank account and vice versa right right um but yeah we can look at things like this like the the visits and the and the um new patients and the units give us these numbers.

11:48 So this is a visit per case number. And as we go across here, you know, you can see that their target is thirteen visits a case. And that came out of an audit. So again, it wasn't benchmarked against industry standard or anything else. We went through and we looked at their patients, the UT's plans of care across the board, averaged out, figured out over the course of six months worth of new patients, that thirteen is right on the dot for as far as what they expect people to come in for. And then what we're trying to do and making sure of, oh, and I don't have a, here's one thing we can do.

12:29 Um, okay. I got to update that because it didn't cancel that and go back. How do I go back dashboard? Um, So anyway, I don't have October's numbers on here, although they should be. But they came back up to about thirteen in the real world. But what we're looking at is why. Why are we seeing a discrepancy between the target number that we know based on an audit they ought to be getting close to and you know, if there's a three visit a case difference or two visit a case difference, that's not only lost revenue.

13:14 And this is one of my big, big things, too. It's it's are we taking all those patients across the finish line? Are we achieving their goals? So a lot of what we're talking about here with all of this is connecting the dots. And when I say connect the dots, I don't even just mean the numbers. I mean, connecting the dots between the people, the processes and then the numbers. The numbers are results. right? So this is really a lot of insight into how well, this is a feedback loop. How well are you managing? How well are you running your practice? How well are the players performing? Because if you've got good processes, good plays that get a particular result, then the players who are doing, you know, who are doing well ought to be achieving that.

14:00 And that gives me another on this one. I, uh, another reason that you should be looking at this stuff. I had seventeen PTs in our practice at one point. One of them was in the red, one was in the yellow, and fifteen were in the green. The reason that's relevant is the one that was in the red By the way, we go deeper on this and then also track by therapists, like where do they fall? Because when you have this, you invariably have a few people above target. You have some near at target and you have a few that are below most of the time. I had fifteen people above the target. I had two people below one by just a little bit. When I say red, it was more than ten percent below. And when I sat down with him and talked about it, he told me that it was impossible.

14:44 It was unachievable. so what i did was i pulled up the other right and everybody else in the practice across all the clinics was in the green with the exception of one person who by the way had been gone on vacation for five weeks wow so the year to date she was actually still seeing more patients than he was um at like you know two-thirds of the way through the year and she had been gone for five weeks wow So it wasn't impossible. If you have somebody like that, it's like, well, let's hook them up with somebody in the practice who can show him the ropes, who can go through and number one, verify that he's following the processes that you have laid out and number two, doing them successfully and comfortable with it.

15:34 And then if there are people choosing not to, because there was no other reason that he was below um you know it then then you start to make decisions like do you do you where do you spend your time and effort do you coach somebody for how long how long do you work with them I want everybody to be successful there are some people and anybody who's listening this who's employed people for any length of time knows there are some people who don't want to you know and okay but you you can do that but you just can't do that on my team right right um So here's another where we're looking at the patient visits and then the leads and then patients per month, sorry, new patients.

16:18 And this is where we get some of those others, but we can see over the course of the year, what's happening there. And then that ties into our productivity. So per FTE, we normalize this. In this practice's case, their visit number is two-sixteen a month. Okay, it doesn't matter if it's one-seventy or two-sixteen or two-thirty or whatever yours is, we can look at that, but they're over productivity for, what, six months out of the first nine months of the year, right? So then we look at things like the conversion rate is a little lower, and I happen to know that the October goes even lower to sixty-three percent.

16:58 Our target's eighty-three. And we'll get to what that means in a second. But this is that lead number and the new patient number. But we look at why is that? Is the front desk not doing their job? Are they not selling? Are they not getting people in? Are people flaking out or not showing up? Or are we over capacity so that there's no room on the schedule? Good point. Right. But that's exactly where we're talking about the connecting the dots in two senses. One is interpreting the data because I can go yell at my front desk or figure out or do remedial training or whatever because they're not converting. but what if there's no room on the schedule? It ain't their fault. So I wanna make sure as far as like what I'm doing and running the business that I look at the different aspects and I tend to start with a process, like is the process being followed?

17:46 And then a personnel is this person or a couple of people not really doing it. And then we get into other things. But in essence, let's step back for a second. When you, if you run your business, like you see a patient, like you treat a patient and you use the SOAP format, right? Most owners are basically stopping at the S, the subjective. They get the story, they hear the stuff from their team, they hear the anecdotal, whatever, and they jump to an assessment and they create a plan. And the problem is if they don't cross-reference that with the objective, Right? You don't just take a patient's word for it. You have a hypothesis in your head.

18:28 You have a differential diagnosis after, you know, a patient comes in and tells you, and you've observed a couple of things, which are also objective, right? But you start adding in the objective pieces and you verify or refute your hypothesis. Then you come up with an assessment and a plan. And that's really what a lot of the numbers are and what it can tell you is if you have a dashboard, you know, what, what, We know where to look because it's not on target, but why? We need to figure out, we need to diagnose why. And if we have a capacity issue that is going to impact our conversion rate, it's also gonna impact our visits per case number. But if we don't diagnose it correctly, therapists need to see more patients.

19:13 No, they don't. Front desk needs to convert better. No, they're trying. Right. So, so it's, you know, it's not just the forty seven page report or whatever. It's also this kind of integration and understanding and looking at all this stuff that allows you to interpret and then take the right action at the right time. What are you using technology wise to track phone calls? Is there something that you're using or is that just something that's calculated somewhere else? It's a process thing. It depends. I mean, there are some, depends on what platform you're on. You know, with some EMRs, you can create a case with each phone call.

19:54 So there are others. I have a client that they still insist on doing all the intakes on paper. So it goes into the paper log and at the end of the month, they count up the number of leads. Because all we're looking at when we're saying leads, right? I'm not trying to overcomplicate this. Leads, I'm looking at inbound leads. Let me see if I've got it down here. When we look at the inbound leads, right? What we're looking at is fax referrals, email, online inquiries, phone calls, any and all of it. right and then the other thing that this allows you to do jimmy is you set a baseline so like we just said running your business like like a soap note gathering subjective information objective before you come up with an assessment and then that before you come up with a plan that will allow you to be more disciplined in your decision making but there's also a baseline for test intervene retest That was the only rule in my PT practice for twenty years.

20:55 We had people very eclectically trained from different backgrounds and whatever, but the one rule we had consistently was test, intervene, retest. Whatever you're doing needs to get a result. And if it doesn't, then switch gears, ask for help, do something else, right? We've got to get results. So the same thing's true here. What if that guy, you know, before he spent seventy six thousand dollars, and by the way, that was like the second or third year. Right. So we're talking two hundred grand plus. But what if what if in the first three months he was looking at the difference in his leads? know i i go and i hire a marketer and i'm running at a hundred and fifteen hundred and twenty hundred and thirty leads and then um you know one thirty seven one fifty three one fifty two i happen to know october is one fifty six well guess what we started a new marketing effort well leads are up thirty percent thirty thirty you know thirty per month okay is that worth it well not if we don't have capacity but but if we have capacity and we're putting more new patients in if we're converting eighty three percent of one hundred and fifty six instead of eighty three percent of one hundred and fifteen that's significant right so you know there's a bunch of math kind of that i mean that and that's in part to why people like hire somebody like me um Because after running a practice and being able to do this, I can look at this stuff and kind

22:25 of go, yeah, this is what we might want to be focusing on. This is where it might be happening. Let's go through and test that idea. Make sure that that's actually the case. Because I'm not professing to have all the answers, but we can certainly get there a whole lot faster. And this dashboard, is this something you built? And this is what people use when you work with them? Yeah. I mean, it looks like it's pretty complete. Yeah, I mean, we're going to be to this one. And this, this has been tweaked. This is a, I made a copy of this a month ago. So we've actually added a couple things to the real clients. But among them is that visits per case by therapists, we've added that data in and a tracking, I got a couple more things to kind of share on here.

23:08 But that whole concept of connecting the dots. i was uh talking about this with matt matt fitzsimmons is my co-author on the books back here and stuff and was my business coach back in like and uh he's in new zealand right and i was we were talking about bringing on doing some kind of small group for smaller practices and bringing in a a bookkeeper cpa bookkeeper accountant type person a marketing person a compliance person and kind of doing a group right and um I realized that we were talking past each other on some of the bookkeeping stuff, accounting stuff. And I'm like, wait a minute, what do you mean?

23:50 And his assumption, because in New Zealand they do this, and I've since talked to a couple of people in the UK and they do this, the accountants and bookkeepers and all, they also look at the operational metrics. So if you're running a cafe, they'll look at the tables turned over, the ticket, you know, the people per table, the ticket, average ticket price, they'll help you to see where your operations could potentially improve your finances. And ours don't, right? And I know that not just in my personal experience and people I've worked with, but once I learned this, I started going back to, hey, And I've interviewed over a dozen bookkeepers and accountants in the PT space who work with therapists about this, about how many visits and do you ever look at that stuff and tie that back to their operations or their employees to their expenses and what have you.

24:45 And they just look at me like I'm speaking Greek. They're totally confused. i'm sitting there going well but how you know if you're only dealing with the money after it's happened what kind of value can you really bring to me right all they're doing really is submitting a report and telling you what you owe your accounting right but and this so this was the disconnect right we started about the managerial accounting which bigger companies like you know work with a big corporation they have managerial accountants Right. They hire people to do that. But in small business, at least here in the U.S. and I believe in Canada, there isn't any there's a there's a big gap in the market.

25:27 There's a big gap here that could help people connect the dots. Again, when we're looking at expenses, you know, everybody wants to do gap GAP, you know, accounting and their tax and da da da da. And it's like it's simpler than that. know for your for managerial decisions we've got three buckets we've got your profit we've got your expenses what really your your personnel and your overhead so this is total expenses this is two of the buckets personnel expense in green and overhead in purple and this is our total expense and we put that up against the total revenue and the difference between the expense and revenue is our profit and there's your three buckets Right, but what we can do here is we can look at, well, why was my personnel expense higher in April?

26:15 And once again, it doesn't necessarily tell us what's wrong, but it tells us where to look, right? And he happened to have, that was the magic paycheck month and some other stuff, right? But if I'm looking at my overhead, it should be relatively steady. And if you see like, twenty-five, twenty-three, twenty-one, twenty-five, twenty, you know, that's what I want it to look like. I don't want my overhead bumping around because that's the way I break these down is overhead is anything that won't change when you hire somebody or let somebody go. So what should fit under overhead? Things like a lease? Anything that doesn't change. HR. Okay. Yep. Yep. If you've got a contract with somebody, if you're Yeah, your phones won't change your other now personnel bucket, people get a little bit more look, it's a little more complicated, because it's anything that will change.

27:02 So if there's software licenses, or a billing company, like percentage revenue of whatever you have collections, but you're increasing collections, because you've added a person, then all that stuff goes into personnel into one bucket. because it's gonna go up and down as you scale, but the overhead doesn't. So then our incremental gross profit is different, but like, you know, con ed, professional dues, if you pay for those, work comp, insurance, disability insurance, taxes, all that stuff goes in the personnel bucket, because it's tied to people.

27:43 And then, and then for all of these, by the way, too, we set targets and some of these, I have the target, you know, outlined like on this revenue. Well, this has cost per visit. I have since updated for the clients. In this case, the revenue per visit target is, is one, and the cost target I think is and we put a straight line across at the and the so they can compare to the targets. then if you're hitting target and everything's cool this month great enjoy it because it won't last and if it's not you can you at least know to start to look for something a leak or something yeah and you start to and you feel more confident too as an owner and i can attest this personally knowing that where i'm looking is going to have an impact on the business right like um i can look at my age of accounts and as long as i'm in like twenty six is a little high for them they should be around twenty three twenty two um but that then you ask the question okay in february twenty six why what happened it's not huge but it's like it better not be higher than twenty six in march because now we're not collecting the money that we're billing out right so you start to see you can see trends but if it's you know bumping around in here that's that's pretty cool yes we talked about the bookkeeper the

29:14 test intervene retest is huge the other one and I know that Dave and I are going to do a thing on valuations but when I bought a couple of practices in the past and I sold my practice. Certainly looked at a whole bunch of practices to buy and not just for me, but working with a couple of people to buy practices. And when we ask for the numbers, right, it often turns into a fiasco. because like you said, well, where do you get them? Well, some come from QuickBooks, some come from the EMR, some come from the bank account, some you have to figure out with your, that's like your staffing or HR with your FTE number, all that stuff.

29:55 But you bring them all together and usually that ends up taking weeks and especially if we want the last three years, it takes a long time and we have to get them to give it to us in a format that I can then do stuff with and whatever. What if you had all this and you had a summary? Like, here's your year to date summary. This is the first three quarters we can extrapolate out. But, you know, we've charged two point two five million. We've posted almost one point to our bank deposits. Now, this is a little different because they do rent out a room or a room to a massage therapist and some stuff. So those are a little bit different, but total expenses at a million.

30:37 So you should see you should see posted and bank deposits. In theory, they should be the same thing if everything was running standard. They should. Well, hang on. I will. That's a great question. Stick a pin in it for just a second. Okay. But in their case, they also have operating income. So that's like the rent that they collect versus the know the pt operations and then i have other clients that have like you know this would be thirty thousand dollars from pilates and one ten from pt or whatever right um but then you got your total profit margin and you can look at all this well if i'm if if you were looking to sell your practice and um you know they said well can i have your numbers you can export this into a pdf and send it to them and if you did this for the last three years how simple would that be You know, and again, we'll talk more evaluation, but what do you think that does to your evaluation?

31:34 Right. If someone can trust your numbers and can clearly go backwards, forwards, up and down with your numbers and see how you got them. Yeah, these numbers look great. How'd you get them? If you can't explain how you got them, I don't trust the number. right well and if they're consistent across time and if you you know yeah and if you can yeah this is how we run things this is why we have you know the success we do whatever um it's and it's a piece of the puzzle right this isn't the end all be all you can't solve all your problems through the numbers because we've got to be able to translate these back into the language of the therapist you know again like that visit per case number i can't tell my therapist see more visits That doesn't translate. What we have to do is go in and figure out, okay, so what is our process?

32:15 Are they following it? Are they getting buy-in from the patients? Are they doing the blocking and tackling and following up with people who've fallen off the schedule? We have all that stuff in our standard operating procedures. Are they doing it? And what can we do to help them? And that's really my job as a manager or founder, is I need to support my players. I really take the coaching model seriously in that if I put people in the best position to succeed and I give them everything they need to succeed, they're more likely to succeed, right? The score will work out. But here, let's go back to your question about posted payments and bank deposits. This is a little broad right here, but generally what you're looking at if...

33:00 you know, we're looking at this, is this bottom line, there's actually two lines there are bank deposits and posted payments. And what we want is for that to be pretty close month to month to month. And if it goes bank deposits higher than payments by two thousand, Then there we go. Bank deposits by two thousand. What we want is that not to accumulate. So we're seeing that does kind of raise the question if my bank deposits are always a thousand or two thousand more. Why is that? Is stuff not getting posted? In this case, they're collecting a little over a thousand dollars a month in rent.

33:45 Got it. So it's always in their case specifically, it's going to be off by about two grand. That's okay. But in general, yes, it's a check and balance because if I'm depositing more than I'm posting, I'm probably sending out statements to patients for money they've already paid, which ain't gonna make anybody happy, right? Or if I'm posting a lot more than I'm depositing, where's that money going? Because if it's not going to my account, what's happening? And that's relevant because I think this, I don't know if anybody's done PTs, but north of thirty percent, I think it's closer to fifty to sixty percent of physicians in private practice will be embezzled from in their career.

34:35 You know, it's crazy, but, but it's because they're not looking at it. It's that whole bank balance accounting. If I have enough money in my bank account, then everything's cool. And they trust everybody because, you know, once again, they're trustworthy. So why, why wouldn't everybody else be? And that's simply, you know, not the way the world works, but so can I, hit you with a couple other things go for it so what we what we do with all this and I'm going to kind of connect the dots back with you so we have a summary we go through we talk about it but really we're interpreting it so if you understand your numbers and you can get your head around it and have it be you know broken down piece by piece by bite so it's not overwhelming because all of this stuff by the way comes from like a spreadsheet like this, right?

35:31 And when you have the spreadsheet like this, I'm sure you know this, Jenny, but there are two ways to scare away a therapist, pull up a spreadsheet like that, right? Or talk about sales. and either one of them you know you'll hear the tire screeching they're out of there real quick but so what we're trying to do is make this digestible and focus on one piece at a time so that we can take action everything's cool great we leave it alone move on to the next one but you but you do that by setting targets and what's kind of acceptable um so we know that we've been below target here for a while why is that well you know again we're back to the productivity thing so we look at these things from you know multiple sides It allows you to track your performance and look at what your potential is and see if you're actually achieving it.

36:16 And then, excuse me, the ultimate goal though is to empower your people. Because if you're running it, if you're the founder, you're a manager, you're a manager of managers, or you're teaching managers, or you're just managing a small team, the better you can support them through the processes and through the resources they need to succeed, the better your numbers are gonna turn out. So when you go with a coaching client, I'm guessing you walk through with each where all this information for each one of these KPIs comes from, like how a bill becomes a bill, where do we get this number?

36:56 How is it generated to make sure that information is coming in clean from where it starts? Yeah. And they actually have a pretty simple, it's still a spreadsheet. We have to kind of get them over that part, but a simple spreadsheet where they fill in not just seven, but more like twelve numbers. they plug those in each month and we also we make a key you know these two are from quickbooks or these three or whatever three are from quickbooks and then this is from your bank and this is from the emr and then you know this is hr your your staff depending on how big you are but yeah it's not a lot of numbers but what what it what it allows us to do is then get into these these ratios and calculations and targets and compare and see are are we cool so i really do like the idea of the dashboard because if you're driving your car you know on a trip this weekend without a dashboard what i mean Yeah.

37:57 What, what do you, what do you, do you know what's going on? Right. Do you want, am I following the speed limit? You know, do I, how much gas do I have left? Is the engine light on? Am I overheating? There's all this stuff where, you know, if things are cool and everything's kind of in zone, okay, that's cool. You're good. You're vibing. Go. But if, if it's not, we need to know that before, before the car blows up, right. Before the engine blows up. And yeah, that's why I'm so passionate about this. When we first started doing this, let's go way back, right? Twenty plus years ago, when I started the practice, got a partner, opened the first kind of joint location, hired the first person.

38:39 It did not take very long at all. And I'm saying very long at all. It might have been hours where I realized I didn't know what I was doing. Okay. Which was weird because I had an inordinate amount of confidence because I'd done every job in the in APT company, you know, except an assistant and except owner. Right. So I'd been a PT, I'd been front desk, I'd done aid work, I'd done billing, I'd done, you know, I've done back office, I've done all this stuff. So I thought I had a better handle on it. Never managed people, though. Right. And with the first hire, think a lot of times we make assumptions and not even the first time the fourth and fifth and sixth hire we assume people are going to do what what what we do meanwhile we don't have stuff written down we haven't told taught them very well we think training means to shadow somebody for a few days and they'll pick it up they'll figure it out and that's just a terrible way of you know it's not setting people up for success So, you know, I learned very quickly.

39:43 I didn't know what I was doing. So then we spent the next decade plus figuring out what we were doing and learning and really intentionally using that business to learn about how to run a business. you know, and through multiple things, some formal, you know, hiring a coach and working with people, some like through organizations like EO where learning was a big, big deal. And you could, you know, network and learn from both from your peers and also from experts that we brought in to speak and talk. And, you know, there were other opportunities there, but really intentionally, deliberately learning parts and pieces all the way along the way and then putting those together.

40:25 And, you know, when we're looking at those, those numbers we can blame it the business for case numbers off a little bit we blame it on capacity but are we making our patients happy are all those patients getting everything they need or are we kind of rationing because we don't have the capacity right and we should be hiring somebody So what this all is meant to lead back to is not to make things more corporate, not to make things colder and drier and whatever, it's really to connect the dots and make sure you have happy patients, there's more of them achieving the goal and getting across the finish line, which by the way leads into happier staff, Because why did they become PTs? Right.

41:06 And there's all this burnout and all this whining and complaining and lack of appreciation. Well, if all my patients are achieving their goals and telling me how great I am, what's my what's my burnout level versus people dropping out or people not being able to get in or that type of thing? Right. And then if I do that, if I have happier patients and happier staff. You know, for some reason, I also get to make more money. Biggest mistake with KPIs from someone who's beginning to work for you, what are they? Oh, the most common is they don't track leads. So they're spending time and energy effort on money on marketing or some kind of effort, and they have no idea if it's working or not.

41:52 They're measuring it by new patients. And there's a couple of steps in between there that could be, you know, like there's an intake process, there's a scheduling process, there's that stuff that could be breaking down. You could be generating more leads. You don't even know it. So I think that's the most common place. um the other one is i don't see people i don't see very many people looking at their um visits per case number and they you know they're so like in this case of the practice we just kind of showed you their schedules are busy their therapists are productive they wouldn't ever even notice that they might be under treating the patients that they're taking care of And again, you go back and you can verify and we can assess, but it makes us start looking at, well, are the patients achieving their goals?

42:45 Are the patients happy? And you can add NPS into this and do some other stuff with it. But if the patients aren't getting across the finish line, then you will end up having gaps in your schedule eventually and be able to fill them with more new people because you lose the old ones. But I think it's a matter of interpretation and not really looking for help because, I mean, I guess this is one of my pet peeves too. It's like, we go and start a business and you're supposed to learn, you're supposed to figure out management, right? You're supposed to figure out marketing. You're supposed to figure out how to run and look at your numbers and stuff.

43:28 And just because they're smart people doesn't mean you can, Not even that you can. It doesn't mean that you should reinvent the wheel and figure it all out for yourself. There are lots of people who have done this stuff before who, you know, the trick is finding a trustworthy, you know, group or people or whatever that you can rely on to help you with that piece. And it should pay you dividends over and over and over again. Right. I see you were asking about mistakes. There's a lot of them, right? Another one is not wanting to spend a little bit of money to make a lot more money. like very close to the chest, very like, well, I don't see the payoff. Well, here's the payoff. I mean, if you could do this, we can calculate what the payoff is.

44:11 Is it worth it? I mean, you should be getting an ROI. Everything you spend in your business should be returning something back to you, usually more than what you're spending, unless it's like insurance or compliance or something like that, where you know you have to spend it. But essentially everything else ought to be getting you more money back in than what you're putting out. And if it isn't, you shouldn't keep doing it. if someone has uh you know they've left the shore they're three years in they haven't been doing something like this and now they might be i mean if i if i were if i had a clinic and i'd been figuring it out for three to five years i'd be super i don't know ashamed or i'd be awkward or scared to so then sit down and bust open the books almost scared of what i'd find under the hood do you talk what do you say to those people where you're almost like i don't even want to know about it i'm just going to keep pressing forward what i don't know can't hurt me and we all know that's not right you have no idea how common that is right and not just not just three years in i've i've gotten people fifteen plus years in who you know come hat in hand tail between the legs like but they're but they're but they're coming i know there are a lot more that don't right out of embarrassment the first thing i say to all of them is it's not your fault You weren't taught any of this, right?

45:32 And it was thrown at you. And like we just said, you're supposed to figure it out. Well, while what? While you're treating patients eight hours a day and dealing with staff and the chaos that is Medicare and the insurances and all the rest of it and the billing company and the EMR and the vendors and the supplies and the landlord. I mean, there's too much stuff. right? So yeah, number one, don't be embarrassed. There, there's nothing at all to be embarrassed about, right? Um, it's not your fault. You, you, you, you signed up for something, you know, you did, whether you thought so or not. That's how I learned.

46:13 When you start the business, you signed up to be the coach. You signed up to be the leader. You signed up to pay the bills to do, you know, to do all this stuff. You just maybe, you know, to learn marketing, to do whatever. But, um, yeah you take it one piece at a time don't get overwhelmed reach out get some get some help from experts and uh You know, there are people that are trying to do compliance all on their own. There are some great compliance people out there that can make it really, really simple and save you a lot of time and headache and the rest of it. Right. Try to do your taxes on your own. There's CPAs and stuff that can do that. And again, make it simple and what have you. Right. So, so use, use those experts. It's what they do.

46:53 It's what they've done. It's what they're good at. Just find, find the good ones. That's all. When I started my podcast, ten years ago, I would look at numbers daily, sometimes multiple times a day to see what was going on. I now look at like big picture numbers like downloads. Sometimes I forget to look at it for a month where I'm just, I'm just like, I understand I'm doing the thing. And then I look up and say, how'd that go? Because if I keep looking at the numbers, I'm adjusting course way too much. It's called a course. It's long term. So how often do you tell people to look at numbers? What's too much? What's not enough? Where's the sweet spot? Because I don't want them every day to be living in the numbers, I'm guessing.

47:36 No, no, no, no. No, you're exactly right. And we have an analogy. I don't know if you can see up on the wall there. That's Laguna Seca. on the track there's my first porsche sorry i hit the hit a button um so uh yeah i teach autocross or taught autocross for a long time and the uh The first thing after showing them how to set up their seat and their seatbelt and their hand position is to look up because when people are driving, they look at the corner, they look at the cone and then they make it past that and they look up and it's like, oh my God, it's a surprise. Well, you look farther ahead, right?

48:17 The whole course slows down. They feel like they're going slower. They feel like it's smoother. Smooth is fast. time starts dropping off right as soon as they can look out and see anticipate so yeah it's exactly it don't stir the cones don't obsess over the numbers um the the right cadence the right frequency depends okay um and and some of it depends on how bad things can get so it's not even the same frequency for the same number it depends on the practice. So if I've got a practice, one practice I started working with was fifty two therapists.

48:57 Well, we want to look at the numbers, some of those numbers weekly, because if something is off track, we need to know sooner rather than later. Right. I've got somebody with three therapists. We're working on more, you know, monthly there's kind of a tipping point when they get into ten, twenty, you know, PTs, I want to kind of update that monthly numbers report twice a month. might want to look at my leads every week i might want to look at things a little bit differently it also depends on what i'm doing so one of my quarterly initiatives is marketing effort and generate new leads i'm going to want to look at those a little bit more frequently and start to make you know quicker course corrections if i just spend a bunch of money on an ad or something else and i don't see any return right so it really varies a bit but but in general you know like this dashboard i showed you we're doing it roughly once a month with just about everybody some of them were doing an update in between and looking at run rate so that's a whole nother run rate is basically your speed like miles per hour so if i have my first five days i've got you know five hundred visits in the first five days and they're twenty one days in the month then i'm gonna have twenty one hundred visits if i continue at this pace right so can extrapolate out a little bit then i can monitor and see if my predictions are right or not um but uh It depends.

50:26 And sorry, it's not a clearer answer than that, but. No, I think it's good. I'm curious about this since we're talking about KPIs. Is there one KPI that surprised you either in how important it turned out to be or how unimportant? Like over the course of you doing this, was there anything you ever didn't look at and started to and realized it was really important or used to pay attention to and eventually you were like, this is not important. Totally. Yeah, I got answers for both of those. And one of them is going to shock everybody. Okay. The first one that I learned to appreciate that I learned was really, really important. And not just because it told me how my marketing efforts were, but it was a leading indicator for how many new patients and how many visits I was likely to see next month is the lead number.

51:14 because if I can predict, if I get a hundred leads and my conversion rate's at three percent on average, I'm gonna have eighty-three new patients. If I have eighty-three new patients at thirteen visits a case, I'm gonna have whatever that is, a thousand visits or eleven hundred visits, right, in the next month. If I can do that and my AR is twenty-eight days down the road, I'm gonna get that much money four weeks later. So I can start being predictive earlier based on, you know, the farther back I can go, with like my lead generation, I can then know roughly how many new patients I'm gonna have, how many visits I'm gonna have, what my cashflow is gonna look like in thirty to sixty days. Okay, so yes, that's critically important and very few people are looking at it or tracking it.

51:57 It's not too hard to track. You just gotta get your team on board with doing it. And to do that again, that connecting the dots idea, you can't just tell them we have to collect leads now. They need to understand why, why it's important. they don't understand how it contributes and how it makes your life easier or lets you know whether to spend more money on marketing or predicts you know are we do we need to hire somebody else or whatever right why are they going to do it You gotta paint the picture for them. The pictures in your heads, in your head as the founder or as the person running it, those pictures are not anybody else's head. That's part of your job is to get those pictures out of your head into their heads, right?

52:38 So that's the one that I think is really important. I have it as one of my seven. I don't see very many people looking at it. I definitely don't see the marketers, you know, they're telling you about awareness and clicks and what, Jimmy, if it ain't turning into paying customers, I don't care. right right i don't care how many followers i have on instagram if if i don't have enough new patients or clients right right so anyway that's that's the one the other one this is the one that's going to piss people off cancels and no shows because if my visits per case number is cool and i don't have a bunch you know of gaps in the schedule because like a bunch of late cancels no shows but like the cancellation rate everybody's obsessed with that but if i'm moving thursday to friday or Tuesday to Thursday and I'm still getting that visit in, the patient's still getting what they need and I don't care.

53:31 And if I've got the demand and I've managed my waitlist stuff, I can fill that Tuesday spot that they moved as long as they give me twenty four hours or whatever more notice. And then now there are, you know, I was working with a company that automate that automate that waitlist thing. So if somebody canceled it immediately went out, you know, via text to a bunch of other people, anybody on the waitlist and they pick it up, I mean, cancellations, things like that get filled in. I mean, it's going to happen. I just, I'm worried about how many of them are showing up, how many people are on, you know, on the schedule and are they finishing their plan of care? Cause then if they achieve their goals, what are they going to say to other people about PT? Right.

54:14 How many people have you run into like, oh yeah, P two didn't work for me. If you drill down just a little bit, right? They didn't show up. They didn't come. They didn't understand why that, you know, there's all this stuff, but they, did they finish their plan of care and it didn't work? Not very many. Right. So here's a question for you. This is more a management or translation question. You discover there's a KPI that you're monitoring. a change needs to be made. How do you translate numbers into action for a team? They're not in a spreadsheet, right? And you don't want them in a spreadsheet. These are, you know, or the front desk staff, like help me understand how you approach translating the thing that, you know, it's kind of like when you're in the movie, the matrix, you're looking at all the ones and zeros scanning by.

55:04 Okay. Now you understand that you've got to translate it to someone who isn't reading the matrix. Well, I mean, it's so it's the same thing as like a little league coach realizing that, you know, little Jimmy's not hitting. Right. His batting average is a ninety two. Right. Well, you don't go and tell. So we all in some way. Right. But yeah, but you don't you don't go to that kid, that player and say, hey, I need you to be hitting to eighty. What does he do with that? You know, so, so yeah, they don't know. And, but, but again, the beautiful thing about therapists, about PTs in particular, but it's a strip OT speech, you name it.

55:48 When you're looking at a movement, right. Or an ADL or whatever, you're breaking down the component parts and figuring out which one's not happening. And then you're focusing on that and fixing it. And you're, you're coaching and you're repeating and you're practicing. You do the same thing with your staff. So if you don't have a process to do something, like get a buy-in to the plan of care, then how do you know if anybody's doing it? And if you're trusting everybody else to do what you do after fifteen years of practice or whatever, you probably have learned a few things that the person who's two years out of school doesn't know. So write that stuff down, go over it, train it, practice it, have it be part of the onboarding induction process, go back and review it, repeat.

56:33 But this is the other thing, like you said, translate to your staff. A lot of times you don't. And what I mean by that is you don't go into the staff meeting at a client doing this. I keep telling them all what to do and they won't do it. like okay how are you telling them we'll go in a staff meeting with forty five people right and i tell them dude if i've got three like what we did was we broke it down we looked and there were like three people that were below standard on their visits per case right there were and of the forty five people like almost twenty were therapists right but then there's like a group of twelve or so that are right in there right in the zone and there are a few that are over ironically jimmy maybe it's not ironic maybe this will be self-evident to a lot of people to me it surprised me every time i see somebody seeing the more than the visits target business per case target they're a veteran therapist who communicates well who really works and their patients achieve their goals the patients will bend over backwards for them because they do the same for their patients And if I've got a target of twelve visits or eleven visits, in our practice our target was eleven visits a case, my best therapists with the most experience were consistently seeing thirteen to fourteen.

57:47 And it wasn't because they were less efficient. right it's because they were actually connecting with patients and helping them get fully across the finish line and uh in that case what's that person thinking if i'm bringing that up in staff meeting about hey we're not hitting our visits target not hitting our business number everybody needs to do better they're sitting there going i'm i'm killing it Why are we spending time on this? So a lot of that goes into the one-on-one meetings, the coaching, the talking, the bringing it up, and then the blocking and tackling are, you know, is there a process? Are you following the process? Let's go through, let's role play it, let's see. Because again, that kid who's batting, I need you to go into the cages and work on your swing this week, okay?

58:34 Yeah, I'll do that. What happens when they come back, you know, next practice? Hey, Jimmy, you been to the cages? Yeah, coach. Is that the end of the conversation? Shouldn't be. No. Okay, get in there and let's take some hacks, right? I want to see it. So you show me, and by the way, people do this, we do this, therapists do this with their patients every day. You don't watch them do their home exercise programs. You don't need to sit there and monitor your people at the front desk or whatever, or sit in on the vows. Show me. You know within the first five to ten seconds whether or not they're doing what they told you they're doing.

59:14 It's literally that simple. Show me. Take me through that. Walk me through your process. Can you find the process? I don't know. It's in the playbook. That means they ain't looking at the process. Right? So, I mean, it's... Once again, this is, as a founder, what you signed up for, is being able to translate this stuff. Whether you can do it well or not is not relevant at the moment, but it is part of your job description, and that is one area where you will need to get good. parting shot for this. What I'll also do is I'll include a glossary because I think what happens is people get lost in the jargon sometimes.

1:00:00 So I'm going to include a glossary. I'll include that in the show notes as well. Just a lot of the terms that we either use today or other KPI terms. But what would your parting shot be for this KPI episode of the DPT MBA? You gain additional insights and you translate them into ways to inspire your staff. Because and then and then that leads to happier patients. So happier patients, happier staff, healthier business. It really is about connecting the dots. I know we went into some depth on the numbers in the dashboard. But if to your point, if we don't bring those back to what do we do with them? How do we make change from them?

1:00:42 Then I mean, you look at numbers all day long, it doesn't matter. We'll have more from you on this course as well. But if you want to get in touch, you can find them at SturdyCoaching.com. Sturdy McKee, entrepreneur, business coach, and, well, in charge of the six-hour CEO. Thanks for scratching the surface. Like, you're giving the surface scratch. If you want to know more, hire someone like Sturdy, and they walk you through these things so you feel, I'm guessing, confident and competent. Totally. Yeah. And yeah, just more secure in your decisions that you're doing the right thing. And then, you know, when people see results, Jimmy, that's when it's like, oh, it's working. I mean, again, it's the same thing. It's just like what your patients say.

1:01:24 Oh, those exercises you gave me, they really work. It's like, yes, if you do them, they do. Who knew? We knew. That's why you came to us. Sturdy, appreciate you taking a shot at this KPIs for us. All right. Take it easy. Thanks, Jimmy. Thanks, everybody. Bye.