If you’ve read this site before, you know that we preach the importance of information. But what seems to be lost in the discussion is the fact that the information needs to be pointed, simple and useful. Practice management software companies and other services are perfectly capable of generating reams of data. But who has the time to look through all of that stuff? And does all of that information have meaning?
Today, we’ll discuss those and other fallacies that come with the generation of information and the usage of those data. You don’t want to be presented with information that consumes excessive amounts of your time to understand or that lead you in the wrong direction.
Here are the potential mistakes you want to avoid:
More information equals better information
So many reporting systems pride themselves on giving you every piece of data that you could possibly need. For reports on new contracts for example, you’ll get every contract broken down by length, value, insurance percentage, doctor who signed the contract, the staff on board during the signing, etc., etc. And some of that information may, in fact, prove critical to decision-making within your practice, but good luck finding it. With the time you spent looking through that data, you could have been seeing more patients, marketing your practice to referral sources or watching your favorite sporting event multiple times on TV.
Good information needs to point you directly to the most important issues in a concise manner. If your basic reports on key practice metrics extend to more than one page, you are probably being overloaded with information.
Extensive detail will enable me to ferret out problem areas
You may be looking at just a handful of key metrics, but they are presented in such excruciatingly minute detail that you can’t really find out anything. We’ve had a request from a couple of past clients who wanted new contract information broken down into 11 different types – Phase 1 by difficulty, phase 2 by difficulty, ceramic, metal, etc. The practice averaged 12 new patient contracts per month so each month, there would only be 1-3 contracts per category. Everything was in so much detail that we couldn’t really glean any useful, actionable facts from it. If the number of ceramic cases when from 1 in the month of July to 3 in the month of August, would that indicate that we had a run on ceramic braces? Should we increase supplies for this type of braces? Should we change our marketing? Probably not. The size of the sample is so small that we really cannot make any decisions that mean anything. If we do make a decision based on this deep breakdown, we may be making the wrong one.
We see this type of fallacy a lot with reports that break down results by day. Generally, a day is such a small period of time and subject to so much variability that it can lead to false conclusions. For example, let’s say that you see 100 patients on each of November 1 (Friday) and November 5 (Tuesday). On November 1, you collect $3,500 and on November 5, you collect $5,000. Does that mean that Tuesday is a better day for a regular patient day? Are people more inclined to bring in a payment early in the week and save up on the weekend? Who knows? We really can’t draw any conclusions here. Maybe 1 patient had an abnormally large payment on the 5th. Maybe the Friday patients had an abnormally large number of paid-in-full patients. Whatever the case, the data are so narrow that we really can’t come to any useful conclusions.
If you try to compare days across months and years to find weak areas, you’re just adding up more unmanageable data.
Looking at additional detail helps to examine a problem area that you found through your normal data analysis, but as the first line of defense, that extreme level of detail can prove to be challenging and misleading.
You can make any ratio have meaning
Not every ratio can help you make decisions. We had a situation where one key metric for a practice was clinical supplies cost divided by employee costs. Are the two related? Well, employees do use supplies, but that doesn’t really create a useful relationship. If clinical supplies jumped while employee costs remained constant, does that mean that the practice is working the same amount of time, but supplies are being used inefficiently? Maybe, but there are much better, simpler and less arcane tools to determine that. Check the link for that information.
Stick to the tried and true basics. They’ve become established over the years because they are simple, informative and easy to calculate. We’re talking about basic expenses as a percentage of revenue, batting averages, show up rate, conversion rates, etc. As you get further away from the main road, you risk generating results that are misleading.
The numbers can tell me everything I need to know
As much as I enjoy the book Moneyball, we have all come to understand that numbers alone cannot provide the complete answer to a problem. They can, however, point us in the correct direction. Here’s an example: we had an office in which results constantly improved. Production, revenue, profits were growing at double digit rates when comparing the current year to same period of the prior year. On the surface, everything was great. But underneath, the office manager had engaged in certain activities and shenanigans that threatened to destroy the cohesion of the orthodontic team. I won’t get into the specific shenanigans, but these were things obviously inappropriate for any type of family-oriented business. If we had left the situation unchecked, the practice would have fallen apart, lost the trust of its patient base and been forced to almost completely start over.
As we’ve discussed at other points, always combine the numerical results with your cold, analytical assessment of your practice. The two combined should lead you in the right direction.
But as you deal with the statistical part, remember to focus on the important factors and design your system to notify you of exceptions and potential important problem areas. That way, those items command your immediate attention and enable you to focus on solving problems instead of consuming your time by searching for potential problem areas.
As always, we are here to help. If you want to review your reporting or have something designed and implemented for you at no charge, don’t hesitate to contact us.
No comments:
Post a Comment