Benchmarking: Measuring your Performance

Do you know if your physiotherapy practice is as profitable as others? Do you know if your

physiotherapists are treating as many patients per day as other practitioners? Do you know if you are

paying your staff competitive wages? Are you paying too much in rent to run a profitable clinic? You

should know the answers to these questions if you own a practice. It is beneficial to know how we are

doing currently and then to compare our performance over time. It is even more valuable to be able to

compare some of these measures to other industries as well as with other physiotherapy clinics. This

is called Benchmarking.

Some of the key areas that we should be measuring in our Physiotherapy practices are: financial,

productivity, accounts receivable and wages. This allows us to determine if our performance is

reasonable and to set more accurate goals and budgets. It can help to identify areas for improvement

and make evidence based decisions.

We really did not have any way of benchmarking our clinics with similar clinics in Canada until the

CPA Cost of Business survey (COB) data became available in 2006. Prior to this time data was

really only available in the United States. They have the Private Practice Section Best Practices

Guide 2002 and a company called HCS Consulting who has been producing a report called PT

Benchmarking since 2002. PT Benchmarking in the United States is available to clinics for $500 to

participate and runs annually whereas the COB here in Canada is free but will not be run annually.

Examples of Benchmarking Data from the COB

In Western Canada most clinics treat about 10,000 patient visits per year. For every dollar billed for

PT services, 45 cents goes to the treating therapist and 55 cents goes to pay for all other expenses.

Most clinics bill about $200 per square foot of clinic space. Across Canada, clinics need to charge

about $64 -$75 per patient visit depending on what to cover costs and run sustainable physiotherapy

clinics.

The benchmarks you select for your business are a personal choice and need to make sense to you.

For example if you own a multi-disciplinary clinic or sell products, you may choose measures that

separate this information by revenue stream. To collect your data you need practice billing software

and bookkeeping software that provides you with easy to generate and easy to understand reports.

Examples of benchmarking measures that are appropriate for a physiotherapy practice include any or

all of the following:

Financial Benchmarks

Income (Income per hour, income per new patient and per visit, income per sq.ft.)

Expense (fixed, variable, and labour expenses) as a % of revenue, cost per visit, accurate

owner management expense

Profit (profit per patient claim, profit per visit, and profit as a % of income)

Professional gross margin (% PTs are paid of gross billings)

Productivity Benchmarks:

Number of new patients, number of visits, billings per PT, number of visits per hour

Accounts Receivable Benchmarks

size of A/R, aging A/R, net A/R as a % of revenue

Wage Benchmarks:

wage for all positions, labour as a % of income

Once you have your “report card” of measures to compare monthly or annually, and to other practices

you need to ask the question “Why?” It is the task of the clinic owner to be able to identify why some

of these measures have increased or decreased over time. For example, are there fewer new

patients because one of your primary referring physicians retired? Did your profit per visit decrease to

a loss situation because your province decided to regulate automobile insurance rates? Is your

reception staff leaving for other jobs because you are not paying a competitive salary? Once you can

answer these questions you are half way to identifying a solution and improving your business.

References:

Charles Felder, Business Benchmarking to Improve Your Practice, PPS 2006 Annual Conference John Wallace, Reimbursement Strategies: Practice Management by Numbers, PPS 2006 Annual Conference

- Submitted by Wendy Neidhardt, Private Practice Division Chair

This article was reproduced with permission from the Private Practice Division Newsletter, which is

produced by the Canadian Physiotherapy Association. The goal of this division is to act as a forum for

discussion and a resource on business management topics relevant to private practice

physiotherapy. To join the Private Practice Division, go to the CPA website (www.Physiotherapy.ca)

and follow the links to Divisions.