[MASTERY] Key Performance Indicators

KEY PERFORMANCE INDICATORS (KPI)

In my development as a business consultant, in my formal business training and then consulting with a number of corporate entities, one aspect of my work was to enable senior management in developing Key Performance Indicators (KPI). I dont use that term in my practice management consulting, but thats one thing I do with all my dental clients. Key Performance Indicators are quantifiable measurements, agreed to beforehand, that reflect a critical success factor of a practice.

If you look at the work of other practice management consultants, they use the same indicators for every practice they work with. In my work, many of the Key Performance Indicators we generate in practices differ depending on the individual practice. A practice may have as one of its Key Performance Indicators the percentage of its income that comes from return patients (recall and pending restorative). Whereas another practice may have as one of its Key Performance Indicators the percentage of incoming calls answered in the first minute.

Whatever Key Performance Indicators are selected, they must reflect the organization's core values, purpose and goals. Key Performance Indicators must be key to the practices success, and they must be quantifiable (measurable). And in my work, Key Performance Indicators must have long-term considerations. The definition of what they are and how they are measured do not change often.

But the goals for a particular Key Performance Indicator may change as the practice's goals change, or as it gets closer to achieving a goal. If the goal was to answer the phone within one minute, and that is achieved, then the goal might be in the domain of new potential patient call ins some percentage of getting these individuals scheduling with an exam appointment. If a Key Performance Indicator is going to be of any value, there must be a way to accurately define and measure it. "Generate More Patients" is useless as a KPI without some way to distinguish between new and repeat patients. "Be The Most Popular Practice" won't work as a KPI because there is no way to measure the company's popularity or compare it to others.

It is also important to define Key Performance Indicators and stay with the same definition from year to year. For a KPI of "Increase Revenues, you need to address considerations like whether to measure by crown units delivered or by dollar value of restorative dentistry. Will redos be deducted from revenues? Will revenues be recorded for the KPI at production or at the actual amount collected? Every element of a KPI needs to be clearly defined.

You also need to set targets for each Key Performance Indicator. A company goal to be the practice of choice might include a KPI of "Staff Turnover Rate." The Key Performance Indicator might be defined as "the number of voluntary resignations and terminations for performance, divided by the total number of staff members at the beginning of a three year period." Reducing turnover to less than one staff person every three years is a clear target that everyone will understand and be able to take specific action to accomplish.

I have found that successful practices create and then fully utilize Key Performance Indicators. Sure, there are some Key Performance Indicators that are universal, and in fact, most practices use them. But these Key Performance Indicators apply to every practice. Its those practices that take a look at their overall practice goals, determine what are the key success factors and create KPIs that generate achievement and progress in these areas. These particular Key Performance Indicators are unique to that practice and continuously empower their success.

So, if you are only using KPIs that have been handed down from either some consultant or a colleague and have not developed your own, then I suggest you figure out your practices overall goals, determine the essential success factors needed to make these goals and then develop a Key Performance Indicators to measure your performance in these areas.

Dr. Marc B. Cooper
The Mastery Company
MasteryCompany.com

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Dr. Marc B. Cooper
President and CEO
The Mastery Company