Regardless of industry, businesses should be measuring their performance on an ongoing basis to understand individual employee and overall success. It’s important to identify gaps in order to make process and operational changes.
Measuring your hearing health practice against industry benchmarks provides actionable insights that ensure you are as productive and efficient as possible. Continue reading to determine why benchmarking is critical to your practice, how to do it and how to use findings to your benefit.
Knowing whether you are charging more for hearing aids or if physicians are seeing fewer patients in comparison to the industry average makes it apparent that you need to alter your strategy to gain a competitive advantage.
Ultimately, business benchmarking allows you to be proactive in improving:
What should you be measure? Keep in mind that most of these KPIs are only applicable to private pay patients, as opposed to third-party.
Calculating the average revenue you are generating per provider is a learning opportunity for your practice. It helps to determine the correct amount of staff to employ. Find your revenue per provider, take your total annual income and divide it by the number of providers within your practice.
Industry benchmark: $450,000 annually
While revenue per provider measures an average across your practice, production per hour determines the individual performance of each provider, allowing them to compare their productivity to others’, as well as the industry benchmark. It helps to identify obstacles or time wasters when a patient is in your office, and whether certain practitioners are spending too little or too much time with each patient. To calculate, you must first determine the total billable hours for each provider by multiplying the number of patient contact hours per week by the number of weeks worked per year. Divide your total annual income by the number of billable hours.
Industry benchmark: $225 per hour
This simple calculation provides a quick reference to determine the general profitability of hearing aid sales. Figure out the hearing aid COGS of your practice by taking your total hearing aid expense over a certain period of time and divide it by total hearing aid revenue within that same timeframe, then converting the resulting number into a percentage.
Industry benchmark: 35%
This one is rather self-explanatory; it tells you the average amount patients are paying for your products and services. This number helps to ensure you are receiving the correct value for the clinical expertise that you are providing. Take your total annual hearing aid revenue and divide it by the total number of hearing aids you sold in the same timeframe.
Industry benchmark: $2,300
This is the most important individual metric for the success of your practice; it reveals the amount of profitability you have remaining after selling a device to put toward operation of your practice. First, subtract your annual hearing aid expenses from your annual hearing aid revenue, then divide that number by the total number of hearing aids sold in that same timeframe.
Industry benchmark: $1,500
Total units dispensed per day reveals how many hearing aids each provider at your practice is selling, on average, every day. Take your total number of hearing aids dispensed annually and divide it by the number of workdays for each provider – determined by multiplying the number of weeks worked out of the year by the number of days worked per week.
Industry benchmark: 0.8 hearing aids per day
Your return rate is a good indicator of your fitting and follow-up process after a patient purchases a set of hearing aids. For instance, a high return rate shows that products may not be well-matched to patients’ needs or that patients don’t feel supported in the time after their purchase. Divide the total number of hearing aid sales returned or canceled by the total number of hearing aid sales, including returns (in units).
Industry benchmark: 7%
Your practice’s close rate is indicative of the success of your sales process; it signifies how many patients who test with hearing loss and could benefit from hearing aids purchase them from you. Take the total number of appointments with sales over a specific period of time and divide it by the total number of sales opportunities (those tested for treatable loss and haven’t purchased hearing aids in three or more years) within that same timeframe.
Industry benchmark: 50%
Upon calculation, are your numbers falling short of benchmarks? Exceeding them? An excessive discrepancy exposes the need for change within your practice. Consider the following factors and how you can adapt to get your KPIs on target:
Without an understanding of where your practice currently stands, it’s difficult – if not impossible – to make modifications that have a positive impact on performance. If you haven’t been measuring historically, it’s not too late.