Here are 10 numbers you should be tracking and trying to improve.
Units of Service -- For most of you this will be Hours of Service Provided. Not all hours are created equally. For example, sending your Geriatric Care Manager into the field may only require 90 minutes, but the revenue generated could be equivalent to five hours or units of service.
Clients Served -- This number is actually more important than Units of Service. If you've become good at growing your business by increasing your units per client, increasing the number of clients you serve will have an exponential benefit.
Admissions -- The number of new clients is a critical measure of growth. You need to compare this number with many of your other expenses to correctly evaluate the cost of growth.
Length of Service -- Track your individual clients from their date of admission. Lengthening your average time of service per client can help grow your business. We recommend using weeks. If your average client purchases 10 weeks of service, and to improve customer relationships you're able to admit them earlier or extend service longer by only two weeks, this is a 17% improvement in revenue per client.
Revenue -- Track the cash! Everyone tracks revenue and profits, but few people realize the importance. Revenue is the size of your business. The larger your business, the more opportunities you have to refine and improve it. The larger your business, the greater the benefits of improvement. If you have $1 million company, and institute a new policy or procedure that drops 5% to the bottom line, that's an extra $50K, but the same policy gives you a $250K increase if your company is a $5 million company. It's no more difficult to improve a million-dollar company than a $5 million company, so constantly look for ways to grow revenue.
Owner's Discretionary Income -- If your company is a sole proprietorship, partnership or LLC, tracking your ODI becomes vital. Growing your ODI is more important than growing your profits, because you have to pay taxes on your profits. In a nutshell, it is the total benefit you receive from being the owner of the company. Having a company car in your garage or life and health insurance paid for by your company are valuable to owners. Tax deductions include some meals and entertainment, professional and personal development, and the ability to give to charities of your choice. Capital investments such as real estate and technology increase the value of your company, without increasing profitability. Whether you receive cash, or are simply growing a retirement asset, being the owner definitely has its advantages. Tracking decisions that you make based on their total value to you as the owner can be as important as profits.
Recruiting Expenses -- Your people are your inventory. The less money you spend on inventory, the more you will reap the profits. Track the costs associated with recruiting new caregivers. Then compare these costs to the number of new hires. It's more important that your cost per hire goes down than your total expenses.
Marketing Expenses -- Track your marketing expenses. You definitely need to know your cost per admission and your cost per referral.
Billing Rates -- The easiest way to increase your income is to increase your billing rates. The easiest way to lose your income is to have your expenses increase without increasing your billing rates. The only way you can know when is the right time to increase billing rates is to be able to evaluate billing rates against your gross margin and/or overall costs. Most of the highly successful companies in the world are successful because of what is called "pricing power". Do you have the ability to raise rates?
Lost Opportunities -- Every company loses opportunities. In private duty, you may get an inquiry call, and for some reason the person purchases from another agency. You don't always know why, and sometimes you can't do anything about it. Other times, you get a referral from someone who wants your business, but you simply can't staff the case. You don't have the person, you can't service the geographic area, or you may simply make a decision that the case will not be profitable enough and turn business away. While every company has lost opportunities, very few companies track these opportunities and use it as a strategic decision-making device. Tracking lost opportunities will help you identify ways to grow your business in the future. They say hindsight is 20/20, so take advantage of your clear vision of the past to focus on the future.
