Of course, these are financial metrics…you're on an accounting blog 😉

No matter whether you are a solo health professional working for a clinic, working your own virtual practice, or a clinic owner with contractors and employees - tracking your metrics is key to success!

By understanding your numbers, you can identify areas where you need to make changes and improve your business. Here are the most important business metrics to track as a health professional.

1.Change in total sales

No metric is more important to your business than sales.

Sales show a direct link to how your business is performing. If your sales are the same each month or year, there is no growth and minimal opportunity to increase your income.

There can be several reasons why total sales change:

The last few months of the year are busier
The summer months are slower
You were on vacation
Higher sales due to having more new patients in the month
Lower sales due to not having any labs needed for patients
Effectiveness of advertising and promotions

The goal of reviewing the change in total sales is to understand the why of the change. Changes are always expected (if you ever make the same amount in multiple months, please email me), so you need to understand the why to see if the change will be an issue with achieving your financial goals—understanding the why can also help you identify what is driving your sales growth so that you can do more of that!

2. Change in Expenses

Your total change in expenses is the only line in your bookkeeping that you have control over. Of course, there are fixed costs that you cannot change (such as monthly rent), but with your budget set up, you should know when those expenses will come so you can plan.

Monitoring your expenses is the most surefire way to impact your net income; if your sales stay the same but your expenses decrease, you get higher income! Similarly, if your sales increase by 10% but your expenses increase by 20%, you will have less income this year than last.

The main reason for a change in your expenses should be planned large expenses (ex. annual membership dues or a course). As a general rule, in an established business, expenses shouldn’t change much each month.

3. Change in Net Income

Once you review your change in sales and expenses, coming up with the main reason for your change in net income should be easy!

Remember that your net income is the base for your taxable income, so this is the amount you want to use when estimating your full-year tax rate.

4. GST/HST payable

If you are registered for GST/HST, remember that this money is not yours - you are simply collecting on behalf of the government. The amounts are not included in your income tax. While you may only be paying quarterly or annually, set aside the amount you will have to remit to CRA, so you don’t spend it!

5. How much did you pay yourself?

If you have been paying yourself consistently the same amount each month and you find that your ending bank balance is way higher than your budget, why not increase how much you take?

The goal of your business is to earn money that you can spend on your personal life (it’s not all about business!) so when you can take out more, consistently, do so!

Remember that if your net income and bank account balance consistently decrease, you may have to pay yourself less.

Special clinic considerations:

6. Gross margin, including subcontractor pay

As a clinic, your gross margin is as important a metric as sales. While tracking sales is important, you earn income based on the gross margin after paying your contractors.

Include subcontractors and physical product costs when looking at your gross margin, and always budget expenses based on this amount.

7. Salaries and wages

You definitely need front-end staff! They are essential to the client experience, and a good receptionist is always worth the expense.

But sometimes you can spend so much on salaries and wages without realizing it. Of course, there are some things you cannot control (if your clinic is open, then you need someone to help patients), but a review of salaries and wages can show how much value you are getting from your front-end staff.

8. Bank fees

Payment processors are expensive. If you collect any payments by credit card, the 3% fee can be a lot. It is essential to understand how much of your sales you spend on these payment processing fees since they come from your profit based on total sales.

9. Accounts receivable

Ensure you understand how much money is owed to you from payment processors; this is especially important for direct billing insurance companies! Keeping an active eye on your accounts receivable helps with your cash flow; if you aren’t actively watching this, you can have no cash to pay your expenses.

10. Retained earnings (paying yourself a dividend)

If you want to pay yourself a dividend from your corporation, you can only do that to the extent that you have after-tax retained earnings.

Non-financial metrics:

Don’t forget to track your key non-financial metrics!

Examples include:

New patients
Returning patients
Staff to patient ratio
Cancelled/missed appointments
Equipment utilization rate
Costs by payer (i.e. health insurance vs. out-of-pocket)

While these are not a part of bookkeeping, they directly impact how much income you earn and can provide insight into your business performance.

Key Takeaways

Remember, the goal is always to understand the reason for changes in these metrics. If you understand and are okay with the reason, then there is no need to panic!

If you don’t like how your finances are trending, or don’t understand what is causing the changes, then you need to take action!

RESOURCES:

Does the idea of tracking your financial metrics thrust you into a state of overwhelm? Book a 1-hour strategy call using this link to review your metrics and learn how to track each month!