Do You Manage by Emotions or Do You Manage by Statistics?

Do You Manage by Emotions or Do You Manage by Statistics?

"Everyone likes Pete so I'm giving him a raise," is managing by emotions. "Jill collected $15,000 we were about to write off, so I'm giving her a raise," is managing by statistics.

You earn more profit, with less stress, when you manage your practice by statistics.

Three Examples

1. Dr. Dennis was aware of just one statistic in his practice: his checking account balance, and it was much too low. His gut feeling was to blame his collections people and cut expenses.

Luckily, he decided to use statistics to sort it out. He spent a few hours one night to find and plot his monthly numbers: New Patients, Charges, Collections and Expenses.

He was shocked to see his Charges graph line had dropped by 30% four months earlier. During those same four months, his New Patients, Collections Percentage and Expenses stat graphs were fairly steady.

So he knew his collections people were collecting most of what was billed. His overhead was not the problem either. If he had followed his feelings, he would have made some big mistakes.

Instead, he found the real problem: his new data-entry fellow was entering the wrong billing codes.

2. Dr. Nancy's website and monthly newsletter attracted 7-10 new patients each month like clockwork. Her material was personal, informative and a little goofy.

One day, a fast-talking marketing guy dazzled Dr. Nancy with website and newsletter samples. “Ten new patients per month is nothing! We'll get you 20!" He convinced her to pay him $1500 per month.

Dr. Nancy and her staff were impressed with the new material. “We look like a million-dollar operation!”

Fortunately, Dr. Nancy was managing by statistics and saw her New Patients statistic drop in half. Dr. Nancy fired the marketing company and went back to her old material. The stat jumped back up.

3. Dr. Bill needed a new office manager. He interviewed a dozen applicants without success. His sister pushed him to hire her best friend as she was “practically family.” But then his receptionist Rachel asked for the job.

Rachel used her line graphs to show how she had steadily increased her two statistics: "Kept Appointment Percentage" and "Over-the-counter Collections."

Based on the numbers, Dr. Bill gave her a six-week trial period. Rachel worked very hard, helped the other staff increase their productivity and showed him the stable statistical increases, all on graphs.

Five Recommendations

1. Assign at least one statistic to each employee. Praise and reward employees who increase their stats.

2. Track your New Patient statistic carefully. Invest in marketing methods that prove to work.

3. Base your hiring decisions on statistics. How long do they stay at their jobs? Credit score? School grades?

4. Use statistics to evaluate your procedures, insurance contracts, fees and collections. Learn which income sources are profitable and which are unprofitable. Act accordingly.

5. Manage yourself by statistics. For example, what does your own charges or collections graph look like so far this year? What about your production per visit or production per day? Which month has been your personal best? Why?

When it comes to management, do not follow your heart. Disregard opinions. Ignore your feelings Instead, be smart and manage your practice by the numbers. Joyful emotions will follow. To really find out how well or poorly you are managing, complete our Practice Management Analysis.

-Brian Rakestraw, Managing Partner