Operating without metrics is setting your money on fire

Newspaper ads, high school sports sponsorships, community running events, Google search keywords, Facebook campaigns, Christmas gifts for the ortho next door... you spend a lot of money on bringing patients to your practice.

And when they finally get booked into the calendar, the only thing left is for them to show up.

But, life gets in the way. John's driver can't make it. Susan's shift got swapped. George's meeting went over.

There's not much you can do about it, right?

Between new patient intake, insurance verification, checking in patients, answering the phones, does the front office really have time to call every single patient who canceled an appointment this week?

Probably not.

So, rather than spend time rebooking repeat cancellers, your front office focuses their energy on the 80% who do show up, again and again.

And if you already know that 80% are showing up, why even waste time counting up the cancellations, no-shows, and reschedules?

With limited resources, ruthless prioritization is the only way to build a business from zero to one.

But, if the largest PT organizations on the planet do count the other metrics, is it just because they have too much time on their hands? Why are they wasting time counting cancellations and no-shows?

Turns out, at scale, the difference between success and failure lies in the fine-tuning of tightly run operational processes designed to keep the schedule full. When optimized correctly, these processes can generate 7 or sometimes even 8 figures of additional revenue for PT enterprises.

But, the same operational discipline can make significant differences for smaller groups as well.

Here's the napkin math:

For a group with 20 therapists, let's assume each therapist sees 10 patients per day.

20 therapists * 10 appointments per day = 200 appointments per day

Let's say the group has an 8% cancellation rate.

200 appointments per day * 8% cancellation rate = 16 appointments cancelled

If you could design a waitlist process that fills 10 of these cancellations, at $96 average reimbursement, that could mean $960 per day, or $249,600 per year.

The same for is true no-shows.

200 appointments per day * 5% no-show rate = 10 appointments no-showed

If you could prevent 5 of these no-shows by calling patients to remind them the day before, that's $480 per day, or $124,800 per year.

But if you only know that you have an 80% arrival rate (and you don't know your cancellation rate), it's basically impossible to figure out which process changes would generate the most return.

Building effective operational processes starts with tracking the right metrics.

Even at a scale of 5 or 6 locations, it's worth considering how much revenue is being lost from avoiding certain processes, which requires some basic metrics to figure out.

So, what do you need to track?

Ideally, for any appointment that was ever booked in the calendar, you should know its status. An appointment is either scheduled, occurred, or not occurred.

If an appointment did not occur, it was either canceled, rescheduled, or no-showed. Even if it was canceled with 2 week's notice, it was still canceled.

A cancellation can be further divided into the number of hours notice before the appointment time. Typically, cancellations within 24 hours of the appointment time are particularly important to track, as it may point to a break in a specific underlying front office process.

Deleted is not a status.

Fortunately, keeping track of appointments is a standard feature of most EMRs. Some EMRs even let you add a note when cancelling a slot, like "cancelled within 24 hours" - ideally, you would add the timestamp of the cancellation so this data can be further processed later.

Baseline metrics

Once every appointment is marked correctly, you should be able to calculate the following metrics:

• Arrival rate
• Cancellation rate
• Reschedule rate
• No-show rate

If you're tracking numbers correctly, the following equation should hold true:

Cancellation rate + reschedule rate + no-show rate = 1 - arrival rate

You should also be able to calculate:

• 24 hour cancellation rate

Of course, the following should hold true:

24 hour cancellation rate + rate of cancellations with >24 hour notice = cancellation rate

Remember, accuracy over time is the key to these metrics. Exporting data directly from your EHR is the best. Counting them manually is better than nothing.

What next?

Once these metrics are in place, you can start doubling down into processes that will make a meaningful difference in your business.

Have a 15% cancellation rate? Maybe it's time to introduce a waitlist or a cancellation fee (or both)!

No-shows through the roof? Might be time to buy more reminder credits from WebPT, or better yet, call the patients the day before to confirm appointments.

In 3 months time, you can track whether these process changes are reaching the bottom-line, and pivot to a different solution if needed.

Without these metrics though, you'll be flying blind, and paying a hefty price to do so.

Have a high cancellation rate?

If you're seeing cancellation rates above 8-9%, you might consider building out an operational process in your front office to manage waitlist patients. In an ideal case, your front office staff would contact enough patients who are eligible for a canceled slot before it goes unfilled.

Or, you could let an AI do the work for you. Penciled helps physical therapists fill last-minute cancellations with an AI agent that contacts waitlist patients and books appointments directly into your EHR. Book a custom demo here.

Thanks to Sturdy McKee, MPT for reading drafts of this.