As they say on Shark Tank….Know Your Numbers

“If you don’t know your numbers, you’re toast” – Kevin O’Leary

Have you ever been in a meeting and someone asks a question only to have you thinking to yourself “I should know this”?  It has definitely happened to me more than once.  It’s embarrassing.  There are basic things that you should just know about your business.  If you don’t know your numbers, how do you make sound decisions?  The answer is….you don’t.  To truly know your business, you must know your numbers.  

I’m not suggesting you have to become Rain Man (although that would be really cool).  You just need to invest the time in understanding the business and knowing what is important.  For each business those things may differ slightly, but there will always be basic numbers that you should know.  Data is a powerful tool and the more you know, the more credibility you will have.

It’s Not Just Financial

Financials are critical, but numbers aren’t only financial.  Numbers are found in every aspect of operations.  You need to have your finger on the pulse of your business, financial and operations.  I’m about to admit something here.  The CEO of our practice comes to the ASC on a daily basis.  He picks up a schedule and looks at the volume and payors.  He also monitors the volume by surgeon on a regular basis.  When he and I are talking, he will often say things like “how many total joints are y’all doing this week?”  (He really does say y’all – we’re in Mississippi) There are so many times where I am in that exact spot I referenced earlier….thinking “I should know this”.  You’d think after having that happen once, I’d never let it happen again.  Wrong.  I get so caught up with the steady stream of people coming through the revolving door of my office that I sometimes fail to take notice of the “finger on the pulse” data points.  It’s an open door policy, not revolving door policy…haha!

Key Performance Indicators

If you aren’t sure which numbers you absolutely need to know, start with your key performance indicators (KPIs).  Learn them and be able to rattle them off.  Preparing a monthly trending report is an excellent way to stay on top of your KPIs.  I have a management and consulting business and am happy to help with this (shameless plug intended).

For an ASC, you should always know your volume, revenue, salaries with benefits % of revenue and per case, supply & drug % of revenue and per case, operating expense, total expense, and profit margin.  You should also know your clinical and administrative hours and % of overtime.  Hours per case and OR statistical data is very important as well.

Choose the key metrics that drive your business and know them inside and out.  Make business decisions based on these metrics.  For example, using hours per case is great measure for when it might be time to add more staff.   Your numbers should align with changes in the business.  If your volume is down, certain expenses and staffing hours should also go down (along with revenue, but not always – depending on payor mix of cases).  If your volume decreases but your supply and drug expense increases, find out why.

Budget

I can’t tell you how often I speak to an Administrator who either doesn’t have a budget or doesn’t use their budget.  I can’t stress this enough….the budget is a tool.  Use it.  It helps predict future performance, but also helps you know if you are performing (or underperforming).  You will then be able to make strategic shifts to stay on track.  Develop a robust budgeting tool or contract someone to do it for you.  Engage your entire leadership team in the budgeting process (future blog).  Share the budget with your team and make certain your accountant measures against it with your monthly financials.  Transparency with your numbers builds trust and buy-in, so I always recommend including your leadership team in regular discussion surrounding the business aspects of running the ASC.

Benchmarking

So you know your numbers, now what?  Now it’s time to figure out how you compare to similar businesses in your industry.  Make sure it is apples to apples and you consider factors like location.  An ASC in New York is going to be different than an ASC in Mississippi.  Cost of labor is one reason for this.  Payor contracts is another.  For an ASC, you also want to consider single-specialty vs. multi-specialty.  This has a significant impact on the benchmarks.  There are some amazing resources out there for benchmarking.   ASCA and AAAHC both offer benchmarking surveys and will provide reports free of charge if you participate. Avanza Health Strategies and Intellimarker are also good resources.  You can also check out my benchmarking presentation with my colleague, Jessica, in June at Becker’s Spine, Ortho & Pain conference (another shameless plug…intended).

Once you identify the most useful benchmarking data, you will be able to determine where your greatest opportunities for improvement are or you’ll have bragging rights.  Ideally it will be a little bit of both.  I like to hone in on SWB expense, supply & drug expense, hours per case, cases per OR, revenue per case, FTEs, among many others.  If you don’t have a peer network, I highly recommend building one.  Benchmarking against other ASCs in your area is extremely valuable.  I hold a monthly call with ASC Administrators in Mississippi and have recently added one in Michigan and one in California.  It’s open to anyone who wants to join, just message me if you’re interested (third and final shameless plug….intended).

‍