What's Your Take Home Efficiency?
I’ve asked people what their most important practice metric is. I’ve gotten answers like “production”, “collections” “take home salary” and even “collections per assistant”.
Sure, you can produce $5 million/year if you have enough patients, but are you doing it on 250 doctor days/year? Maybe you’re doing it on 150 days/year with an 80% overhead. Both of those are scenarios I want to avoid.
I was listening to a lecture the other day and I heard the doctor talk about the number of days they worked. So, I started thinking. If I could take home “X” per year, I’d be happy, but not if I did it on 250 days/year. Wouldn’t I be happier if I could make “X” in 100 days/year? So, I calculated my net production per day and was interested in seeing how it looked versus previous years, and as expected, it was rising substantially. But that’s not my “take home”.
So, I started doing it for my collections and the same trend obviously appeared. Then I looked at my yearly overhead for last year and multiplied that times my per day collections and that created my per day “take home”. That seemed like a great way for me to see my “take home efficiency” (THE). If I was taking home “X” for every day I was in the office, and wanted to work less and make the same or more, then I would need to become more efficient with my systems, or I was under-scheduled for the number of days I worked per year and could consolidate, or my overhead was too high, all things I could correct.
But then I asked myself: “What about practices with multiple doctors that are doing huge volume?” It occurred to me that the formal could help me realize when I need to add day or an associate. It’s a bit of an equalizer. For instance, a single doctor practice collecting $1 million/year on 185 days and a 50% overhead means $5,405collections/doctor/day and a THE of roughly $2700/doctor/day. The $2.3 million 1 doctor practice on 185 days and 60% overhead is doing $12,432 collections/doctor/day and a THE of $4,972. And the 2 doctor, $3.5 million practice open 225 days/year (expanded hours, etc based on one doctor working 150 and the other working 150 for instance (working some days together and other alone, but open roughly 5 days/week)) at 60% overhead is doing $11,666 collections/doctor/day for a THE of $4,666. The THE is less than the single doctor practice.
Of course, you could also figure out the number of hours you’re working per day and calculate this time down to THE per hour but I suspect that would only be useful if there were different numbers of hours being worked per doctor.
We all want to make as much as we can on the least amount of days, right? So, I’m just suggesting you take a look at what you take home every single day you’re in the office and evaluate if you’re more or less efficient than you were last year, perhaps before you added an associate or started taking (or not taking) certain insurances.
At the end of the day, this helps us look at our work days like a day laborer who is paid a contracted take home rate for their day’s work. Maybe we can consolidate our days and take home more. Maybe we can hire more team members per day and be more efficient. Maybe our systems have helped us take home more. Maybe you’re making way more per day than last year but feeling burned out and need to make some changes.
We need to make sure we take exceptional care of our patients, but take home efficiency seems like a simple barometer by which we check to see how well we’re taking care of ourselves and our families.
As always, I’d love your feedback.
All the best,
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