Picture yourself driving into a 20-mile-per-hour school zone. As you enter that school zone, parked at the curb is a police car with its radar pointed right at you. Oh yes, picture one more thing; You have no dashboard instruments in your car. No speedometer, no tachometer… no gauges at all. Do you close your eyes, step on the gas and hope for the best?
The above scenario may seem far-fetched, but it’s not totally out of the realm of possibility. How many people drive their cars with incorrect speedometers, non-functioning gauge lights or instruments just being out of commission? Probably more than we care to think about.
Similarly, how many doctors manage their practices without knowing their speed or progress, how much fuel or cash they have, or if their practice needs an overhaul? Should they just close their eyes, continue practicing and hope for the best?
Translate that analogy to consider for a moment how many doctors out there attempt to manage their practices without knowing their financial statistics, and you’ll see the correlation. Putting it simply… without statistics, you’re attempting to “steer” your practice while wearing a blindfold!
Making Sense Out of the Numbers
When I first started in practice, I had no systems in place to monitor my financial condition or the direction of my operating trends. I had no idea if I was heading for trouble until something broke.
As I started to learn how to gather the statistics pertaining to the proper running of my practice, I discovered I had a problem. I couldn’t make any sense out of a bunch of numbers shot-gunned across a page. They gave me as much information as flyspecks on wallpaper. I saw them, but it was almost impossible to determine where the flies were coming from or where they were going.
To gather some significance from this collection of numbers, I ended up translating them into line graphs.
Line graphs provide two types of information:
- what condition a statistic represented at a particular point in time;
- where the statistic stated for that condition is heading.
Of course, financial stats presented in line graphs can also tell you how “fast” you are going and if you are speeding up or slowing down. Specifically, that’s what trends will show you (more on that later).
As we all know, it’s much easier to correct a problem in its weaker, formative stages than when it has deeply embedded itself into your operating system. By keeping a close watch on your statistical trends, you will have an “early warning system” that informs you of impending problems. With this knowledge, you’ll be able to correct your business direction before the other, heavy shoe drops on your bank account.
Please keep in mind that your statistics and graphs are only as good as your data-gathering procedures, so you need to be as accurate as possible. Also remember that in a line graph, a “normal trend” is not a level line; the line should incline upward.
Clarifying the ‘Tech Talk’
If you’re a “non-techy” like me who thinks Taco Bell is a phone company in Mexico, here’s a layperson’s attempt at clarifying this numbers-related tech-talk.
As you know, there are two sides to a line graph. The vertical side (“Y” axis) represents position. This could be any unit representing performance, such as number of patients, fees collected or total services.
The horizontal side (“X” axis) represents time, such as days, months or years.
Before you start plotting your numbers, you need to find the extreme ranges of your data so you can plan accordingly to make sure they all fit onto one page.
Line graphs display the relationship between the performance units and time. How these two types of information change and vary will depend on the influence they have on each other.
The direction a data line progresses on a graph is called a trend. A trend is a statistically significant change in performance data over time. The direction of this data trend is measured and illustrated on a line graph.
Here’s an example of how changes in one of these two types of data can influence its trend line:
If I started dropping one pebble onto the top of your head once every minute, the line graph would show one pebble on the “Y” axis over a series of minutes on the “X” axis. When you plot these two figures during a period of several minutes, you would see a straight, horizontal trend line on your graph.
However, if during one of those minutes, I dumped 500 pebbles onto the top of your head, there would be an upward spike in the “Y” axis. (You’d also probably be thinking of some type of retaliation for those bumps on your head.) You would observe a momentary upward trend before it goes back to horizontal.
That’s how one piece of data can influence the others and can change your trend line.
Plotting Your Practice Stats
Now that you see how all this fits together, it’s time to start plotting your statistics.
Remember these three important elements:
- There must be at least three points of data on your chart before you can determine the direction of your trend. It’s even better if you have more than three data points.
- When the “X,” or time axis, is plotted too close together, the sharp peaks and valleys up and down the “Y” axis will not give you a clear picture of your data trend. To get an unclouded picture, plot your data farther apart on the “X” axis.
- Keep in mind that weekly data swings are informative but not necessarily conclusive. Monthly graphs will give you a better trend picture. Try not to make decisions based on weekly or even monthly trends. Look at an entire quarter before you make any significant changes.
Finally, like those gauges in your car, the information you monitor regarding your business is only valuable when it is used and responded to (as long as your responses are proper and warranted).
So check your statistics, take the appropriate actions and direct your trends onward and upward!