Medical Practice Metrics
Updated: 9 minutes ago
As healthcare professionals, you dedicate your days to patient care, but how much attention are you giving to your practice's financial health? Understanding and tracking the right practice metrics can be the difference between a thriving practice and one that's merely surviving.
At APS Africa, we specialise exclusively in accounting for the medical profession. And through our years of experience, we've seen firsthand how the right metrics can transform practice performance and, ultimately, practice value.
Why Metrics Matter
Metrics are fundamentally tools for growing your wealth. Practice value is calculated by multiplying your future maintainable earnings by a valuation multiple—and you can significantly influence that multiple by improving key metrics like turnover, operating expenses, and payroll as a percentage of sales.
Beyond valuation, metrics help you:
Identify efficiency and growth opportunities: What's working? Where can you improve?
Proactively catch problems: Before they balloon into issues that take years to fix.
The Key Metrics to Track
Total Income: Track monthly and yearly patterns to ensure billing is on track and identify opportunities.
OPEX Ratio: What percentage of revenue goes to running your practice? Top-performing specialists sit around 47%, while struggling practices can reach 77%.
Current Ratio: Can you meet short-term obligations? Aim for between 2 and 4.
Cash Days: Your financial breathing room. Target 30-90 days of operating expenses in the bank.
Creditor Days: Doctors often pay too quickly. Moving to 30-day accounts improves efficiency and earns you interest.
Taking Action
We encourage you to review these metrics with your accountant. Find out where you stand, then identify where the opportunities lie. Small improvements can have a significant impact on your practice's profitability and value.
