What is your utilisation rate, and how can it help your practice?

Troy Parsons is a podiatrist, Managing Director of Optimise Health (QLD, Australia) and Founder of The Hive. Here he explains what a utilisation rate is, how to calculate it, and why he believes it’s a valuable metric to track in your clinic.

Guest author

Troy Parsons, The Hive·

What is a 'utilisation rate' explained by Troy Parsons

For many years, when trying to get a sense of how well our practice was doing, my only real indication was having a full appointment book, preferably booked out a couple of weeks in advance.

That, along with how much money we took in each day and how much was sitting in our bank account, was all I had to determine how things were going.

The trouble was that a perfectly full appointment book meant that my practitioners were using all of their contracted hours on patient treatment. And that just wasn’t sustainable.

What if a practitioner got sick or suddenly needed time off? My team couldn’t absorb those extra appointments.

Or, what if a practitioner left the practice on short notice? Not only could we not take on the additional appointments, but we also couldn’t simply turn on a tap and have a flood of suitable applicants come streaming in.

We needed to leave a little extra room in everyone’s schedule so we could be flexible when we needed to be.

That’s when we began using the utilisation rate to help us determine just how much flexibility we had to handle unexpected changes in our practice.

How to calculate your team’s utilisation rate

Today, the utilisation rate is a very important metric for us, and it’s something I think nearly every practice could benefit from using.

To find the utilisation rate for your practice, start with the number of contracted hours a practitioner has per week. But remember, not all of that time will be billable.

In our practice, for example, we have morning tea, afternoon tea, lunch, team meetings, one-on-one mentoring, and we give our team 20 minutes a day to catch up on patient notes or referral letters they need to write.

That all comes out to about 10 hours per week. So, in a 40-hour week, our practitioners are left with 30 billable hours. And let’s say that a practitioner has 20 hours of appointments during a single week.

To calculate the utilisation rate for that practitioner, we just divide the billed hours by the total billable hours available and multiply that number by 100. That gives us a percentage, known as the utilisation rate. In this case, it’s 66%.

20 billed hours ➗ 30 billable hours available ✖ 100 = utilisation rate of 66%

Utilisation rate =

billed hours ➗ billable hours available ✖ 100

What is the best utilisation rate?

We’ve found that the sweet spot for the utilisation rate is somewhere between 70-80%. If we go above that, we start to run into trouble. That’s when we begin losing our flexibility, and I know it’s time to start our recruiting process.

If we fall below 70%, like in the example above, that tells me we still have some room to grow. As a practitioner builds their patient base and increases their referrals and rebookings, etc., then we know they have the necessary space in their schedule to accommodate that growth.

At this point, you might be wondering why we dedicate 10 hours a week per practitioner for non-billable tasks. We consider this time an investment in our team and our culture. It’s how we provide an environment that supports our practitioners to help them serve their patients to the best of their ability.

So if our team is operating at their fullest potential and has a utilisation rate somewhere between 70-80%, we know that our business is healthy and strong, and we can easily manage an unexpected event with limited disruption to our team and our patients.

It’s the utilisation rate that makes it all possible. That’s why it has become one of the most meaningful metrics for our business, and it’s something I think a lot of practices could benefit from using.

Note:

Within Cliniko, you can find a practitioner's billed hours (known as ‘service hours’) under the ‘revenue’ tab of your practitioner performance reports.

Author information

As a Podiatrist, allied health centre owner (Optimise Health in QLD, Australia) and business mentor (The Hive), Troy Parsons is driven to help health care practitioners, and business owners reach their potential.

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