Best-in-Class Operations: The Standard Private Equity Uses to Judge Performance
Private equity looks at healthcare clinics through one lens. Performance. They want proof that the business runs on systems, not hope. They want reliable numbers, stable margins, predictable growth, and leadership that is not stuck inside day to day operations.
This is not about sounding sophisticated. It is about running a clinic like a real business that produces consistent results. When a clinic meets best in class standards, it is worth more today and worth more at exit. A clinic that does not meet these standards loses value, even if the care is great.
Below is a breakdown of the measures private equity uses and what owners can do to match them.
Why Investors Care About Best in Class Operations
Investors want businesses that continue to grow when the owner steps back. They judge this by looking at several areas.
• Revenue consistency
• Operational efficiency
• Staff productivity
• Data tracking and reporting
• Financial discipline
• Leadership structure
• Risk control
• Growth readiness
A clinic with strong systems earns higher valuation because it is predictable. Predictability lowers risk. Lower risk raises value.
The Four Areas Investors Analyze First
1. Financial Performance That Is Clean and Consistent
The first area investors investigate is the financial engine. They expect to see numbers that show control.
What they look at:
• Net profit margin
• EBITDA margin
• Reimbursement mix
• Average charge per visit
• Arrival rate and cancellation rate
• Collections performance
• Payroll as a percent of revenue
A clinic that cannot produce accurate, current financial reports is seen as disorganized. A clinic that tracks its income weekly and watches for slippage increases value right away.
What owners should do:
• Track deposits weekly
• Track expenses weekly
• Track collections accuracy
• Monitor authorized visits and expired authorizations
• Keep simple dashboards that show trends before they grow into problems
You do not need complex tools. You need consistent measurement.
2. Operational Reliability
Investors judge whether operations produce the same product every week. Reliable operations equal predictable revenue.
Key operational indicators:
• Percent of prescribed treatment completed
• Weekly visit volume per clinician
• Reactivations
• Cancellation handling
• Five day forecast
• Documentation turnaround time
The clinics that score high here follow simple systems with measurable outputs. The owner does not micromanage. The team knows what to do.
What owners should do:
• Set clear targets for each role
• Use standard scripts for scheduling and cancellations
• Track patient retention and look for drop off points
• Use a structured visit flow for patient education
• Hold short weekly reviews to fix issues early
Most clinics lose revenue because they do not protect the plan of care. Improving this area raises profit without adding new patients.
3. Leadership That Operates Above the Daily Grind
Private equity places major weight on leadership structure. They want to know who makes decisions, how the team is held accountable, and whether the owner is replaceable.
What they want to see:
• The owner has time to work on the business
• A management routine is in place
• Systems exist for admin, communication, and operations
• Staff performance is tracked
• Processes are documented in simple steps
A clinic that depends on one person is risky. A clinic with a leadership framework can scale.
What owners should do:
• Shift toward an 80 percent leadership and 20 percent daily work ratio over time
• Build simple SOPs that define the product of each role
• Hold short operations meetings with a fixed agenda
• Train the team to solve problems using data
• Create a plan for reducing owner dependency
This is usually where clinics get stuck. But once the owner pulls out of the daily swirl, the business gains value fast.
4. Growth Ability and Market Position
Investors want clinics that are prepared to grow. Growth requires more than wanting more patients. They evaluate how the clinic brings in new clients, how it keeps them, and how much control it has over demand.
What they look for:
• Reliable new client sources
• Internal referral activity
• Online presence
• Strength of reputation
• Reactivation activity
• Marketing consistency
The most valuable clinics do not depend on luck. They can increase volume on purpose.
What owners should do:
• Track referral sources
• Aim for steady growth in online reviews
• Run simple reactivation routines
• Keep a consistent outreach schedule
• Survey clients to learn why they choose the practice
Investors want to see that the clinic does not collapse if one referral source dries up. A diversified inflow raises the valuation.
The Benchmarks Investors Consider Best in Class
These numbers come up in nearly every investor review. They may vary by region, but the principles hold.
• Arrival rate at or above 92 percent
• Prescribed treatment completion at or above 80 percent
• Weekly visit goals met or exceeded 95 percent of the time
• Payroll below 60 percent of revenue
• Strong reactivation flow
• Clean receivables
• EBITDA margin that reflects operational discipline
A clinic that meets these standards brings in more cash now and attracts stronger offers later.
The Three Weak Spots That Lower Valuation Fast
If a clinic struggles to grow, the cause is usually one of these.
Weak Spot 1. Poor retention
If clients do not complete their plan, the clinic loses revenue, referrals, and reputation. Investors see this as a major risk.
Fix this with:
• Clear visit expectations
• A simple phased care communication system
• A strong cancellation handling process
• Weekly retention tracking
Weak Spot 2. Lack of documented systems
If procedures live only in the owner’s head, the clinic cannot scale. Investors see this as unstable.
Fix this with:
• One page SOPs for admin and operations
• Defined responsibilities for each role
• Consistent scripts
• A simple dashboard for key stats
Weak Spot 3. Owner dependence
If the owner is needed for everything, the clinic loses value.
Fix this with:
• Leadership routines
• Hiring to reduce owner overload
• Delegation of non essential tasks
• Building a management rhythm
When owners correct these weaknesses, profit and valuation rise fast.
What Owners Can Do Now to Reach Best in Class Standards
You do not need to overhaul your entire clinic at once. You need a simple setup that moves the business toward predictable results.
Start with these five steps.
Step 1. Identify your current numbers
Pull the core KPIs.
• Weekly visits
• Arrival rate
• Prescribed treatment completion rate
• Average charge per visit
• Collections accuracy
• New clients
• Cancellations
• Reactivations
Do not guess. Gather real data.
Step 2. Pick three areas to improve
You do not fix everything at once. Choose the biggest gaps that affect revenue.
Step 3. Build or simplify your SOPs
Write one page instructions for the core processes.
• Scheduling
• Cancellations
• Payment collection
• Visit flow
• Documentation
Keep it simple. Clear steps and clear end products.
Step 4. Track results every week
Do not wait for the month to end. Weekly tracking gives you control.
Step 5. Shift the owner into a leadership role
Block time each week for leadership work.
• Reviewing numbers
• Planning
• Staff training
• Executing the strategy
When the owner manages by data, the clinic becomes stable. Stability produces growth. Growth raises value.
What Happens When You Reach Best in Class Standards
You gain:
• More control
• Better cash flow
• Predictable growth
• Less stress
• Easier hiring
• A stronger reputation
• A higher valuation
• A business that gives you options
You can scale, slow down, or prepare for exit. You create a business that works without burning you out.
Want help improving your operations to meet best in class standards. Let’s talk.
