For example, many physicians routinely calculate their practice expenses and compare their own figures against national averages, as an effort to manage their practices by controlling expenses to improve the bottom line. Formal benchmarking techniques offer a more structured approach to the establishment of business parameters and the review of financial progress against baseline values. It creates more reliable and useful information for you to use to improve your practice. Before you can effectively benchmark your practice, you need to understand the different standards available. These include internal and external standards.
Internal standards are the easiest to determine and apply.
They include your income statements, financial statements, balance sheets, productivity and accounts receivable information. In applying internal standards, you need to make sure that the information you are using is consistently reported. If you change your practice's accounting procedures, it may be difficult to accurately benchmark based on this information. External standards are benchmarking tools or information obtained from sources outside of your practice. The type of benchmarking activity you seek to undertake will be determined by the external benchmarking indicators available.