What Most People Get Wrong About Financial Health & KPIs

If you run an ABA clinic, you’ve probably been told to “watch your KPIs” and “protect your financial health.” But what do those terms actually mean? And why do so many clinic owners track numbers that don’t help them make better decisions?

This post is for ABA clinic owners, clinical directors, and BCBAs stepping into leadership roles. Most of us trained as clinicians, not finance experts. That’s fine. But when we mix up key terms or track the wrong things, we create confusion, waste time, and sometimes push our teams toward choices that hurt clients or staff.

Here’s what we’ll cover. First, we’ll define “financial health” and “KPI” in plain English. Then we’ll set ethical guardrails that should come before any target-setting. After that, we’ll walk through the ten biggest KPI mistakes clinics make and how to fix them. Finally, we’ll give you a simple checklist for building KPIs that actually work.

Let’s start with the basics.

First: What “Financial Health” and “KPI” Mean (Plain English)

These two terms get thrown around constantly. But most people use them loosely, and that creates problems.

Financial health means your clinic can reliably pay its bills—payroll, rent, vendors, insurance. It means you can handle surprises without scrambling for emergency loans. A big part of financial health is cash flow stability: the consistent ability to generate enough cash from operations to meet obligations.

KPI stands for Key Performance Indicator. A KPI is a measurable value that shows how effectively you’re achieving a specific, high-priority goal. It’s not just “any number you track.” A KPI is the small set of metrics that matter most for steering decisions.

Here’s the difference between three things people often confuse. A KPI is a targeted measure tied to a goal that triggers action. A financial ratio is a standard formula used to analyze financial health and compare performance over time. A report like a P&L is a document showing detailed financial activity. The report often contains the raw data that KPIs and ratios summarize.

Quick Example

Financial health answers the question: “Can we cover payroll and rent next month without panic?”

A KPI might be “Days of cash on hand,” tracked weekly or monthly.

A report like a P&L shows your income and expenses so you can calculate that KPI.

Before you track anything, make sure your team agrees on what the term means. If two people on your leadership team define “utilization” differently, you’ll spend meetings arguing about the wrong things.

Want a simple way to explain KPIs to your team? Create a one-sentence definition for each KPI before you track it.

For more on getting your terms straight, see our guide on [financial health basics (plain-English guide)](/financial-health-and-kpis/financial-health-basics-for-aba-clinics).

Ethics First: KPI Guardrails for ABA Clinics

Before you set any targets, you need guardrails. KPIs are powerful. They shape behavior. If you’re not careful, they can push people toward choices that hurt clients, staff, or your clinic’s integrity.

Here’s the rule: KPIs are alerts and conversation starters. They do not decide care. In healthcare, KPIs guide strategy and monitor quality, but they don’t replace clinical expertise. This is the same principle we apply to AI and other tools—they support clinicians, not replace clinical judgment.

A second rule: KPIs must never pressure staff to deny medically necessary care. And they should never reward documentation that exists just to hit a number. Certain targets can unintentionally encourage staff to document for payment instead of accuracy. If people feel punished for “missing numbers,” you can get unsafe workarounds and even fraud risk.

For dashboards that include client data, follow HIPAA’s Minimum Necessary Standard. Prefer aggregated or de-identified data for broad visibility. Use role-based access so staff only see what they need.

A Quick “Green Light / Red Line” List

Some KPIs support care and stability. Others create pressure that leads to harm.

Green light KPIs reduce delays, errors, and rework. They improve scheduling reliability. They help you see problems early.

Red line KPIs reward cutting authorized services to improve margins. They punish staff for reporting clinical barriers. They push volume over quality.

Before you set targets, write down your red lines. What will you not do to hit a number?

For more on building dashboards that respect privacy, see our guide on [HIPAA-aware KPI dashboard basics](/financial-health-and-kpis/hipaa-aware-kpi-dashboards). To think more deeply about balancing business and clinical priorities, check out [how to keep clinical integrity during business decisions](/ethics/clinical-integrity-in-business-decisions).

How KPI Mistakes Hurt Financial Health (and Team Behavior)

When you track the wrong things or track them badly, you don’t just waste time. You actively harm your clinic.

Wrong KPIs create confusion and wasted work. People spend energy measuring and reporting, but nothing changes. Leaders stop trusting the dashboard. Staff see the numbers as pointless or punitive.

Worse, KPIs can trigger unintended consequences. When a number becomes a target, people optimize the number—sometimes in ways that hurt the mission. This isn’t always malicious. It’s often a rational response to poorly designed incentives.

What “Unintended Consequences” Can Look Like

Staff might chase speed over accuracy to hit a documentation turnaround target. They might hide bad news instead of fixing problems. They might focus on one number while other problems grow unchecked.

Over time, this erodes trust, reduces quality, and can lead to ethical lapses. It also creates cash flow stress. If you’re rewarding the wrong behaviors, you’re probably ignoring the things that actually drive stability.

Pick one KPI you track today and ask: “What behaviors does this reward?” If the answer makes you uncomfortable, that’s a sign to redesign.

For more on building systems that don’t rely on heroics, see our guide on [building systems instead of relying on heroics](/leadership/systems-over-heroics).

The 10 Biggest Financial Health and KPI Mistakes (With Fixes)

Each mistake follows the same structure: what goes wrong, why it hurts, and what to do instead.

Mistake 1: Tracking KPIs That Are Not Tied to Your Goals

Why it hurts. You spend time measuring but don’t change outcomes. People produce reports nobody reads.

Do this instead. Start with one to three goals—stability, access, or quality. Then pick KPIs that directly connect. If you can’t explain the link, don’t track it yet.

Mistake 2: Tracking Too Many KPIs

Why it hurts. Noise hides the signal. Leaders get overwhelmed and stop paying attention.

Do this instead. Keep a small “core dashboard” of three to ten primary KPIs. Keep detailed metrics in the background for deep dives. Your executive-level view should fit on one screen.

Mistake 3: Measuring What’s Easy Instead of What Matters

Why it hurts. Easy numbers can look good while real problems grow. You celebrate metrics that don’t reflect client outcomes or financial stability.

Do this instead. Choose at least one KPI for outcomes, one for operations, and one for financial stability. If a KPI is easy to track but doesn’t drive decisions, reconsider whether it belongs on your core dashboard.

Mistake 4: Over-Relying on One KPI

Why it hurts. Tunnel vision creates blind spots and bad incentives. Optimizing one thing can damage quality, ethics, or staff retention.

Do this instead. Pair each KPI with a “balancing KPI”—a second number that keeps you honest. If you track billable hours, also track staff call-outs or client continuity.

Mistake 5: Setting Unrealistic Targets (Or Changing Them Too Often)

Why it hurts. Staff disengage or start gaming the metric. Trust erodes when goals feel impossible or goalposts keep moving.

Do this instead. Set targets based on your actual baseline. Adjust on a set schedule, not every time someone complains. Use a traffic-light system with clear bands so people know where they stand.

Mistake 6: Incentives That Encourage Gaming or Unethical Choices

Why it hurts. People optimize for the score, not the client or the clinic’s long-term health. You can end up with documentation fraud or shortcuts that harm care.

Do this instead. Reward problem-solving and quality checks, not “perfect numbers.” Run regular internal audits linking claims to documentation and medical necessity. Make it safe to report real issues.

Mistake 7: Messy Data and Unclear Definitions

Why it hurts. Two people “see” two different truths. Meetings turn into arguments about whose spreadsheet is right.

Do this instead. Create a KPI definition sheet for each metric. Include the name, formula, data source, owner, and cadence. Use a single source of truth. Track definition changes in a change log.

For a simple template, see our [KPI definition sheet (simple template)](/financial-health-and-kpis/kpi-definition-sheet).

Mistake 8: Using the Wrong Time Window

Why it hurts. You make big changes based on short-term noise. You compare weeks to months or mix payer groups without realizing it.

Do this instead. Use consistent time windows. Note seasonality or one-time events. If data is missing, label it—don’t guess. Compare like to like: same payer group, same location, same time period.

Mistake 9: No Owner and No Review Meeting

Why it hurts. KPIs turn into “interesting numbers” with no action. Nobody is accountable.

Do this instead. Assign one owner per KPI. Review on a set cadence: weekly for ops, monthly for finance, quarterly for strategy. If your meeting ends with “we should,” add an owner and due date before you end the call.

For more on building a review rhythm, see [how to run a weekly KPI meeting](/financial-health-and-kpis/weekly-leadership-kpi-meeting).

Mistake 10: Tracking Without Decision Rules

Why it hurts. You either panic or ignore the dashboard. The numbers become decorative.

Do this instead. Write simple action rules for red, yellow, and green. Define what triggers each status. Specify the first step when something goes red. Test small changes instead of making sweeping reactions.

Choose two mistakes from this list and fix them first. Small cleanups create big clarity.

Bad KPI vs Good KPI Examples

Seeing examples helps you recognize weak KPIs and rewrite them.

A bad finance KPI is “Increase revenue.” It’s vague and doesn’t tell you what action to take. A better version: “Track cash collected each week and days in AR.” Days in AR measures how fast you get paid. Aim for below 40 days.

A bad operations KPI is “Do more sessions.” It rewards volume without context. A better version: “Track scheduled vs delivered hours and cancellation reasons.” This tells you where breakdowns happen.

A bad documentation KPI is “Get notes done faster.” Speed alone can hurt accuracy. A better version: “Track documentation timeliness plus a quality check rate.”

A bad staffing KPI is “Improve utilization.” Without context, this can push burnout. A better version: “Track billable time plus staff burnout signals like call-outs and client continuity.”

A bad cost KPI is “Reduce costs.” Too broad. A better version: “Track rework errors like claims rejections and staff turnover alongside expenses.”

Good KPIs are clear, controllable, tied to goals, and balanced. Bad KPIs are vague, easy to game, and disconnected from decisions.

For a longer list of starting points, see our [starter list of ABA finance KPIs](/financial-health-and-kpis/aba-finance-kpis-starter-list).

A Short Starter Set: Financial KPIs Leaders Should Track

You don’t need 40 KPIs. You need a small core set that answers the right questions.

Cash stability answers: “Can we cover near-term obligations?” Track days of cash on hand. For smaller clinics, 30 to 90 days is a typical healthy range.

Collections and timing answers: “How fast do we get paid?” Track days in AR. Below 40 days is the goal.

Profitability answers: “Are we sustainably profitable?” Track net margin or contribution margin by service line.

Payroll and staffing costs answers: “Are we staffed in a stable way?” Track payroll as a percentage of revenue and monitor turnover.

Service mix answers: “What services drive or drain capacity?” Track utilization and revenue by service type.

Don’t use any single KPI alone. Pair them. Balance leading indicators with lagging ones.

Start with 6 to 10 total KPIs across finance, operations, staffing, and quality.

For more on cash flow fundamentals, see [cash flow basics for ABA clinics](/financial-health-and-kpis/cash-flow-basics-aba). For margin guidance, see [margin basics (what it means and why it matters)](/financial-health-and-kpis/margin-basics-aba).

KPI Setup Checklist: Build a KPI the Right Way

Here’s a simple process for setting up a KPI that works.

Step one. Name the KPI and the decision it supports. What question does this number answer?

Step two. Define the formula in one line. No gray areas.

Step three. Define the data source. Where does the number come from?

Step four. Pick an owner. One person is accountable for updates.

Step five. Set the review cadence. Weekly, monthly, quarterly. Put it on the calendar.

Step six. Define red, yellow, and green. What triggers each status? What do you do when it’s red?

Step seven. Add one balancing KPI to reduce unintended harm.

Mini “KPI Agreement” Fields

Use these for every KPI you set up. If you can’t fill them out, don’t track it yet.

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KPI name
Why we track it
Formula
Data source
Owner
Review cadence
Action rule when off-track
Ethics check (what we will not do to improve it)

For a one-page version you can print, see [one-page KPI agreement (what to include)](/financial-health-and-kpis/kpi-agreement-one-page).

Review Cadence and Ownership: Running KPI Meetings That Lead to Action

Tracking KPIs is useless if you never discuss them. Here’s how to operationalize your dashboard.

A simple cadence works well: weekly for ops checks, monthly for finance review, quarterly for strategic reset.

Clarify roles. The owner updates the number. The leader facilitates discussion. The team proposes tests and next steps.

Keep meetings focused. What changed? Why? What will we try next? Circulate the dashboard 48 hours before so people come prepared.

A Simple Meeting Agenda

Look at your core KPIs
Call out the one or two that changed most
Ask what caused it
Pick one small test and assign an owner
Set a date to review results

Document decisions and follow-ups. If your meeting ends with “we should,” add an owner and due date before you end the call.

For a deeper guide, see [weekly operating rhythm for ABA clinics](/operations/weekly-ops-rhythm-aba-clinics).

Data Quality Basics: Definitions, Time Windows, and One Source of Truth

Bad data kills good intentions. If your numbers are messy, your decisions will be too.

The same KPI must mean the same thing every time. Write down the definition once. Don’t change the formula without noting it in a change log.

Choose one source of truth for each KPI, even if it’s imperfect. Two competing spreadsheets cause more harm than one flawed but consistent source.

Use consistent time windows. If you compare weekly data one month and monthly data the next, you’ll get confused. If data is missing, label it—don’t guess.

Simple Rules That Prevent Most Confusion

Write down the definition once
Don’t change the formula without noting it
If data is missing, label it
Compare like to like
Make one person responsible for each KPI’s definition and change log

For more on keeping your data clean, see [data hygiene for KPIs (simple rules)](/financial-health-and-kpis/data-hygiene-for-kpis).

A Quick Self-Audit: Are Your KPIs Helping or Hurting?

Here’s a fast diagnostic you can do today. Run through these yes-or-no questions for each KPI:

Can we define it in one sentence?
Do two people get the same number?
Do we review it on a schedule?
Do we know what we’ll do when it drops?
Do we have a balancing KPI?
Could this KPI pressure unethical behavior?
Is client privacy protected in how we share it?
Is it tied to a real goal?
Do we track too many KPIs for the time we have?
Have we kept the same definition for at least one cycle?

If you answer “no” to several, you’ve found your starting point. Pick one or two KPIs to retire or rewrite. Do a full audit at least annually or when your strategy changes.

For a step-by-step cleanup process, see our [KPI cleanup playbook (what to fix first)](/financial-health-and-kpis/kpi-cleanup-playbook).

Frequently Asked Questions

What is the difference between financial health and KPIs?

Financial health is stability over time—you can pay your bills, withstand payment delays, and fund growth without emergency measures. KPIs are the numbers you track to see if you’re on track. KPIs are tools. Financial health is the outcome you’re protecting.

How many KPIs should an ABA clinic track?

A good target is 3 to 10 primary KPIs on your executive dashboard. Keep additional metrics in the background for deeper analysis. Match your KPI count to your available review time.

What are examples of bad KPIs versus good KPIs?

Bad KPIs are vague, easy to game, not tied to decisions, and have no owner. “Increase revenue” is a bad KPI. Good KPIs have a clear formula, consistent data source, connection to a goal, and an action rule. “Days in AR below 40 days” is better.

How do KPIs create unintended consequences?

People change behavior to match what’s measured. Common harm patterns include tunnel vision, gaming the numbers, and hiding bad news. Balancing KPIs and ethics guardrails reduce harm.

How often should we review financial KPIs?

A simple rhythm: weekly for ops, monthly for finance, quarterly for strategy. Consistent cadence matters more than perfection.

What should a KPI “definition agreement” include?

Include the name, purpose, formula, data source, owner, cadence, and action rule. For ABA settings, add an ethics check field. Keep it to one page.

Can we use KPIs without risking ethics or clinical quality?

Yes, if you set guardrails and keep human oversight. Never pressure staff to deny necessary care. Never create incentives for unethical billing. Protect client privacy on dashboards. KPIs inform decisions—they don’t replace clinical judgment.

Conclusion

Financial health and KPIs are not complicated concepts. But they’re easy to misuse. When you track the wrong things, define them poorly, or skip the ethics conversation, you create confusion and push your team toward choices that hurt clients and staff.

The fix is simpler than you might think. Start with clear definitions. Set ethical guardrails before you set targets. Pick a small number of KPIs tied to real goals. Assign owners. Review on a schedule. Write down what you’ll do when something goes red.

Most importantly, remember that KPIs are tools. They serve your mission—they don’t define it. Your clients deserve a stable clinic run by leaders who track what matters and make decisions with integrity.