Today, it’s critical to measure the results of your practice using key performance indicators to determine areas for improvement. Discovering such areas and implementing a solution can lead to an immediate increase in the profitability of your practice. This article discusses key performance indicators that can be used to determine where areas for improvement lie.
Self-Pay Days on Accounts Receivables Over 60 Days – This is an indicator of how long it takes your practice to collect accounts receivable from your patients, ultimately affecting your practice’s cash flow. If your practice’s self-pay days on accounts receivable over 60 are significant, it may be time to reevaluate how you’re going to collect balances from your patients. Are you just sending invoices or does your practice have a strategic follow-up system that includes sending letters and phone calls? Having a defined credit plan and a process for collecting such balances will keep this number to a minimum. This analysis will become more important as consumer-directed health plans gain popularity among employers.
Claim Denial Rate – This metric is an indicator of your effectiveness in preventing denials, negotiating refunds, monitoring payer behavior, and training staff. Simply put, the higher this rate, the more money your practice will lose on a daily basis and it may be time to investigate the root cause of your claim denials. Providing initial training to staff and tracking the cause of your denials can reduce this number.
Encounters Per Hour: Measures the efficiency of your practice in terms of whether the schedule is complete. Opening in your schedule means that your practice is not earning any income during that time period. Excessive scheduling can be just as detrimental to your practice because it can cause patients to spend too much time in the waiting room. Analysis of your current schedule can determine if you need to add another doctor to your practice or change your practice hours.
Patient Turn – This is basically a measure of the time period between when a patient walks in the door, checks in, is seen by the doctor, and leaves. The main complaint of patients, decade after decade, is not attended to promptly. A reasonable performance goal might be to see patients within 20 minutes of their appointment time. If your practice isn’t achieving this goal, you may want to consider mailing your new patient registration forms before they visit your office so everyone is ahead of the game when the patient arrives.
Employee turnover – While this measure may be more difficult to analyze quantitatively, it is certainly worth looking into. Since your office staff is so critical to the success of your practice, it is imperative that you monitor employee turnover. Incentives can be implemented that reward your staff for keeping claim denials low and tracking denied claims and past due patient balances. Adequate training must be provided to your staff so that they are competent and can perform their daily tasks accordingly.
Budget to Actual Review – While this may seem obvious, it is often overlooked. Reviewing your actual monthly income and expenses to your budgeted numbers can tell you where your practice is financially positioned. This is a high-level review that must be done after each month-end close. Not only will it let you know the financial position of your practice, but it can also alert you to suspicious activity by your employees. While no business owner likes to think that one of their employees will commit fraud, it is essential that certain internal controls are in place to mitigate such activity. You can even take it to the next level and compare your numbers to other practices in your specialty.
The right set of KPIs can transform your practice. It’s worth your effort to find them and constantly check them to see where your practice stands. Doing so can be the difference between taking your practice to the next level or achieving the same results over and over again.