Today, it’s critical to measure your practice’s results against key performance indicators to identify areas for improvement. Identifying such areas and implementing a solution can result in an immediate increase in your practice’s profitability. This article discusses key performance indicators that can be used to identify where your areas of improvement lie.
Self-Pay Days in A/R over 60 days – This is an indicator of how long it takes your practice to collect your patient receivables, ultimately affecting your practice’s cash flow. If your practice’s self-pay days in A/R over 60 are significant, it may be time to re-evaluate how you accumulate your patient credits. Do you only send out bills, or does your practice have a strategic follow-up system that includes sending letters and answering phone calls? A defined credit schedule and procedure for collecting such balances keeps this number to a minimum. This analysis is becoming increasingly important as consumer-focused health plans become more popular with employers.
Claim Denial Rate – This metric is an indicator of your effectiveness in preventing denials, negotiating refunds, monitoring payment history, and training staff. Simply put, the higher this rate, the more money your practice is losing on a daily basis, and it may be time to investigate the cause of your claim denials. By providing up-front training for staff and tracking the root cause of your rejections, this number can be reduced.
Encounters per Hour – This measures the efficiency of your practice in terms of whether scheduling is full. Openings in your schedule mean that your practice will not generate any revenue for that period. Overscheduling can be just as detrimental to your practice as it can result in patients spending too much time in the waiting room. By analyzing your current schedule, it can be determined if you need to add another doctor to your practice or change your office hours.
Patient Turn Around – This is basically a measure of the time frame between a patient walking through the door, being checked in, being examined by the doctor and being checked out. The most common patient complaint, decade after decade, is not seen immediately. A reasonable performance goal might be to see patients within 20 minutes of the appointment. If your practice is not meeting this goal, consider mailing out registration forms for your new patients before they visit your practice so everyone is in the game when the patient arrives.
Employee Turnover – Although this metric is more difficult to analyze quantitatively, it is definitely worth looking at. Because your office staff is so critical to the success of your practice, it is imperative that you monitor staff turnover. Incentives can be created to reward your staff for minimizing claim denials and following up on denied claims and overdue patient balances. Your employees should be adequately trained so that they are competent and able to carry out their day-to-day duties appropriately.
Budget-to-actual review – While this may seem obvious, it’s often overlooked. Checking your monthly actual expenses and income against your budgeted numbers can let you know where your practice is financially. This is a high-level review that should be performed after each month-end close. Not only does it show you where your practice stands financially, but it can also alert you to suspicious activity by your staff. While no business owner likes to think that one of their employees would commit fraud, it is important that certain internal controls are in place to curb such activity. You can even take it to the next level and compare your numbers to other practices in your area of expertise.
The right key performance indicators can transform your practice. It pays to find them and keep checking back to see where your practice stands. This can make the difference between taking your practice to the next level or getting the same results over and over again.