The Vital Signs of Your Practice: Choose and Use the Right Key Performance Indicators
In the age of big data, it is possible to measure anything and everything, ranging from the number of patients per day to the amount of time spent on phone calls. So, what should your medical practice measure?
Pick Your Data Points
While measurements and potential improvements are limited only by your imagination, it is easy to fall prey to information overload. Pick your data points carefully. Here are some common, practice-related key performance indicators (KPIs):
This involves charges for patient visits and ancillary services before any discounts or contractual allowances.
How much the practice actually received, compared with how much you actually billed.
Total Patient Visits
Tracking how many patients come in for appointments weekly, monthly, quarterly and annually is especially important to track year to year. Look for trends related to your marketing efforts or other factors, such as seasonal changes.
Missed appointments are very costly and procedures should be in place to minimize their occurrence to the extent possible. Most scheduling systems should have the ability to track missed appointments. To calculate your no-show rate, simply divide the number of missed appointments by the total number of patient visits scheduled.
Days in Accounts Receivable (AR)
This is monies owed the practice, which is also a measure of how long claims are overdue. Typically, the most useful metric is how many “days in AR” accounts remain — or the average number of days it takes for payments to arrive. There are specific best-practice metrics for AR, but a rule of thumb is that claims that remain unpaid for more than 90 days should be less than 20% of the practice’s total AR.
Per Visit Value (PVV)
Sometimes called revenue per visit, PVV is how much money the practice receives per visit. This is calculated by dividing the collections by total patient visits. It underlines how each provider in a practice is doing compared with others on clinical protocols and services utilization.
Net Collection Ratio
This is collections divided by the sum of production less contractual obligations. A healthy practice typically has a net collection ratio of greater than 93%.
First-Pass Denial Rate
This indicates what percentage of claims are billed correctly. A healthy practice has a first-pass denial rate of less than 5%.
Of course, collecting data and doing nothing with it is a waste of time and energy. Use your KPIs to track trends — weekly, monthly, quarterly and yearly.
A trend can indicate where there is a problem so the practice can fix it before it becomes a major issue. Keep in mind that some trends are seasonal, and events such as flu season and weather need to be taken into account. Also, do not just look internally. Benchmark your KPI trendlines against similar practices in your area.
Visit “Using KPIs as Your Ticket to Growth” for more information.
Create an action plan
Every industry, including health care, has been affected by the heightened capabilities of data collection and analysis. Choose your KPIs carefully and create an action plan for using the data to increase profits and patient satisfaction.
For more information, contact Jason Flahive at firstname.lastname@example.org, or call him at 312.670.7444. Visit ORBA.com to learn more about our Health Care Group.