Best Practices: Use Key Performance Indicators to Manage Your Medical Billing and Practice Profitability
In these trying times, physicians and practice managers are concerned about the impact of the nation's economics and the effect it will have on their practices. It's important for physicians and managers to examine specific Key Performance Indicators, KPIs, to monitor practice performance. This will help management and physicians understand the practice’s position and identify irregularities, and guide future decisions. Medicine is a business and it's time to take this seriously.
There are two industry sources typically used to compare practice performance. First, compare your statistics from year to year. For example, is practice operating expense stable or is it spiraling upward each year? The second comparison is to examine industry standards for your specialty. The Medical Group Management Association (Annual Cost Survey) and the National Society of Certified Healthcare Business Consultants (Annual Statistics) both track statistics on key performance indicators by specialty. MGMA reports a broader range of indicators, but NSCHBC has a larger sample size for each specialty and provides geographic breakdowns. Some specialty societies are beginning to track statistics for their members as well, so check with organizations your practice is affiliated with to see if they have useful performance information.
Here are a few basic KPIs to look at each month:
- Income and itemized expenses as a total percentage of income. This will tell you where the money goes. The highest expense is likely to be staffing costs. Staffing costs are inching upward toward an all time high of nearly 30% for primary care physicians. This is staggering, and managing these costs is essential to improving the bottom line. To dig deeper, examine the variable salary rates for each position to be sure they are in line. You’ll also want to look at overtime trends. Remember, when people work overtime you are paying a premium pay rate for the hours they are tired and likely to be less productive. Monitoring the top five expenses will give you a better understanding of expenses and ways to manage them.
- Productivity reports are included in the month-end management reports typically produced by the practice management system and reveal the total charges, receipts and adjustments for the practice and should also compare each physician's individual production. Keep an eye on fluctuations that need to be explained. Sure, one doc's charges will be down if on vacation or ill, but otherwise start looking for a reasonable explanation for an unusual variation in production. If adjustments are climbing, dig to be sure staff understands legitimate insurance adjustments and fights for your money when insurance plans make errors. Industry expert Healthcare Business Advisors states that 30% of claims in the US are denied and of that 15% are never resubmitted, despite the fact that 70-80% of appealed claims eventually get paid. Be proactive and get what you deserve!
- Patient visits. It’s smart to get information about the number of patients a typical physician in your specialty sees in a year, both new and established, and compare to the physicians within your practice. If the number of visits is slipping for some of the providers, you will want to know why and whether the slippage is due to new patients or established patients. It can be a sign of inefficiency, a mismanaged schedule or attrition due to poor service.
- Accounts receivable reports follow money that is owed to the practice. An acceptable standard would be for the total accounts receivable to equal 1.5 to 2.5 months' worth of charges and for the amount on the books that is more than 90 days aged to be in the 15% range. Of course, there are variables depending on your specialty. Most insurance companies will process clean claims within 30 days, so if you aren’t getting paid it may be due to errors that result in claims rejection and, perhaps, not being timely in correcting the claim and taking action to be sure such errors are not repeated. A well-trained staff that is held accountable to a set standard is the best way to improve performance.
- Missed appointments cost the practice plenty, so track them. More than one or two a day is not okay. Four missed appointments a day are projected to be a loss of more than $150,000 a year per physician. You can't afford to miss out on that kind of revenue. Improving your scheduling patterns and philosophy is an investment that pays off! Most practices find that a well-thought-out script for patient reminders helps cement the patient’s commitment to keep the appointment and automated systems reduce the missed rate by as much as 20-25%. The cost of the automated system and the staff time it saves is easily recuperated when there are fewer holes in the schedule.
- Access. It is important to keep an eye on how long patients wait to get an appointment. This is simple to track by just looking at when the next available appointment is. Don't look at the first appointment, which is likely due to a cancellation. Instead, look at the third available appointment out. If it's more that 10 days, access is an issue. Poor access compromises service and patient compliance. It can also be a cause for missed appointments. If patients are scheduled 10 days out they are likely to get better, go to another physician or forget the appointment altogether – this isn’t good for the patient and it certainly isn’t good for the practice.
- Wait time. This KPI is a reflection of your customer service. No one likes to wait and it’s your job to ensure waits are reasonable. External companies are monitoring the wait times on medical practices based on feedback from the patients.
- Mind your Ps and Qs. Social media is opening doors of communication for patients to spread the word and let the world know how they feel about you and the service you provide. There is an explosion of available information available for people to form an opinion when searching for new physicians. Check out how you rate at www.vital.com and www.healthgrades.com. I was recently checking out a physician and this is what I read: "Horrible and stomping around the room 'Your case is too complicated for me' & he never gave me a diagnosis - refused my request for his notes & said if I contact him again he will file a restraining order!!!!!!" That’s enough to scare off potential patients. Other tracking sites include www.angi.com and www.yelp.com, just to name a few. Seems professionals are now falling under a broad microscope and people can form opinions based on what they read rather than their own personal experiences. This is a new level of accountability that should influence medical practices to assign a KPI for patient satisfaction and to begin conducting their own surveys. This has become simpler and more cost effective through automated services like Survey Monkey and Zoomerang.
Key performance indicators provide tools to improving the way medical practices do business, help them serve their patients better and run a more efficient organization, resulting in improved accountability and a better bottom-line.