There are a lot of people offering key performance indicators (KPIs) or healthcare metrics for the healthcare industry. If you are a physician or medical group, should you consider developing a system of KPIs? Should you invest in a system of important healthcare KPIs proposed by an outside consultant?
In this Article …
What are key performance indicators in healthcare?
Investopedia defines key performance indicators as “a set of quantifiable measurements used to gauge a company’s overall long-term performance.” Performance indicators include financial metrics such as net profit margin and revenue cycle performance metrics. They often include KPIs that are related to operational efficiency such as staff-to-patient ratio and patient satisfaction.
In the healthcare industry, there are also healthcare metrics related to patient outcomes and patient safety that can be monitored.
Healthcare provider organizations, particularly those larger organizations with professional management, have long used many important healthcare KPIs to monitor important aspects of organizational performance. But medical practices, even large groups, have been slower to adopt healthcare KPIs.
Performance Indicators that Indicate Financial Health
There are an abundance of KPIs that provide vital information about financial health. Medical practices, outpatient clinics, and any healthcare organization can greatly benefit from monitoring financial KPIs in order to assess their performance and identify areas for improvement.
- Accounts receivable is one of the most important aspects of the revenue cycle. In many practices, the total amount of accounts receivable is monitored, but that tells only part of the story. The real performance indicator is the average days revenue in accounts receivable – the average number of days it takes to collect payments due to the practice. Benchmarks for this healthcare KPI range from a low of 30 days for a high-performing medical billing department to over 60 days for a below-average medical billing department. And an excellent way to decrease accounts receivable and increase cash flow is to collect patient responsibility payments at the time of service whenever possible.
- Monitoring average cash flow is also a useful healthcare KPI. Simply calculating the average daily cash flow over the past 6 months and comparing it to cash flow in the most recent week can be another indication of the effectiveness of the revenue cycle.
- Of course, profitability is also an important healthcare KPI. Profitability can be measured in a couple of ways, using benchmarks available from a healthcare organization like the Medical Group Management Association (MGMA). For instance, the MGMA publishes data on compensation as a percentage of collections. You can benchmark your own compensation as a percentage of your patient collections by specialty. You can also benchmark performance indicators like average staff members per healthcare provider, and average non-physician practice costs per healthcare professional.
Performance Indicators for Operational Efficiency
Healthcare organizations can benefit greatly from monitoring operational efficiency-related KPIs. Doing so can help to ensure that operations remain efficient, that patients have a good experience, and that staff is adequately meeting the needs of their job functions. There are several KPIs for operational efficiency in a medical practice, and some of them can apply to any healthcare organization that has direct patient encounters.
- Average patient wait time is a healthcare KPI that directly affects patient satisfaction. As a matter of fact, according to Issuetrak, a company that provides complaint management software, patient wait time is the number two complaint about visiting the doctor’s office. Fortunately, patient wait time is an easy metric to capture with an electronic health records (EHR) system. Usually, an EHR system will have the capability to record the time the patient arrives in the waiting room, and the time the patient is placed in an exam room. Developing a key performance metric by computing waiting time averages for each patient’s arrival will help to monitor this component of patient satisfaction. Average patient wait time can also be reduced by increasing the exam room turnover rate.
- A low claims denial rate is also an excellent healthcare KPI. Denials of insurance claims are the bane of relevant departments everywhere. Denials occur for a number of reasons, so the first strategy is to avoid them. Understanding and following guidelines like the Centers for Medicare and Medicaid (CMS) Correct Coding Initiative are part of the keys to a low claims denial rate. Again, mine the patient data in your medical billing system to establish an average claims denial rate, and track this healthcare metric over time.
- A third performance indicator of efficiency is the number of days spent initially processing insurance claims. The average length of time between the date of service and the date a claim is submitted can be a significant portion of the days in accounts receivable. Again, electronic record systems can make completion of medical records easier so claims can be submitted much more efficiently.
Performance Indicators for Patient Care
Medical practices can benefit significantly from monitoring KPIs related to patient care. By tracking these important metrics, healthcare providers can gain valuable insights into the patient experience and make necessary adjustments to improve their overall care. In addition, by monitoring KPIs related to patient outcomes and safety, healthcare providers can identify areas for improvement that can lead to better patient outcomes. There are healthcare KPIs for patient care services that can be found in a number of sources.
- CMS maintains an inventory of electronic clinical quality measures(eCQMs) covering a range of topics that practices with an EHR system can measure. Topics range from depression screening to immunizations to assessment and treatment for many chronic and common conditions.
- Some types of patient outcomes can be tracked as individual events. These include patient safety (falls, medication errors) and unauthorized disclosures of protected health information. They also include misidentified patients which result in erroneous EHR entries.
- Social media ratings and comments can also be a source of patient complaints to be evaluated. Patients are not shy about commenting on the services delivered by healthcare providers these days. It can be surprising how fast patients post comments on their overall patient satisfaction with their healthcare professionals.
- Many healthcare systems and healthcare organizations also offer electronic patient satisfaction surveys that are a healthcare metric on performance of the practice.
Should You Invest in Healthcare Metrics for Your Practice or Medical Facility?
Well, in fact, you probably already try to monitor some healthcare KPIs in your practice. You watch your accounts receivable and your cash flow. You look for indications of growth in the number of patients seen and overall labor costs. You are sensitive to comments and complaints from patients. It is not a big step to organize this information more formally and to take the time to review it with your partners, other health professionals, and your support staff. It can only help you deliver quality care – a goal shared by everyone!