With a typical day packed with new consults, procedures and patient follow-ups, it is no surprise that most physicians have little time to focus on the details of running a successful vein practice. Understanding your KPIs and comparing them to previous months, enables you to make strategic decisions and plan for the future. Introducing operational analytics into your practice will usually result in improved efficiency, profitability, and yield better results across your entire practice. Choosing what to measure and what to report is as important as deciding to start tracking KPIs in the first place.
This article will help you look at the big picture and quickly identify signs of trouble. I have spent the better part of my career helping physicians understand the Key Performance Indicators that they should be looking at, as well as understanding what actions, when implemented, will bring a defined resolution. Understanding that every practice is unique, this article will provide a brief explanation of performance indicators that every physician should be looking at.
The list of KPIs worth analyzing and observing can seem endless, so the key is to start with a set of indicators that will have the greatest impact on your practice. Develop your list of indicators based on your unique challenges, opportunities and strategic goals.
Start With The Basics… KPIs to be monitored and reviewed frequently — on a daily, weekly or monthly basis. Take the time to incorporate historical data for comparison.
- Month-End Reporting. It is important to review each prior month’s performance and examine any indicators that affect your current or future position. You should receive practice performance reports from your office manager each month, within (5) days of the month-end close. These reports should be reviewed with the office manager upon receipt. At a minimum, the reports should include monthly and year-to-date production activity (charges, receipts and adjustments by provider, by CPT code), payer and patient accounts receivable A/R, overhead analysis, marketing analytics, and a summary of patients referred by key referral physicians.
- Daily Charges. Daily charges – the total value of all services provided by your office each day are important. Here’s what you should track: a) The total dollar amount associated with services each day; b) The total amount billed each day; and c) The total amount collected each day.
- Days in AR. Days in AR is the average number of days it takes for your office to be paid for services. This measurement is also known as AR Days. A low AR days measurement means cash flow is consistent. If your AR days start trending up, expect a reduction in cashflow in the near future.
- Denials by Category. If you don’t track information about your claim denials, it’s almost impossible to improve your billing process. Tracking claim denials by reason codes lets you see where your office is making similar mistakes repeatedly. If you’re seeing denials for uninsured patients, you need to improve your insurance verification process. Numerous denials for timely filing could mean your billing department is understaffed or is unorganized. Review claims denials monthly to identify areas for improvement.
- Cash Receipts: Revenue is what feeds your practice, so payer and patient payments should be monitored daily. Fluctuations in charges should also be watched closely, as this directly correlates with fluctuations in receipts. Have your office manager prepare for you spreadsheets or graphs that show you the numbers and trends of Charges, Contractual Adjustments, Receipts and Outstanding Accounts Receivable (Payer & Patient Balances). When you see a sudden increase or decrease that is not predictable based upon historical benchmarks, take a closer look. A sudden increase in adjustments could be an indication that your A/R is not being followed-up or balances are being written off rather than worked. If payer balances are shifting into the 60+ day aging, staff may be focused on other areas of the practice or perhaps one of your payers has become delinquent. Payers frequently deny claims initially knowing that many are never resubmitted by small practices, despite the fact that 70-80% of appealed claims eventually get paid. Be proactive and get what you deserve!
- Accounts Payable: A practice can’t operate without overhead; therefore, having knowledge of your unpaid invoices, when they are due and how much cash is readily available to pay those expenses, is critical. Monitoring your unpaid expenses weekly allows you to determine the cashflow of the practice and helps you ensure that you have enough cashflow to cover expenses. If overhead percentages are increasing and revenue is decreasing, it’s a possible indicator of poor financial management and/or decreasing provider productivity. Start by reviewing prior monthly, quarterly or annual financial statements to identify contributing factors to this trend. A more detailed overview of the entire practice will require the assistance of your accountant or a practice management consultant.
- Patient Visits. Historical patient data is usually a strong predictor about the number of patients you can expect to treat each month in your practice, both new and established. If the number of visits is dropping, you will want to know why and whether the drop is from PCP referrals or self-directed patients. A decline can be a sign of scheduling inefficiency, poor office management, a reduction in marketing activities, or attrition due to poor patient satisfaction. It may also be an indication that patient volume is greater than you are able to schedule in a timely manner and patients are looking elsewhere for treatment.
- Wait Time. This measurement is a reflection of your commitment to patient satisfaction. No one likes to wait and it’s your job to ensure patient wait times are no greater than 5-10 minutes of their scheduled appointment times.
- No Shows and Patient Cancellations: This indicator allows you to determine opportunities to improve capacity management, optimize your schedule and reduce missed opportunities. Frequent no-shows can cost your vein practice a tremendous amount of money. Calling or texting patients with an appointment reminder the day before or day of the appointment, as well as improving your appointment scheduling templates, is an investment that pays off. Most practices find that a well thought out strategy for patient reminders helps cement the patient’s commitment to keep the appointment. An automated system can reduce no shows by as much as 40-45%. The cost to automate is easily recuperated when there are fewer holes in the schedule.
- Payroll Costs. If overtime costs are suddenly rising, your office manager needs to explain to you why. Examine the hourly wages for each position to be sure they are in line with your wage scales. 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 less likely to be productive. If day-to-day activities in the practice are business as usual, overtime hours should be stable and predictable. Sudden increases in overtime can identify absenteeism or staffing issues, which in itself can be an indication of a bigger problem.
- Unhappy Patients or Low Staff Morale. When patients start to complain about how they are treated by staff or their inability to schedule appointments within a reasonable timeframe, it is time to start asking questions. If you have employees with “attitude”, perhaps it is coming from yourself or the office manager? Staff will generally emulate the attitude and behavior that they are experiencing. A frequent cause of low staff morale is their feeling of being overworked and underpaid. A high rate of staff turnover increases their workload, frequently without additional compensation. If you are experiencing high staff turnover, something is wrong within your office. It could be unrealistic expectations, poor management or an inability to develop an atmosphere where people feel important and are proud of their accomplishments.
In less than four hours a month, a physician and their office manager can review practice performance reports and make data-driven decisions that are prudent for the over-all stability and growth of your practice. If you aren’t doing this now, it’s time to get started. If you are experiencing signs of trouble, start investigating the causes now. Begin by working with your office manager, they should be able to provide insight and may help you understand the reason for the problems. However, if the problems seem to require more aggressive action, you may want to turn to outside advisors.
You can obtain an unbiased report of the practice performance by hiring a practice management consultant to conduct a practice assessment. The consultant will look at major aspects of the practice by reviewing reports, conducting an on-site assessment and examining systems, procedures and the culture of the practice. The costs will vary, depending on whom you hire and how extensive a survey is conducted. Such an assessment provides an excellent base line to guide you in setting and achieving benchmarks for improvement.