Calling all medical practice owners.
Do you want to increase your revenue, streamline scheduling processes, and enhance patient loyalty? I’ll assume that you do.
Every organization has key performance indicators (KPIs), i.e., numbers you monitor that tell you how well your business is meeting objectives and goals. In the healthcare industry, these range from basic financial numbers to complex statistics generated by medical lab software.
These values help you identify problem areas in your medical practice, as well as track improvements and set new goals. There are hundreds of KPIs that you can and should track, but some are more relevant than others.
Here are three often ignored KPIs that your medical practice should be monitoring, but may not be.
1. Net Collections Rate
Revenue cycle KPIs are essential for understanding the health of your practice. But according to Becker’s Healthcare, too many healthcare professionals only track what they bill.
Unfortunately, not every bill gets paid. Tracking the actual dollar amount that your practice receives keeps you abreast of your billing practice’s health and growth.
There are a couple ways to measure what you’re taking in. The “Gross Collections Rate” tells you the percentage you collected of what you billed. However, this doesn’t tell you how much you collected of the total that you were owed.
If you want a more accurate measurement of your financial state, you should measure your Net Collections Rate instead. This number excludes write-offs from the payments you receive and shows you the percentage of total potential reimbursement collected out of total allowed amount.
There are several ways to calculate this but the most common is as follows:
(payments – credits) / (charges – contractual adjustments)
The allowable amount includes payments from both the payer and insurance companies, so make sure to collect from both of these sources.
One hundred percent is obviously ideal, but the range for a healthy practice usually falls from 96 to 98%.
What to do
- Regularly calculate and monitor your Net Collection Rate to get a better idea of your performance over time.
- If your rate is lower than 96%, evaluate your medical billing process to identify areas for improvement.
2. Overtime trends
Overtime is a huge expense for medical practices. And too much overtime has a human cost as well as a financial one.
When healthcare professionals, especially nurses, are fatigued, the quality of their work suffers. Studies show that patient mortality rates are higher when nurses work too many hours. Further, if nurses are too tired to give patients proper discharge instructions, readmission increases.
However, with careful evaluation, you can reduce overtime. By tracking the number of overtime hours your employees are working, you can figure out whether you can reduce them or schedule them more efficiently.
Under the Fair Labor Standards Act (FLSA), you are required to pay employees who work more than 40 hours per week overtime pay of at least 1.5 times the normal rate, unless they are exempt from overtime pay. Make sure you know which of your employees are exempt from overtime pay and factor this in when scheduling hours.
What to do
- Track your overtime hours.
- Know which of your employees qualify for the overtime exemption.
- Evaluate your overtime policy to make sure you aren’t over-scheduling.
- Hold employees accountable for documenting their hours.
- Require prior approval for all overtime requests.
3. Missed appointments and no-show rates
Four missed appointments a day can cost a practice up to $150,000 a year per physician. So, it’s worthwhile to spend time evaluating your appointment scheduling process and system to avoid huge losses such as these.
To calculate your no-show rate, simply divide the number of missed appointments by the total number of patients scheduled. Certain medical scheduling systems offer no-show tracking, along with other features to mitigate this issue, such as automated reminders.
Elizabeth Woodcock, an Atlanta-based healthcare consultant, says, “I generally recommend texting two hours before an appointment. It’s not the only reminder that you should do, but it’s a great supplemental tool.”
Engage your patients by including them in the scheduling process. Ask them what days work best for them, and if they do miss an appointment, follow up and find out why.
Many practices also charge a fee for missed appointments, but Woodcock says, “I am not a believer in charging [patients] the first time.” She suggests sending a warning letter after the first time and then charging if they miss another appointment.
What to do
- Re-evaluate your scheduling patterns, and brainstorm ways to improve patient loyalty.
- Test different times, intervals, and methods of appointment reminders.
- When scheduling appointments, ask patients what days and times work best for them.
- Follow up with no-shows and find out how you can avoid it in the future.
How do you measure performance?
Monitoring these three KPIs could ultimately make your medical practice more profitable, efficient, and patient-oriented.
What are some other important KPIs that you use to improve your practice? Tell us in the comments below.