From the June 2016 issue of HealthCare Business News magazine
You can’t manage what you can’t measure. If you want to improve cost effectiveness and efficiency at your practice, you should track and report financial and performance data on a regular basis. Do you know the key performance indicators (KPIs) for your practice? Are you tracking them consistently? And are you using that data to make better decisions?
If you answered no or aren’t sure about any of those questions, you have some work to do. A good place to start is by looking at a few key metrics that have the greatest impact on the health of your practice. Those metrics may include:
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• Profitability indicators: operating margin, total margin.
• Revenue cycle indicators: gross charges, receipts, unpaid claims, low-paid claims, denied claims, denial rate per payer and per provider, clean claim rate, A/R aging, ratio of claims collected to fees incurred, timely submission of charges.
• Cost indicators: salaries to net patient revenue, overhead expenses as percentages of revenues.
• Liquidity indicators: current ratio, outstanding A/R, days of cash on hand.
• Productivity indicators: patient volume per provider and per office, number of procedures per provider and per office.
One of the most effective methods for improving efficiency and productivity is to perform a workflow analysis. A workflow analysis can help you to visualize key processes within your practice by mapping out in detail each step of the process, including who does what. You may want to focus on processes within common pain-point areas such as the billing cycle and the patient visit.
Armed with data and a better understanding of your expenses and internal processes, you can make more informed decisions and identify specific opportunities to improve cost efficiency and effectiveness. You may discover opportunities to adjust staffing, renegotiate contracts, change purchasing patterns, streamline administrative tasks, automate processes or make other changes to boost efficiency and productivity while containing costs.
About the author: Kevin N. Fine, MHA, is a director of health care advisory services in the Miami office of Kaufman Rossin, one of the top 50 CPA and advisory firms in the U.S.Back to HCB News