You Can’t Manage What You Don’t Measure: 5 KPIs to Drive Revenue
“You can’t manage what you don’t measure.” It’s a tried and tested mantra – and one that everyone in a management position should take to heart. That said, if you’re one of the many healthcare industry managers who isn’t yet successfully measuring your data, not to worry. You’ve come to the right place. Read on to learn the five simple metrics that, when collected and analyzed correctly, can streamline your practice management and improve your bottom line.
Every department of your practice operations should have Key Performance Indicators (KPIs) established to ensure financial and operational efficiencies. These KPIs in practice management generally fall into three main categories: revenue drivers, financial performance, and clinical performance. In this article, we focus primarily on revenue drivers, which are – quite literally – the things that “drive your revenue.” They’re the inputs or variables your revenue model is based on. (Revenue Drivers: A Guide For Startups, 2021). Below are the revenue drivers you should start measuring today.
- Slot Utilization
Slot utilization refers to how many slots your practice has available for patient visits during a specific period of time and how many are booked. A 2004 article in the AAFP cites that, “A fill rate higher than 95 percent (for example, during flu season) may indicate a high level of staff stress and patient-access problems. If the fill rate is much lower than 90 percent, too few patient visits or too many missed appointments may be negatively affecting the practice’s bottom line.”
Many practice management systems utilize a scheduling component where you can run reports to view how many slots a provider has filled and how many are open. Knowing this information can help you predict any revenue shortfalls and helps you to understand underutilized providers.
- No Shows
“No-shows occur when a patient fails to attend a scheduled appointment with no prior notification to the healthcare provider. They are missed healthcare utilized time slots and resources that can negatively affect the utilization of space and human resources.” (Dounia Marbouh, 2020)
Simply put, this metric measures how many patients were scheduled for an appointment and did not show. Many practice management systems also offer a report that can provide this information. Knowing this value drives several opportunities for remediation. Are you utilizing an appointment reminder system? Should you be double booking some appointments to account for no shows? In your quest to ensure each patient has a follow up scheduled during checkout, are you booking appointments too far out?
- Provider Hours Worked
Providers are the individuals who produce the revenue that makes your practice run. If you are not tracking how many hours are being worked, you can’t accurately predict potential negative impacts on revenue. There are certain high vacation months or months with several holidays and corresponding time off, so your budget should be built to expect lower revenues during these times. This also means understanding an average of expected revenue per hour of worked time that your providers produce.
- Top 10 CPT Billed Per Month
It is important for every practice to understand what their trends are in billed CPT work, whether it is E and M codes or surgical codes. This helps you identify any potential positive or negative impacts to revenue expected over the next 30-120 days. Having a working knowledge of how much of your revenue is tied to these codes also helps you easily identify the impact that any coding or reimbursement changes may have on your practice and provides ample time for you and the practice to prepare for changes.
- Relative Value Units
Relative Value Units (RVUs) are the basic component of the Resource-Based Relative Value Scale (RBRVS), which is a methodology used by the Centers for Medicare & Medicaid Services (CMS) and private payers to determine physician payment. The RVU is comprised of three components: the work RVU (wRVU), practice expense RVU and malpractice RVU.
As a component of the RVU, the wRVU is a numerical value for each CPT code that is based upon the technical skill, physical effort, mental effort and judgement, stress related to patient risk, and the amount of time required to perform the service or procedure. This is a uniform number that can be used to benchmark production across multiple platforms and geographies. The wRVUs for a 99214 are identical across specialties and areas of the country.
Understanding the RVUs or wRVUs that each provider and the practice is producing is very much akin to monitoring hours worked and CPTs billed. Since the RVUs and wRVUs are a standardized numerical value for each billed code, they can be utilized to create comparisons to other practices and providers. You can also create internal comparisons based upon revenue per wRVU or RVU or, similarly, expenses per wRVU or RVU. This can help your practice determine trends between providers and service locations.
Now that you know what revenue drivers to measure, you may be wondering how to manage them.
Once you identify what you will measure, it is equally as important to know what you are comparing yourself against to determine how you are performing. Just knowing your numbers isn’t enough. Comparing those metrics to internal and external values provides directional data to show you where you are successful and where you have opportunities for improvement.
For internal benchmarking, consider comparisons against the prior year and against budget. The first can show if improvements are occurring over the previous period, while the second can show if your planning was on target or skewed in an ineffective direction. If the data is not showing improvements, it can likely provide valuable insights on how to get back on track.
For external benchmarking, measuring against national databases can provide a comparison to same size, same specialty peers. Different professional organizations that you or your providers belong to may also collect data at local and national levels that you can purchase, and many conferences provide useful data points as parts of presentations that you can collect and utilize. The Medical Group Management Association (MGMA) and Sullivan Cotter are two nationally recognized organizations that aggregate data that can be filtered in various ways to provide tangible comparisons to benchmark against.
Is your organization already measuring some or all of the items listed today? If not, I challenge you to establish new measurement protocols for at least one or two KPIs this month and see how it impacts your practice management and decision making. Remember, you can’t manage what you don’t measure. And you can’t measure what you don’t make a priority.
Pattie Clay is a Senior Advisor and Management Consultant, leading MMG’s Behavioral Health Practice. Pattie has more than eighteen years of industry experience and a proven track record as a senior leader in the health system environment. MMG is a national provider of consulting services and back office administrative support to independent and system owned physician practice groups.