Today more than ever, managing a practice is not just about caring for your patients it’s also about running a successful business. If you lack efficiency, your quality of service will ultimately suffer. To thrive, you need to make informed decisions, but this can be a challenge. As the saying goes, “You don’t know what you don’t know.”
Without a way to measure relevant financial and operational indicators, you might find yourself relying on educated guesswork. Thankfully, there is an alternative to good guessing: benchmarking a strategic management tool that helps evaluate the effectiveness and fosters goal-setting.
Essentially, benchmarking provides a snapshot of your business performance and shows where you are in relation to a particular standard.
For Example: If your accounts receivable are averaging a sluggish 54 days and you’re wondering whether this is normal, benchmarking can show how you compare to your specialty’s average at just 45 days, signifying not only that you’re trailing behind your peers but that a reduction should be achievable Or, if you find that your patient wait times have increased, benchmarking can help you find the optimal balance between same-day and future appointment openings.
Benchmarking can even help effectively manage your successes. Suppose you know your practice is gaining new patients at an astonishing rate. By analyzing this growth will you be able to easily predict whether it is time to hire another full-time employee, or if this is just a short-term spike in workload.
So, what exactly should you be benchmarking?
In a nutshell, the statistics and trends you need to gather can be broken down into two categories; operational and revenue-related.
1.Operational Benchmarking:
Benchmarking your operations embraces everything from staffing and productivity to office flow and analysis of procedures performed. It will help you to uncover such details as:
- How many patients per month each provider is seeing,
- How many more procedures your practice is performing this quarter than last
- Where the bottlenecks in office flow are
- What your patient retention rates are
All these factors impact the efficiency of your business. Once you know, say, the average number of statement reminders it takes before a patient pays their bill, you can work out when you should stop mailing reminders and turn the account over to collections.
Even managing relationships with referring providers, essentially a marketing exercise can benefit from benchmarking you will be able to give some impressive aggregate data to these providers that will help your practice stick in their minds.
2.Revenue Benchmarking:
Similarly, revenue-related trends and statistics whether concerning reimbursement, claim rejections and denials, the collections process or payer trends can reveal the financial health of your practice and what steps you need to take to control it. Monitoring payer contracts, specifically, the contracted reimbursement rates for each procedure, may seem like a lot of extra work but is a vital part of maximizing your revenue.
More general payer trends are also important to monitor because they are likely to indicate a parallel trend in your revenue. Armed with this knowledge, you can negotiate more skillfully when your payer contracts are up for renewal. The composition of payers is also an important factor, albeit one that is more difficult to influence.
Consider a practice that has a stable number of patient visits per month. If the composition of payers shifts from a majority of commercial to a majority of government and self-payers accounts receivable days are likely to increase and total revenue is likely to decrease. If you are proactively keeping track of these changes rather than just waiting until it is reflected in your cash flow, you can implement reimbursement policies to safeguard your practice.
Set Goals
For benchmarking to be effective, however, it can’t just be about measuring it also should involve active goal setting. To be able to set realistic goals, you need to evaluate:
- How efficient your practice is currently?
- Have you improved over time?
- How far you still have to go?
Your own practice is the first reference point compare this month to last month as well as the same time last year. Focus on a workflow audit and an analysis of how much you are putting in compared to how much you are getting out.
- What has changed?
- How quickly can you process payments and charges?
- What percentage of the amount you bill is never reimbursed?
- Which payers are rejecting the most claims?
Secondly, look outside your practice. Be as diligent as possible about finding data that is specifically relevant to your specialty and type of practice.
Use analysis provided by associations such as:
- The Medical Group Management Association (MGMA)
- The American Health Information Management Association (AHIMA)
- Healthcare Billing and Management Association (HBMA)
- The National Association of Healthcare Consultants
Be Compliant
In an increasingly regulated industry, benchmarking also has the added benefit of helping practices comply with the guidelines issued by the Office of Inspector General (OIG). These guidelines were issued to assist physician practices and third-party billing companies to file claims more accurately, prevent fraud, and avoid conflicts with federal health care law. The seven steps that the OIG lists as integral to creating a compliance program are:
- Conducting internal monitoring and auditing
- Implementing compliance and practice standards
- Designating a compliance officer or contact
- Conducting appropriate training and education
- Responding appropriately to detected offenses and developing corrective action
- Developing open lines of communication
- Enforcing disciplinary standards through well-publicized guidelines
Finally, the one thing that single-minded physicians occasionally forget when implementing a benchmarking system: the success of practice can depend on its staff. You can’t single-handedly be effective at benchmarking without the buy-in of your employees. Sharing the benchmarks of your organization with your employees is also vital to their performance!
If they are unclear about what is expected of them, how will they know whether they are doing a good job? Drawing up job descriptions for your seasoned employees may seem unnecessary, but clarifying responsibilities can help tremendously. Explain what you are trying to achieve with benchmarking and how they can help. Share your goals!
Being a physician in the twenty-first century may involve some juggling of roles, but benchmarking and setting sensible business goals will ultimately reduce the challenges that it presents.
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