Here is the key to maintain a thriving practice
Healthcare is unique in the limits physicians have to predict practice revenue from a variety of payer models. As we look to the future of healthcare delivery, medical practices will still contend with these limitations, but they can control at least two things: how well they care for patients and how efficiently they run their practices. On the business side, efficiency can be measured and improved by the right key performance indicators (KPIs).
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The majority of KPIs will address the revenue cycle. As measurable indicators, a medical practice’s KPIs may include, but are not limited to:
· Gross charges
· Net charges
· Gross/Net collection percentages
· Work Relative Value Unit per provider (wRVU)
· Charges per wRVU
· Collections per wRVU
· Accounts receivable aging overall and over 120 days
· Charge entry lag
· Days in accounts receivable by payer
· Denial rate by payer
· Self-pay balances
· Bad debt write-off
· Patient encounters per day
· No-show rates
· New patients as a percentage of total visits
KPIs like these will ultimately answer the question: Is this a profitable practice? If the answer is no, there are certainly areas for improvement that can be monitored and measured through a continued focus on KPIs.
For example, let’s look at wRVUs per provider, which is basically the level of productivity (billable work) expected of each physician relative to compensation. Each physician will have his or her own wRVU benchmark based on past productivity as well as the types of services rendered. Practice groups can determine baseline percentiles by reviewing data published by the Centers for Medicare & Medicaid Services at least annually. Though not without its flaws, such as the inability to measure quality or patient satisfaction, a wRVU is independent of physician schedules, insurance coverage or reimbursement. It can measure the output of each physician—creating an opportunity for setting productivity goals as well as bonuses tied to patient care and quality. It can also pinpoint real barriers to productivity.