Why Are KPIs Important To Checking The Health of Your Practice?
By Austin Stone August 20, 2021
Have you ever wondered what KPIs mean and why so many fortune 500 companies talk about them and the importance of tracking them? KPI stands for Key Performance Indicators. KPIs help you measure and identify business trends that are important to the health of your business.
Setting KPIs in each aspect of your practice will help measure success and where you want to go. In healthcare, multiple areas can be measured using KPIs. Looking at outstanding AR, patient satisfaction, and denial rate are some of the more common measures. If your company has not previously set KPI metrics, pulling reports and researching the health of your practice will give you a good idea of where you are starting.
Each EMR system should provide a series of data points that can be exported into excel and show where the practice stands against others like you in their network. This is a good place to start.
Here are some data gold mines to set KPIs.
→ Appointment Count
⇾ No Show
→ Outstanding Patient AR and Insurance AR
→ Denial Rate
→ Claim Errors
→ Revenue Month to Month
This data is obtainable from most EMR systems. If you have a 3rd party running your revenue cycle department, reach out to them for monthly reports covering these items. Third-party companies should be able to provide this crucial information in convenient, easily accessible reports.
Make sure you fully understand the benefits a third-party company can bring to your revenue cycle. It is crucial for your practice. You can better understand the denial rate and cash flow when you know their processes.
Some EMR systems do not provide reports that are pre-analyzed. They provide a series of data points and expect the end-user to analyze the data. If this is the case, using Excel is a great tool to help you crunch all of the numbers. They offer several different ways to report data points that can come in graph form, categories, or pivot-tables.
If you are not familiar with Excel and the way it can analyze data, reach out to your IT department or your EMR system. They can create a report that generates, analyzes the data, and sends it to a specific folder monthly. It may take some refining, but you’ll be headed in the right direction.
Also, checking out Excel classes or taking a class can be beneficial. You can find some good resources here.
After you establish the critical business function you want to monitor, you’ll need to set up benchmarks. Benchmarks are where the KPIs are on average. This is an important step as not identifying this will be hard to measure success or failure. The best way to identify your benchmarks is to take a year of past data and take the average of the twelve months.
You will want to identify goals for each of the KPIs chosen. These targets are where you want to see your KPIs reach, and give you an objective way to measure performance. For example, the average denial rate in the US is 6-13% and your practice is averaging 12%. Setting your goal below 6% would be a measurable number to see positive change in your denial management workflows.
Now you have all of your data points, the reports identified, and your goals set, it is time to discuss process improvement. To achieve positive results, you must implement the right changes to workflows that will move the needle on your KPIs.
It takes roughly 3-6 months to go through an improvement cycle. Once a change is made, evaluate it over the next 90 days without making any other changes. If the improvement cannot be seen, you can change the workflow based on your data analysis.
Change is never easy. It's amazing to see how even non-quantitative leaning staff will get excited when they see positive trends on KPIs. Once your staff sees the difference in practice efficiency, profitability, you'll achieve the buy-in to maintain the optimized workflow.
Great job! You have come so far in implementing KPIs. We want to see a positive change in your practice. Now how do you know your practice is healthy?
No practice is the same, so comparing yourself to others does not equate to health. However, there are some general ideas of what success looks like.
Denial Rate - This is one of the most important measures to keep an eye on. When claims go out the door, you want them paid right the first time they come back. It costs you money not only to send them out but to investigate why they were denied in the first place.
Outstanding AR - Outstanding AR can often correlate with a high denial rate. Keeping large amounts of money on the books for a long period reduces the opportunity to collect. Keeping Patient AR under 90 days to collect is a great measure of success. Being paid within 90 days reduces the stress on your overhead costs.
Patient Satisfaction - We would not be in healthcare if we did not want to help patients. Sometimes, when we focus a lot on collections and patients feel as though we have lost the patient element, taking surveys and monitoring how happy your patients are will give you a good idea of how well you are doing with patient care.
KPIs are a great tool to help your practice grow year over year, but they are that, just a tool. Do not get so hung up on them, that you lose sight of why we are here in healthcare. Some months will be better than others, making slight changes to improve or change course will make your practice better and stronger.
When your KPIs are exceeding and all in the green, it is time to re-evaluate your goals and keep growing!