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A User-Friendly Guide To Benchmark Analysis
What exactly are key performance indicators? In simple terms, KPIs provide a way to measure performance and evaluate success. With any business initiative, performance should be measured and monitored to determine whether goals have been met—and if there’s a return on investment. For a busy medical practice, incorporating KPIs can help drive financial improvement.
A Closer Look:
A proper analysis should confirm what’s working well and what isn’t. It should also identify new revenue opportunities in areas like increased collections, reduced deductions or the implementation of a government sponsored program such as MACRA. Effective A/R practices increase revenue performance, but improvement can only come by understanding your current position. Identifying areas of opportunity allows you to make better decisions on staffing and resources. To identify your priorities and goals, ask yourself these 10 questions:
Are you running your practice, or is your practice running you?
Your Greatest Asset:
Turnover is high in healthcare administration, and it can be costly to your bottom line. Evaluate your current staff. Is someone being underutilized or overworked? Talk to your staff to get feedback on minimum requirements, goals and resource allocation. Ask them to help monitor performance. You can even establish incentives for reaching specific goals. If you notice a specific area where staff members are struggling to keep pace, talk to them individually. Ask for their help. If they’re truly falling behind, seek temporary assistance from other team members. Meanwhile, keep a close eye on that area to make sure you have the right staff in place.
The Untold Value of Benchmarks:
Not unlike an annual physical, a benchmark analysis is an invaluable tool in assessing the health of your practice. Establishing a baseline is like a new beginning—a way to strengthen what’s working and heal what’s failing.
Benchmarking also lays the groundwork for invaluable financial advice. On average, doctors lose 24-32 cents on every dollar, largely due to inadequate collections and billing procedures. With professional help in these areas, you could see a 25 percent increase in cash flow.
A benchmarking analysis can be completed utilizing the following four basic reports from the practice management system:
A chronology of actions taken on each charge, capturing all payments for primary, secondary, tertiary and patient activity.
Insurance aging profile:
A report that captures all outstanding claims due from respective insurance payers based on monthly aging from 30 days to over 90 days.
Patient aging report:
A breakdown of patient balances that have aged 30 days to over 90 days.
An account of the primary insurance companies billed and the total charges, payments and write-offs by the payer.
Collectively, these four reports provide the data needed to calculate collection rate, analyze performance by CPT code and evaluate days in A/R. They can also be used to determine recoverable reimbursements, the potential impact of increased collections efforts or reduced deductions, and some form of expected savings.
For you, benchmarking’s true value lies in its ability to identify potential cost savings and revenue opportunities that would have otherwise gone undetected.
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