Whether your practice is a medical or dental, specialty or general, running a healthcare clinic is a monumental and difficult job. No small handful of KPI’s seem to encompass all the competing management objectives – making a profit, managing a large staff, delivering top-quality patient outcomes, complying with government regulations, dealing with various payors, etc. Further, if you’re also seeing patients, then you have to be both a doctor and a business manager – both enormously challenging tasks.
How can you calm the chaos and get the most from your practice? We’ve put together a four-step process that will help your practice operate at its full potential. This data-driven approach to management will unlock the potential in your practice.
1. KPI’s Must Match Business Goals
It’s trite but true: KPIs must serve the larger business goals and direction. So to find the right , start by dreaming, a little… What are your top level “big hairy goals”? What would you like the practice to look like next year?
Create a mix of business goals – financial, medical and social. For instance, you may want to take home more money, operate more efficiently, and improve patient outcomes.
Don’t get bogged down with a big list — if you find that you’ve got 20 business goals and management objectives, cut your list in half. Then cut it in half again! You need to end up with a list of three to five overarching business goals.
Pro Tip: It’s best to work through this process with your senior management team. If you have buy-in from them, you’re much more likely to work together in reaching your goals.
2. Choose your “Key Performance Indicators”
Next, translate your goals into metrics. For this you need KPI (Key Performance Indicators). What can you measure that will show progress toward these goals? It’s best to select one top-level KPI for each goal; no more than five. You don’t need to spend a lot of time thinking about this – finding the right KPIs is usually an iterative process. It’s better to get started and refine as you go.
Choose KPIs from wherever data exists and can be gathered. The performance reports may come from your practice management system, your accounting system, or from manually prepared performance reports.
Pro Tip: Don’t choose the obvious KPIs. If your goal is revenue, don’t measure actual revenue… instead choose something that is a precursor to revenue, but is based on a controllable activity. For revenue, the best KPI might be “Production per Doctor-Day”. For cash flow, start with “Collections as a % of Billing”. And for expenses, try “Actual expenses vs Budget”. (For better control, you’ll want to break this down to a departmental level… more on that later.)
3. Measure Progress
Next, find out where you are succeeding and where corrective action is needed. Publish these performance reports and discuss them with your management team.
Make communicating about KPIs simple and easy. Simple spreadsheets may be the best way to communicate, but only if you can present the most important data without losing it in a sea of detail. PowerPoint presentations are good to highlight key metrics, but lack the ability to answer “why” and “what if” questions. The best way to present performance reports to management is through data visualization tools.
While you will continue to get some operational reports on a daily basis, the ideal reporting cycle for these KPI’s is longer – a week is probably best for most medical clinics and healthcare organizations.
Pro Tip: Consistency is important, and the speed of reporting is vital. The ideal is a 30-minute meeting on Monday afternoon, to report and discuss last-week’s results. Automated data visualization tools — like Domo, Microsoft BI, and Qlik Sense can be tied directly into many accounting and practice management systems to make viewing performance reports more timely, and make everyone’s life easier.
4. Make Improvements
Usually you will find that some KPIs are meeting your management objectives, while others are lagging. Working with your team, develop tactics for the needed improvements. This is where your management skills – and the technical skills of your staff – come into play.
You will probably need a set of tactical KPIs for each department. If top-line revenue is not meeting budget, or Production per Doctor-Day is below your business goals, then your department manager will need to find the root cause, and the right corrective action.
Pro Tip: Start tracking the underlying building blocks, like visits per day, and billing per visit. Then drill down to the procedure level. Comparison between doctors is especially helpful. Analysis of the data will reveal the difference between top performers and doctors who need improvement. Get help from an analyst or CFO to understand the nuances of the data. Steadily and consistently, begin fixing the problems.
This data-driven approach to management helps in three ways: it keeps you on track to meet your top-level business objectives, gives you analytical tools to solve underlying problems, and takes the subjectivity and drama out of managing your physicians and your staff.
Ready to optimize your practice — or just want to talk? Call our healthcare practice area leader, Steve Milan at 704-301-7777.
Keywords: KPI, Healthcare KPI, Key Performance Indicators, Business Goals, Management Objectives, Performance Reports, Practice Manager, Practice Management System