When you’re investing time and money into the growth of your practice, you want to know that all your hard work is paying off. But how do you know, and how reliable is your intel? If you’re simply counting patients or revenue, you’re more than likely leaving money on the table.

In 50 years of working with medical practices, we’ve found that the most financially successful owners are those who consistently and diligently track their key performance indicators (KPIs).

KPIs are metrics that tell you:

• How your practice is performing against your business objectives.
• How specific activities are moving the needle (or not).
• Whether your investments are yielding good returns.
• Where to focus your attention for accelerated growth.

The importance of KPIs

So why isn’t tracking revenue enough? Surely if revenue is going up, you’re doing something right? Well, yes, but a macro KPI like revenue only gives us a broad overview. Micro KPIs let us drill down into the data and find out why. More importantly, they tell us which areas need attention, and what we should do more/less of to optimize profit.

Let’s imagine you’ve invested heavily in marketing and community outreach, and now you’re seeing higher patient numbers and increased revenue. Success! You keep investing because it’s clearly working.

Now let’s say you were also tracking micro KPIs like:

• Source of patient referrals (physician, social media, family and friends, etc).
• Community event attendance.

You take a look at the data and realize that your digital marketing campaign was actually a dud, but your community outreach has been a roaring success. Had you not been tracking your micro KPIs, you would have continued to waste money on marketing. Now, you can trim that waste and pour your investment into the more profitable outreach instead.

Of course, this is a simplified example. There are many moving parts in any medical practice, which means many potential KPIs to track. So how do you know which ones to focus on?

Identifying your KPIs

Each KPI should be tied to a business objective. In this case, it’s revenue growth, but you can apply the same principle to goals like patient experience, staff satisfaction, etc. The KPI should be specific and measurable, and you should take a baseline measurement at the start so that you can evaluate your progress at monthly intervals.

For each objective, first identify the macro KPI. This is the broad “yes-or-no” KPI that tells you only whether or not you’re meeting your objective. In this case, what is my revenue, and is it increasing or decreasing?

Now, it’s time to drill down and find out why. Think about all of the individual elements that directly affect your revenue cycle: 

• What’s your payer denial rate?
• What’s your write-off percentage?
• What’s your no-pay rate?
• What’s your cancellation rate?
• What’s your no-show rate?
• What’s your average accounts receivable time?
• How quickly do you bill services?

Tracking micro KPIs like these on a monthly basis can give you a clearer indication of what’s driving your revenue up or down, and where you need to focus your attention.

Perhaps your KPIs show that you’ve got a high no-show rate, so you introduce a policy of calling to confirm patient appointments on the day. Continuing to monitor your no-show rate will show you whether or not this policy has been a success.

Sometimes you might need to dig even deeper. For example, your KPIs suggest that your high no-pay rate is stifling revenue growth, but they still don’t tell you why it’s happening. Adding a few extra KPIs can shed some light:

• What’s the average income of your patients?
• What percentage of patients are insured?
• What’s the average deductible of your insured patients?

These KPIs might unearth a picture of a financially struggling patient population who find it difficult to secure affordable insurance. You can use this information to adjust your outreach, insurance or billing practices accordingly. 

Maintaining the balance

As you can see, monitoring your KPIs can offer you a wealth of information that you can use to fine-tune your revenue cycle. However, you don’t want to get so bogged down in the data that it becomes another full-time job!

We advise our clients to think of KPIs as a guiding compass. Is your write-off percentage high? Then it’s worth going further down that path and breaking down your KPI into smaller questions. Is your payer denial rate low? Then adding more granular KPIs will add little extra insight or value.

If monitoring your KPIs sounds like an extra job you just don’t need, then Ideal Practice Solutions can help. We offer intelligent, customized analytics software that:

• Analyzes your billing/RCM services for you.
• Monitors KPIs and critical revenue metrics.
• Provides real-time insights into your performance.
• Offers data-backed recommendations to strengthen your revenue cycle.

Want to know more about how our analytics services can boost your practice revenue? Schedule a consultation and get a free practice analysis now (worth $2500.00).