Data Series Part 2: Identifying healthcare business KPIs to grow Physician-Owned Practices.
Let’s start with the basics.
Welcome to part 2 of our data series! (You can catch up on part one here.) Everyone loves to talk about “data,” but you’d be surprised how many decision makers lack a data analyst to take the time to make it useful or useable. Today, our starting point is identifying healthcare business key performance indicators (KPIs), measurable data points that show progress towards a particular company/divisional/individual goal.
It’s easy to establish simple KPIs like “revenue” or “income” and rate the entire company based on those broad metrics. But while those items may be easy to track, they often won’t provide much insight into how each division/employee is performing. Going slightly deeper, effective KPIs have the four following characteristics:
1. Objectively Measurable
Any KPI you establish should be able to be measured without anyone questioning the metric. If people question the methodology of calculating the number, they won’t accept being evaluated by it. There may be subjective parts of your business you want to track, but unless there is a way to convert those into objective metrics, they won’t be effective KPIs. To paraphrase management guru Peter Drucker, “If you can’t measure it, you can’t manage it.” This can involve being very wary about the difference between quantified data, and qualified data masquerading as quantified data (so, for example, hard data that ultimately relies on a subjective score assigned by someone.)
Good examples of quantified data for a practice: New revenue, patient satisfaction (though the scores may be qualified, their aggregation is quantifiable), provider utilization, days in accounts receivable, net collection percentage, revenue per unit, cost per case, recovery time, turn over time, and even certain clinical data, like patient transfer rate (objective data from an EHR/EMR system can be really helpful here, if you can get that access.)
2. Easily Measurable
Ideally, you should be able to use systems that are already in place for tracking KPIs instead of creating new tracking systems. If you need to dedicate significant resources to just tracking the data, chances are it won’t be worth the effort.
Good examples for a practice: Revenue and net income, patient satisfaction or certain clinical data, provider/OR utilization, number of cases, on-time starts, same day cancellation rate
3. Connects with Practice Goals
Any KPI you establish needs to fit with your overall practice goals. So, before you work on establishing individual KPIs, ensure that you know what your practice goals are. For example, airlines know that their customers care about getting where they need to go on time (without their flight being cancelled) and with their baggage. To track this, United established the Global Performance Commitment. All United employees are measured, at least in part, based on the entire company’s on-time arrival percentage, completion factor (flights that weren’t cancelled), and mishandled baggage rate (MBR). Not every employee can affect these metrics on a daily basis, but United knows that if the company performs well on these metrics, their market share, customer satisfaction, and profit will all improve.
Good examples for an anesthesia practice: Provider utilization, new revenue, net income/margin, on-time starts.
4. Influenceable by the Employee or Department
In the above example, we noted that every employee can’t affect certain metrics, and that matters when evaluating and tracking progress based on data-driven goals. If an employee has no impact on a particular metric, it’s unlikely that they’ll ever really buy into using it as a KPI, or feel incredibly stressed out by being evaluated by something outside of their control. (Imagine if your work performance was influenced by the weather forecast!) While United’s KPIs are objectively and easily measurable—and fit with the company’s overall goals—each division in United needs to translate those KPIs into how that division can actually impact those KPIs. For example, the maintenance division needs to implement specific actions/plans to ensure minimal downtime of United’s fleet, which would lead to fewer cancellations and more on-time arrivals. Without this last step, employees won’t feel ownership over the KPI and therefore won’t work on improving it.
Good examples for an anesthesia practice: Patient satisfaction (for your clinical staff), average revenue per unit (for your billing department), provider utilization (for your admin team).
Putting it all Together
Establishing effective KPIs provides a common language with which to discuss and measure performance of your staff. Having ineffective KPIs is a waste of time and energy. Make sure you are clear on your overall practice goals, and then establish employee- or department-specific KPIs that are objective, easy to measure, and something that the employee/group can actually impact.
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