essential healthcare and financial kpis to begin tracking today

Strategic Key Performance Indicators (KPI) can help you increase the profitability of your practice and maximize the satisfaction of your patients. This blog covers the importance of healthcare KPIs and a few of the top metrics you should focus on.

What is a Key Performance Indicator (KPI)?

A Key Performance Indicator is a quantifiable measure that shows how well an organization is achieving its primary objectives. KPIs give targets for teams to aim for, milestones to assess their progress, and insights that help in decision making. From sales and marketing to finance, KPIs allow practices to move forward strategically.

Why are KPIs Important

Measuring the Key Performance Indicators (KPIs) of your practice is vital to its health and success. Here are three reasons why tracking and measuring KPIs is important:

1. Measure of Progress 

Setting KPIs allows you to measure the progress you’ve made towards achieving the long-term goals of your practice. Set annual and quarterly targets to measure your incremental progress towards those objectives.

2. Monitor The Organization’s Health

KPIs are essential when it comes to assessing how well your practice is doing financially and operationally. For example, monitoring your practice’s revenue trends will help you keep tabs on the profitability of your practice and identify potential problems and areas of concern. It is also beneficial to compare your practice’s performance to industry standards.

3. Analyze Patterns over Time

If you monitor the same KPIs each quarter, you might begin to notice patterns in your data. These patterns are helpful to your practice in multiple ways. You can use them to predict your slower times and develop strategies to increase volume during those times. You can also use them to identify potential areas of concern on the cost and expense side.

Which KPIs are Essential for Your Practice?

We break down a few of the essential KPIs for your practice into two broad categories, clinical and financial.

1. Clinical KPIs

A clinical KPI is a metric that helps you assess how your practice is performing. A good clinical KPI should be communicated, well defined, and essential to fulfilling your strategic objectives. Here’s some clinical KPIs you can incorporate into your practice:

Patient Follow-Up

This tracks the number of patients that receive follow-up care after their initial visit to the clinic. Patient follow-up could be from a physician, or any other staff member asking about the patient’s health and visit experience. Higher patient follow-up indicates strong quality care.

Patient Retention

This measurement monitors how many patients are coming back to the practice and how many patients the practice loses. In the healthcare field, patient retention needs to be scrutinized, and practices should develop strategies to increase their rate of patient retention.

New Patient Data

Owners of medical practices face a considerable challenge when trying to attract new patients. If you are not tracking the number of new patients you receive, you should start now. It is also important to track which marketing methods or referral sources new patients are coming from. Ideally, the number of new patients should be greater than or equal to the number of patients you are losing. If this is not the case, you might need to boost your patient acquisition.

Missed Appointments/No Shows

Missed appointments could cost your practice thousands of dollars in a year. This means that your practice should invest some time into measuring missed appointments and no-shows to avoid these losses.  It is then important to implement procedures to help reduce the number of missed appointments. Your no-show rate is calculated by dividing the number of missed appointments by the number of scheduled patients.

2.     Financial KPIs

Financial KPIs ensure that your practice is running smoothly and that your financials are in order.

Accounts Receivable Data 

This metric measures how efficiently the clinic is collecting its receivables, which is crucial for cashflow and projection purposes. A high accounts receivable turnover shows that payments are being collected timely, unlike a low turnover which indicates collection issues. Accounts receivable turnover is calculated by dividing net revenue by average accounts receivable.

Average Treatment Charge

This indicator measures the average amount a practice charges for treatment. It is a good assessment of the effectiveness of the treatments provided in your health facility. You can break down this metric by type of treatment or treatment category.

Measuring the average treatment charge is ideal for when you want to minimize costs. The average treatment charge is calculated by dividing the total treatment charges by the number of treatments.

Rejection/Denial reports

Denied claims cost your office money and cause delayed payments. Therefore, preventing claim denials is vital for revenue cycle management. If your clinic has a high percentage of denials, you will need to investigate why denials are happening and find solutions to deal with the problem promptly.

Write-Off reports 

Sometimes practices are forced to write off the bills of patients who are unable to pay. The write-off report evaluates the rate at which your clinic suffers from bad debt. This measure can help you better manage and reduce bad debt.

Don’t know where to begin tracking or analyzing your healthcare metrics? Lutz can help you. Feel free to contact us or visit our website to learn more about our healthcare consulting and healthcare data analytics services.