Old Wisdom Improved Results: Measure and Manage
Key Metrics to Measure and Manage for a Healthy Practice
By Connie Ziccarelli*
As the Peter Drucker leadership saying goes, “what gets measured, gets managed.”
Sometimes, this is taken as an old cliché and repeated so many times that its principle is taken for granted and, sometimes, falls off our leadership radar. I have personally experienced the power of this age-old wisdom on many occasions. Nothing gives me more power than to know what needs to be measured in our practice and also get those around me motivated to measure with me.
So, what are some of the metrics or “triggers” that should be measured in your practice and at what time intervals? Measuring is just one component of successful management; the other is figuring out the timeframes. Metric triggers have different timeframes, meaning some should be watched daily and weekly, while others may be measured monthly, quarterly, and yearly. Getting the right combination of what needs to be measured along with the optimal timeframe for measurement will put you and your team in the best position to manage the results. Let’s unpack this topic and look at some benchmarks I’ve found to be very helpful in revenue cycle management.
Just as you keep track of your patient’s vital signs, it’s important to generate weekly reports that show the health, or “vitals,” of your practice. A few key metrics recommended for weekly review include:
- Total new patients, by clinic location and/or by provider
- Total patient visits by revenue source (weekly payer mix) to help project payment timelines and contract usage
- Visits completed (treatment compliance), by clinic location and/or provider
- Medicare certification signatures, to track certifications and ensure they’re properly noted in the medical record
- Graduation (discharge) of patients, by clinic location and/or provider, and follow-up plan
- Documentation status; critical for billing, the prior week’s documentation should be completed each week and ready for billing
- Collection rate at the front desk; calculated by measuring the expected payments for each patient (i.e., copays to be collected for that day’s patients) against the amount collected each day, and then weekly
Establishing solid weekly metrics and recognizing your team’s successes with a reward is a good practice. If the results are not where you want them, provide constructive feedback to your team about what is preventing your desired results, and generate solutions for those problems.
Having a robust set of monthly reports will give you a more comprehensive snapshot of the health of your revenue cycle. These reports should be generated once the monthly billing is completed and all the monthly receipts have been posted to the patients’ accounts. These reports should include:
- Accounts receivable by patient responsibility
The patient outstanding receivables report shows what is outstanding after a patient’s insurance pays and all copays are collected. Cash-pay patients should not appear on this report if your practice completes timely collection of monies at the time of service.
- Accounts receivable by insurance payer
This report is very important for the health of your revenue cycle. Knowing the status of accounts that are pending payment from third-party payers gives you a sense of where your money is outstanding. Is there a payer that is behind on payments? Has your collection team processed claims in a timely manner? Do you have a faulty claims issue? Are claims being denied? Looking at this report monthly is just as important, if not more important, than your company’s balance sheet.
- Adjustment/write-off by category
This report is important to monitor to determine where and who is reducing outstanding receivables with writeoffs of adjustments. Looking at each adjustment category allows you to be sure it is aligned with your payer contracts. Looking at what is sent to collections, or written off to bad debt, gives insight into the collection prowess of your team. Total charges by location and/or provider
Looking at the following metrics on a quarterly basis gives insight into the practice performance as a whole. These reports will empower you to see exactly how you performed, and where the next quarter’s goals should point. A statistical profile report for your practice could include:
- Average charge per visit by location and/or provider
- Average reimbursement per visit by location and/or provider
- Average cost per visit by location and/or provider
- Profit per visit by location and/or provider
- Practice expenses (minus owner salary)
- Days in Accounts Receivable (DAR)
Another quarterly report to consider is payer mix. Earlier, we discussed collecting this information on a weekly basis. Looking at payer mix each quarter allows you to know what is happening with your payers over a longer period of time. What is your largest payer, and what fills in the gaps? It is important to understand where your patients are coming from and then to evaluate the mix you have. Do you like the mix? Is it sustainable? Do you need to diversify your patients to accept other payers? Knowing this allows you to work better with your marketing efforts or with referral sources to ensure a healthy mix of reimbursement.
Yearly Review Process
Now we arrive at the yearly review process. Reviewing these items best ensure your practice is operating in an efficient and compliant manner. My yearly top two key review processes are:
- Third-party payer contract review
While not an official metric, each year your payer contracts should be reviewed. Do you need to renew a contract or is it evergreen? Do you need a new and updated fee schedule? Is your practice and/or providers correctly listed in the payers’ directories? Has the payer paid you timely throughout the year, and if not, do you have a strategy to meet with a payer representative?
- Corporate compliance review
Review your compliance “binder” to ensure it is current with provider information and that payers have been accurately notified of any provider that has left the practice. It is important that each member of your team understand the seven elements of corporate compliance as outlined by the Centers for Medicare and Medicaid Services (CMS), and your binder is current with examples of each of the elements.
There is a lot to manage as practice owners and administrators. Knowing what to measure is the first step in assessing your clinic’s health. Then determine who is responsible for creating the report, analyzing the data, and communicating the results to the team. A team effort in producing and reviewing these reports often yields the best results. Once you determine the metrics to measure, delegate the management of that to others on the team and have them report the outcomes to you on a set timeframe.
It’s my experience that once we began to measure a certain metric in our practice, that metric got much better; what is measured improves significantly. I encourage you to incorporate a few, if not all, of these metrics into your reporting strategy and sit back and watch how your team manages the success of the outcomes. Peter Drucker was right, and what he said in 1954 still remains true today: get measuring and get managing, your practice will only get better!
Connie Ziccarelli is the cofounder and COO of Rehab Management Solutions. She is interim Chairperson of the PPS Administrators Network and frequent author in the PPS Impact magazine and other Healthcare publications. She can be reached at email@example.com.
*The author has a professional affiliation with this subject.