How Do You Evaluate the Performance of Your Practice?

Brian D. Meyers, CPA, Health Care Consultant 

One way to do this is to use key performance indicators (KPIs).  KPIs are those benchmarks or statistics that are most important for management to monitor.  While you can adopt KPIs for every facet of your healthcare operation, let’s focus on accounts receivable indicators. 

Every organization will not have the same KPIs.  This is due to the fact that management of one practice may want to know one thing while another practice wants to track something else.  For A/R purposes, though, the indicators tracked should be pretty similar.  For example, most organizations track: 

• Days Receivable Outstanding (DRO)
• DRO > 90 days
• DRO < 30 days
• Net Collection Ratio
• Bad Debt as % of Total Charges 

In addition, many practices track lag days between date of service and date of charge entry, gross collection percentage, and rejection/denials by payer. 

Creating a dashboard to track and monitor your practice’s chosen KPIs can provide a wealth of information.  Many of these KPIs can be tracked on a year-to-date or rolling six month basis, each of which will provide your practice with different information.  A dashboard is a great way to view the data in a quick and easy to follow format – with just a glance, doctors can understand what’s happening with the practice.  Dashboards also provide a quick signal when something needs attention. 

The great thing about KPIs is that you get to decide what is most important to your organization.  And then, you can determine the acceptable performance level. 

Finally, track your results against your own historical results AND the results of other practices of similar size.  The data you collect will be a wealth of information for the performance of your practice.