Key Performance Indicators Measure Success
Brian Meyers, CPA
Many physician practices I work with want to know how to evaluate the practice’s performance. One way is to use key performance indicators (KPIs).
KPIs are those benchmarks or statistics that are the most important ones 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 – something that doctors can glance at and understand what’s happening with the practice. Also, dashboards can provide a quick signal when something may need attention.
The great thing is that you get to decide what is important to your organization. Then decide what an acceptable performance level is. Finally, track your results against your own historical results as well as the results of other similar-sized practices, assuming this information is available. Look through the data you have available – there is always something you can track and learn from!