Just as population health requires a patient-centered focus and a wealth of data to analyze and use to transform the wellbeing of our communities, the wellbeing of a healthcare organization requires similar insights.
Practices produce and capture volumes of practical data. Knowing which data to select and use, however, has proven tricky for some practice leaders. The answer lies in benchmarking, the art of comparing your processes and metrics to industry standards.
Data-savvy practice administrators apprise physician stakeholders of how things are going, by:
• Determining what metrics are critical to the practice’s success
• Gathering internal data from an EHR, as well as from practice-management and accounting systems
• Identifying a source for external benchmarking data
• Determining the practice’s metrics and comparing them to external benchmarking data1
Some of the most popular benchmarks that medical practices have tracked include:
• Operating cost per procedure or visit
• Support staff per full-time-equivalent (FTE) physician
• Visits per FTE physician
• Payer mix percentages
• Days in accounts receivable (A/R)
• Visits per day2
Given the importance of financial security to a business’s long-term operations, practice leaders should pay special attention to key performance indicators (KPIs) that explain revenue cycle, cost-efficiency, and the proverbial “bottom line.” Medical Group Management Association (MGMA) data suggest that, despite variances based on physician or hospital ownership, the following KPIs are most reflective of the financial health of your practice:3
1. Practice profitability and staffing
a. Total medical revenue per FTE physician
b. Total operating cost per FTE physician
c. Total medical revenue after operating cost
d. Total physician compensation and benefit cost per FTE physician
e. Total operating cost
2. Revenue cycle
a. Total A/R per FTE physician
b. A/R over 120 days
c. Days of gross charges
d. Adjusted fee-for-service collection percentage
The size, specialty, ownership, and governance structure of a practice will dictate how often you want to review these metrics, which should help inform the degree to which your practice invests in the platforms or integrations with an existing EHR to extract the pertinent data for analysis and benchmarking.
Of course, having a handle on the money side is only one component of a multivariate formula that spells success or failure. The recent MGMA Winning Strategies from Top Medical Groups report identifies three key differentiators for high-performing practices that lead MGMA benchmarking categories:
• Engaging, patient-focused cultures: Better-performing practices are much more likely to conduct staff, provider and patient-satisfaction surveys and share results transparently throughout the organization. Staff are empowered to identify opportunities for improvement and form action plans.
• Long-term, strategic focus: Better-performing practices have an established vision and goals that help them prioritize their efforts and resources. Strategies are revisited to adjust tactics as needed. Performance monitoring and analytics enables those reviews at regular intervals.
• Operational innovation: Better-performing practices maximize the tools and information currently available, then take a systematic approach to investments in new resources. One of the biggest considerations is technology, as it is a tool to streamline operations and improve key areas such as communication, patient engagement and compliance—all of which can be monitored for return on investment.4
As physician stakeholders age into retirement or choose to exit the organization, having a succession plan in place is essential to prevent disruption to the business. This is especially true for geographic areas and specialties that are difficult to recruit for amid physician shortages, not to mention the inherent costs of severance packages and onboarding new physicians.
A 2018 survey of MGMA members found that 58 percent of practices lack a succession plan and 71 percent do not feel adequately prepared for an abrupt departure of a key team member.5
At the top of an organization, there are two key roles that necessitate a short-term and/or long-term succession plan:
1. A manager or executive board member: Replacement from within or from among external candidates is required, though promoting from within is preferable, given less time needed for onboarding and learning the organizational culture.
2. A clinical provider: Replacement for a non-shareholder provider or nonphysician provider requires an external search. Practices should build connections with local schools and hospitals to boost networking among new graduates prior to a search. If hiring a clinician, the board should seek out candidates with the potential to become an executive clinical leader.6
Other steps that can facilitate a transition include:7
1. Encouraging a positive work culture that might slow a doctor's retirement plans.
2. Maintaining a database of providers who can be reached out to when an opening occurs.
3. If possible, having a new provider shadow a retiring physician.
4. Expecting all of this to take time. Even with the right person for the job, it can take a year to fully transition to a new provider, including marketing that provider to your current patients.
As with many administrative aspects of managing a medical practice, the particulars of the processes and policies a given organization follows for benchmarking, long-term strategy, and succession planning should be well documented. Practice leaders should establish clear expectations for how often these topics should be considered, as well as short- and long-term goals to enable physician and administrative leaders to devote the proper resources—time, talent, and otherwise—to achieving the desired outcomes.