Key performance indicators (KPIs) are one way to evaluate how your practice is doing. KPI’s are benchmarks or statistics, and they provide a roadmap to help you monitor the overall performance of your practice in both financial and non-financial measures. You can adopt KPI’s for every facet of your healthcare operation, but today, we are going to concentrate on accounts receivable (A/R) indicators.
First of all, you will not have the same KPIs as every other practice. 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)
- A/R > 90 days
- A/R < 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 KPI’s can provide a wealth of information. Many of these KPI’s 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 KPI’s 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.