The most important goal of your healthcare practice may be offering the best possible patient care. But, at the end of the day, you’re running a business—so it’s equally important to pay attention to the financial and operational side of your medical office.
Setting and measuring key performance indicators can help you understand how efficiently different areas of your practice function. You can also identify trends about how well your office meets different business objectives.
What you need to know
- KPIs can help you find focus areas of your medical practice to improve
- You can use KPIs to elevate the patient experience by reducing wait times and making your check-in process more convenient
- Optimize your resource planning by measuring indicators like patient volume and no-show rate
What are KPIs?
KPIs are key performance indicators that help measure, quantify, and evaluate the performance of a specific business goal or objective. By using KPIs, you can easily figure out what your physician practice is doing well and what you need to improve.
Though some organizations use metrics and KPIs interchangeably, there are key differences between the two. Both can be used to track performance, but metrics are typically broader and rely on more general information that may or may not align with your business objectives. KPIs, on the other hand, strategically measure performance against objectives that align with your overall business goals.
As a medical practice, you can use key performance indicators to monitor progress toward specific business goals and make strategic decisions and improvements based on how you’re tracking.
Why you should use KPIs to measure success
Your physician practice should use KPIs for the following reasons:
KPIs are easy to understand and track
Identifying and focusing on just a few KPIs can give you valuable insights about what’s happening with your practice on a macro and micro level. Many doctor’s offices incorporate software to gather and track data more easily. The right technology can speed up the process by giving you real-time KPI analysis and an easy-to-understand dashboard.
KPIs can help streamline your operations
By monitoring KPIs in real time, your teams can identify problems quickly and make the necessary adjustments to resolve them. This helps prevent costly mistakes or productivity slowdowns while ensuring that you’re working toward those larger business goals.
KPIs can help motivate your employees
Assigning individual KPIs to employees gives clarity and transparency about how their performance and deliverables help your entire practice succeed. The most satisfied and productive employees feel informed, responsible, and empowered. You can also use individual KPIs to make decisions related to bonus eligibility, raises, promotions, etc.
How to use KPIs to fuel business growth
Here are some tips on how your physician practice can use KPIs to fuel growth and patient satisfaction.
Focus on a few KPIs
Don’t overwhelm yourself by trying to measure too many things at once. Instead, focus on just a few relevant indicators that tie directly to your business goals for the quarter or year. For example, if you think your operational costs are too high, choose KPIs that will help you maximize your budget and operational efficiency.
Set realistic targets
Be sure to set attainable goals that are not necessarily easy to achieve—but also not impossible. Unreachable goals can discourage your team instead of motivating them. Use historical data and predictive analytics as a foundation to choose the right targets.
Use software to monitor your KPIs consistently
Since KPIs are based on quantitative data, it’s important that your numbers are accurate and that you’re collecting them consistently. To make this easier, consider using digital tools to automate the collection and interpretation of data in real-time, giving you accurate KPI insights so you can make quick, informed decisions on how to adapt.
Review results consistently
Don’t micromanage or abandon the KPI review process. It’s best to establish a balanced approach to follow and evaluate the data. If you’re measuring specific projects, evaluate the final insights after completion and discuss them with key stakeholders, encouraging open discussion and feedback.
Consider all the context
Though KPIs are extremely important in measuring performance, they should never be used in place of strategy because they are only indicators without context. Showing changes without the underlying factors doesn’t paint a clear picture. Strategic decisions should be data-informed instead of data-driven, and feedback from experienced leaders should also be considered.
9 important KPIs for physician practices
While physician practices have many KPIs to measure, it’s best to focus on a few that can help achieve your highest-priority goals.
1. Average revenue per visit (ARPV)
ARPV = Total revenue / Number of visits
ARPV calculates the revenue your practice is making from every patient visit. It’s usually calculated monthly and should include insurance and patient payments.
2. Cost per visit (CPV)
CPV = Total cost / Number of visits
CPV measures the average cost your medical practice incurs for each patient visit. This KPI helps identify all your medical office expenses—like operational costs, personnel costs, facility expenses, etc.—to give insights into how cost-effective your medical operations are. With this data, you’ll know where you can make adjustments to make the most of your budget.
3. Average revenue per patient
Average revenue per patient = Total revenue / Number of patients
This KPI measures the average revenue your medical practice earns for each patient over a period of time. By understanding the average ‘value’ of each patient, your healthcare practice can forecast future revenue potential.
4. Accounts receivable turnover (ART)
ART = Net credit sales / Average accounts receivable
ART demonstrates how quickly your medical practice collects service payments from patients and insurance providers. A low ART indicates that it takes a long time to collect payments, while a high ART is a sign that your practice collects payments quickly and efficiently.
5. Patient volume
Patient volume = Total number of visits or appointments
Patient volume is a straightforward count of total visits or appointments within a specific timeframe (typically monthly or quarterly). This simple KPI helps your practice calculate its growth capacity and better serve your community.
6. Patient retention rate (PRR)
PRR = [(Number of patients at the end of period – New patients) / Number of patients at the start of period] x 100
PRR provides information about the percentage of patients returning to your practice. This KPI highlights patient loyalty and indicates your office’s ability to provide quality care and service that keeps patients happy. Focusing on this KPI can help maintain stability and long-term growth for your doctor’s office.
7. Patient satisfaction rate (PSR)
PSR = (Number of satisfied patients / Total number of surveyed patients) x 100
PSR measures the quality of the healthcare services of your medical office. A low rate is a red flag and a sign that your facility needs to provide better care and services, otherwise you risk losing patients. A high patient satisfaction score indicates that your patients are happy and more likely to come back.
8. Patient wait time
Patient wait time = Total wait time / Number of patients
This KPI measures the average amount of time your patients spend waiting for appointments. Because nobody likes to wait, your office should take actions to minimize how long people sit in your lobby or waiting room. For example, many doctor’s offices turned to online and mobile check-in systems during Covid to let patients check in from their cars and reduce congestion in lobbies. Calculating wait times can also give you insight into your office’s resourcing.
9. No-show rate
No-show rate = (Number of no-shows / Total number of appointments) x 100
The no-show or cancellation rate indicates the percentage of unattended appointments. Keeping an eye on this number (which should be around 10%) helps your medical office better optimize its resource planning.
Maximizing the number of happy patients is a high-priority goal of every physician practice. By focusing on the right KPIs in the short term, you can make more strategic decisions to ensure better patient satisfaction, employee engagement, and operational efficiency in the long term.
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