This guest post was contributed by Wes Ernst, CPA, of Forvis Mazars—a TPCA Partner.
Introduction
Key performance indicators, informally referred to as KPIs, are metrics used to track an organization’s health and well-being. KPIs are frequently used to measure data points across financial areas but are also seen in other aspects of a healthcare business such as patient satisfaction, employee engagement, or communication.
Viewed as tools for continuous improvement rather than static measures of performance, effective use of KPIs aids in decision-making and leads to better overall performance.
Alignment
Health centers have no shortage of information at their analytical disposal, whether arising from their Electronic Medical Record (EMR) system, accounting software, Uniform Data System (UDS) reports, or publicly available information from the Health Resources and Services Administration (HRSA). Because of the volume of items upon which to choose, many organizations use a “more-is-more” approach, in essence creating pages of spreadsheet calculations or tables which are difficult for end users to comprehend. To avoid this scenario, health center teams should carefully select which KPIs they wish to track. Examples of common financial KPIs for health centers include calculations such as:
- Days Cash on Hand
- Days in Accounts Receivable
- Revenue/Cost per Visit
- Debt Service Coverage Ratio
- Operating Margin
However, the most effective KPIs are those which align with a health center’s business objectives or overall strategy. Imagine a health center who wishes to grow its Medicare volume as a key component of future viability. Developing an organized scorecard of measurements specific to this goal will help leadership evaluate how to facilitate any investments or improvements, and could include:
- Medicare Revenue per Visit (Global)
- Medicare Revenue per Visit (Individual Insurance)
- Medicare Cost per Visit
- Medicare Average Visits per Patient
- Medicare Bad Debts
- Medicare Patient Wait Times
- Medicare Patient Satisfaction Surveys
Engagement
Devising a KPIs dashboard for management or other users within the health center should be handled in a collaborative way. Finance department personnel, for example, should solicit input from site managers, physicians, or other team members to see what kind of analytical information would be valuable for them in determining areas to improve. Not only does this approach lead to a better understanding of the KPI value between the parties, but it also increases the level of ownership felt by the end user because their input has been sought during the front end of the process. Such transparency fosters a culture of accountability and encourages everyone to contribute towards the organization’s common goals.
Conclusion
View KPIs through a lens of positive growth and change, but with an understanding that true action is the step which will create overall value for all those involved. Furthermore, any benchmarking exercise should be an iterative process, constantly being updated or modified to meet the needs of the recipient stakeholders. In doing so, these performance metrics offer business insights to leaders that allow them to fulfill their important missions to serve health center patients.
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