Is a check-up in order? With reimbursement tightening and demands on limited practice resources increasing, it is critical that your employed network operates as efficiently as possible. Routine monitoring will keep you apprised and illuminate the steps you need to take to improve operations, stem losses, and keep localized issues from becoming systemic problems.
On an ongoing basis, executives, board members, and physician leaders should be provided an executive-level dashboard of relevant practice scores compared to industry benchmarks and trended over time. Dashboard in hand, leadership can evaluate the network’s operational performance, the effectiveness of the current management team, the progress of specific strategies and tactics and the overall “health” of the network, and make necessary adjustments designed to elicit positive change. In our work with clients, we have found the following metrics to be an excellent starting point:
FINANCIAL
Profit or Loss per provider – Identifying profitability at the provider level is preferable, but, depending on the practice’s accounting processes, data may only be available at the practice level. In that case, an average profit or loss per provider in the practice would be compared to peers. Losses that cannot be reasonably explained become problematic if maintained over extended periods of time. An example of losses being reasonably explained is when a physician is transitioning into retirement and a new physician is hired to assume the workload. The two physicians will likely each be paid a full salary, but a market for two physicians does not exist, so the losses will be greater until the retirement takes place. In addition to the value of this metric in understanding financial performance, it is also important when evaluating commercial reasonableness.
Overhead rate (total operating expense as % of revenue) – Reviewing financials, in this case total operating expenses, against MGMA benchmarks will enable you to determine if your expense structure and practice resources are out of line with the revenue being generated, consequently negatively impacting the bottom line. If so, this will necessitate a deeper dive and investigation by the management team to pinpoint the culprits and provide recommendations and solutions. This category should include all expenses, except provider expense.
Total provider cost as % of revenue – We advise looking at hospital/IDS employed peers as well as private practices to maintain perspective. Having a higher provider cost as a percentage of revenue than peers could be indicative of a provider being overpaid or potential inefficiencies in revenue cycle causing revenue to be lower than peers’.
MACRA Score & patient satisfaction – As payment for service transitions to quality, achieving greater levels of quality will be crucial to ensure you are maximizing your reimbursement potential.
Compensation v. wRVU productivity – Illustrating the alignment of compensation and wRVU productivity is insightful when considering questions, such as:
• Are high producers being paid proportionately to their production? If not, they could be a flight risk.
• Are low producers being overpaid? If this is the case, the compensation plan may not be considered fair market value and commercially reasonable, unless there are extenuating circumstances.
Presenting this data in a scatter diagram is often insightful and quickly articulates a point to an audience.
REVENUE CYCLE
Days in AR – Having high days in AR could be indicative of payer credentialing issues, front desk process breakdowns, and backend protocol or staffing issues, among other issues, that impede proper cash flow.
Adjusted collection rate – Knowing how much revenue is being lost to issues such as improper coding, bad debt, untimely filing, and other non-contractual adjustments will provide insight into areas where remedial steps are needed. Categorizing non-contractual adjustments is key to determining where those remedial steps should be taken.
Professional collections per provider FTE and wRVU – How does the physician’s professional collections (per individual FTE and per wRVU) compare to peers? Can a deficit be explained? Is there a payer mix issue? Or is there a problem in revenue cycle, such as services are not being collected?
VOLUME
wRVUs per provider FTE – wRVUs are, in our opinion, the gold standard in measuring provider productivity. wRVUs are universal across the country—wRVUs for a level 3 office visit in California are the same as they are New Jersey. They are not adjusted for location or affected by payer mix. They allow for a true comparison of effort and productivity. It is important to understand any underperformance so that it can be addressed.
Specialty leakage rate – Capturing specialty referrals from outside your network is vital and should be pursued, but capturing specialty referrals that originate from inside your network is a must. Many networks do not have access to this data, but for those that do, it is game-changing.
An extended management dashboard is needed for management and oversight purposes, which requires more detail and specificity. These additional metrics should be analyzed and presented on a management dashboard:
FINANCIAL
Total support staff per FTE provider – Industry benchmarks are available for front and business office support staff per FTE provider. Overstaffing can indicate inefficiencies in procedures and/or performance that need to be addressed. And understaffing can negatively impact a myriad of issues, from patient scheduling and flow to billing and collections. It is important to manage staffing levels for efficiency, but with an eye toward growth. Economizing at the expense of needed staffing can boomerang.
Total clinical support staff per 10,000 wRVUs – The need for clinical support staff is volume dependent. According to MGMA data for family medicine practices, the median is 2.74 clinical support staff per every 10,000 wRVUs. Again, it is important to staff appropriately and utilize clinical staff to the highest level of their credentials.
General administrative staff per FTE provider – Is the management structure for the practice(s) heavy or too light; is it lacking the appropriate level of management needed to be effective and efficient? Consideration of this metric many times leads to adjustments in policies and procedures.
REVENUE CYCLE
Registration error rate – Usually obtained from the practice management/EMR system or electronic claims submission clearinghouse reports, this report can highlight issues that need to be addressed related to front desk and registration staff. If “clean claims” are produced on the front end, cash flow is improved and business office staff can focus on other issues needing their attention.
Claim denial rate – When highlighted by denial type, practices can begin to correct repetitive issues at their source.
VOLUME
Time to third available new patient appointment – This metric provides insight into new patient access. Holding one appointment slot for new patients can be manipulated, but looking forward to the third is a better representation of true access, or lack thereof.
Appointment fill rate – Providers can only be as busy as their schedules allow, so filling the schedule is key to maintaining (or improving) productivity. We recommend a 95% fill rate. Agreeing to a standard schedule template is key to reducing variation and increasing productivity.
No-Show rate – It is difficult to change behaviors, but if you know a practice has a high no-show rate you can work to mitigate its impact through such measures as double booking frequent no-show patients, initiating appointment reminders, etc.
Network and practice assessments begin with benchmarking against industry data from sources such as MGMA, AMGA, and Sullivan Cotter, but knowing what the benchmarking results mean and what to do about it is the unique professional experience that HSG Advisors can bring to your organization.
