Sanjay M. Patel is founder and chief executive officer of Practice Pro, a leading developer of therapy practice management software that helps clients develop more efficient practices, engage effectively with patients and therapists, maximize billing and collections, and access unparalleled insight into their physical therapy practices.
Do you know the difference between data and information? Think of information as a usable form of data. For example, you may know how often patients don’t show up for their appointments each day, but are you aware of the week-over-week or month-over-month no-show rate and how your practice compares with others? That would be a simple differentiator between data that you’re aware of and information you can use to make intelligent business decisions.
With increased competition and lower reimbursement putting pressure on therapy practices, understanding key performance indicators (KPIs) is a critical consideration to gauge the health of a practice, find areas for improvement and make better decisions.
But not all indicators are created equal. To be truly actionable, information should be as real-time as practical, which just isn’t possible without a practice management software system that supports KPI dashboards.
How to harness practice data
Creating actionable intelligence starts with the quality and the timeliness of the data itself. The adage Garbage In Garbage Out (GIGO) certainly applies to the data quality you should demand. And if you are waiting for the end of the month or the end of the quarter to examine practice data, that’s much too late.
If you’re creating Excel spreadsheets and importing/exporting data from various departments or multiple locations, think of the staff hours involved to find and collate data, not to mention the time loss between data acquisition and the creation of any reports. This is an example of “disconnected” data. The more hands that touch data, the less reliable it becomes.
In order to stay competitive, you must be able to extract actionable information on the fly, which would be “integrated” data. Think about a manufacturer’s ability to pull a product from the assembly line and test it immediately. Any defects can be identified before the product leave the facility.
The easiest way to quickly and easily understand the metrics that matter to your practice is to ensure your practice management software allows for dashboard reporting of KPIs as that information is gathered.
How to use KPIs
Practice leaders who are already using KPIs to any extent are likely tracking the financial health of the organization, which is a great place to start. Gross collections, days between insurance filing and payment (A/R days), and other financial metrics are critical to keeping the doors open and cash flow positive.
But KPIs and dashboards can track much more, and the data will benefit employees from every department. Department heads (billing manager, front desk manager, clinical manager) should be able to track data about their departments, as well as select data across the practice. Therapists should have the ability to access their own metrics and therapist-wide data so they can see their performance against others. This could spur competition to increase efficiency among therapists.
With a proper dashboard, any anomalies that are discovered can be examined in greater detail by drilling down into that metric. A manager can quickly see whether an issue is isolated to a certain time period, practice or therapist to determine what, if any, next steps are required.
As baseline practice KPI metrics are being gathered, determine how often KPIs will be reviewed. You probably want to examine financial data weekly, but you may want to review clinical data daily. After several weeks, look over the KPIs from the beginning and see how metrics change day-to-day, week-to-week or month-to-month. Are no-shows higher on certain days? Some billing months higher?
Once you start measuring performance metrics, you can set goals and start managing to them.
Consider other sources of benchmarking data
In addition to internal metrics, you should also be comparing your practice against industry benchmarks as well as against peer organizations of similar size, by clientele and by geography to see how you stack up. There likely will be some areas where you meet or exceed industry/peer averages and others where your practice comes up short.
The American Physical Therapy Association has started the PPS KPI Benchmarking Program, with the first results expected in April for those that were accepted to participate. If you didn’t take advantage of this initial report, look out for future opportunities. This would be a terrific opportunity.
If you’re outsourcing your revenue cycle management, medical billing companies draw from direct experience to provide accurate targets for KPIs such as accounts receivable percentages and reimbursement per visit for different payer types. Be sure and ask whether any of your vendors can provide benchmarking data.
Your practice management software vendor could be another valuable source of information. Many practice management systems and data registries often will aggregate depersonalized metrics across their client base for the purpose of benchmarking within their own applications.
Finally, consulting and business advocacy services can be expensive, but they can evaluate your practice’s success using KPI standards and their own industry expertise.
While patient care remains the central focus of therapy practices, competition and reimbursement pressures have brought new importance to KPIs and the ability to better manage a practice. Manual data collection and spreadsheets are not only time-consuming and prone to error, they provide a retroactive glimpse of practice metrics that can’t guide critical day-to-day decisions.
Ask your practice management software vendor whether it supports dashboards that compile data in near-real time, provide KPIs at a glance, and offer the ability to better understand any data point in a click or two.