In my last blog (posted below), I discussed the importance of a practice assessment. But as a provider, how do I go about that? In this follow-up, I’ll discuss five easy steps for giving your practice the checkup it needs periodically to keep it — and your financial bottom line — in good health.
Conducting a competitive analysis is a critical step toward the financial success of any business. The frenetic pace of medical practices make them prime environments for applying the concept of continuous process improvement, an ongoing engineering effort to improve the products, services or methods that an organization uses to achieve increased efficiency and effectiveness while determining how to market and grow its business. The cycle begins with an assessment of the current state of the practice while taking a look at the market, operations, financials and culture.
1. Evaluate the market
You entered medical practice to make a difference and improve people’s lives. But let’s face it…it is a business and your own livelihood. Particularly today with consumers bearing a greater portion of the healthcare “spend” and health plans and employers also seeking to get every drop of value, you do have competitors — down the street, across town or even further away. So it’s important to determine how you stack up now, and what perhaps you can learn of why they’re doing well…and where you can do even better to gain a competitive, sustainable advantage.
Start by using your patient origin data to define the current service area. Graphically map out your practice and service area along with those of your competition. Include other elements such as the drive-time radius or use ZIP codes to conduct a market assessment of population statistics and projections by age group. Medicare or other health plans could be helpful in providing delimited data on patients in your area by disease state, hospital length of stay and other factors. With analytical tools and services being easier to leverage than ever before, all of this data can be helpful when considering how future changes in demographics may impact your practice as you also assess your current workflows, locations, staffing and other factors.
2. Assess workflows
Efficient workflows don’t just happen; they’re intertwined and are earned through a thoughtful practice analysis. This can close the entire process loop to make every aspect more efficient and effective, both individually and taken together.
From the most effective use of your time to creating the best patient experience, the flow of your office is essential to your success. Document processes for each functional area. What are the responsibilities of the front-desk staff? Are they up to learning new tasks and tools such as electronic check-in, pre-authorization and collecting the patient’s expected co-pay and deductibles up front, improving collections and lowering days in accounts receivable? This growing movement of many back-office functions to the front end can dramatically improve your practice’s flow of both cash and patients, and actually increase patient satisfaction. No more surprise bills weeks late that anger them…and half the time go unpaid and are written off.
Are certain staff members solely responsible for certain tasks? How more inefficient would your operations be if that person or persons were sick, on vacation or left entirely? For that matter, do you even have the right people with the right skill set and adaptability in the right positions; even if you do, is your staff appropriately cross-trained to cover unforeseen circumstances and peaks in patient load? The process of documenting workflows can itself shed light on which areas can be improved by reassigning work or providing staff training including ongoing refreshers.
Having key employees in different departments complete a SWOT (strength/weakness/opportunity/threat) analysis often provides insight into office roles. These key employees aren’t necessarily your longest-term people, who may been too set in the existing ways to see opportunities most clearly. It should be those who have demonstrated a broad understanding of your operations and some of the issues impacting healthcare delivery and reimbursement, and who have shown a desire for constant innovation. Also, feedback from those on the front line can prove invaluable, especially regarding tasks that a provider may not see, such as the efficiency of the scheduling process.
3. Compare against industry benchmarks
You don’t have to evaluate your practice alone. Tools and services are available that utilize benchmarking to enable you to compare your performance against external standards. Once information is gathered, benchmarking is an important tool for trying to understand how your practice’s performance compares to others, both in your defined service area, region and even nationally.
The Medical Group Practice Association (MGMA) is the best source for comparative benchmarks for medical practices such as staffing, wages, overhead expenses, revenue and patient flow. Practices should calculate the ratio of staff members and their salaries to providers, and compare this against appropriate benchmarks. This information helps identify areas where the practice may be overspending or over-staffing — down to the facility or role level — as compared to similar practices in their specialty.
4. Crunch the financial numbers
Like any business, a healthy medical practice needs a healthy revenue stream. This means that a proper analysis of your finances is an essential part of any medical practice assessment. Financial metrics that should be included are the total charges and collections by provider, gross and net collection percentages, charges and collections per visit, and the number of days that bills sit short- and long-term A/R. These metrics help identify and eliminate errors and error patterns in your billing department or between your internal billing staff and your external billing service, and establish your current profitability. Further, the reimbursement schedule for your top CPT codes from your top health insurance payers should be revisited quarterly to ensure payments are accurate and received in a timely manner, all in alignment with — or hopefully better than — your competition and industry benchmarks.
5. Consider your culture
The culture of a practice is sometimes the most difficult item to measure, but it can’t be ignored as a factor in your success as a business providing consumer services. The U.S. healthcare industry saw a voluntary turnover rate of 15.3% in 2016, up from 14.4% the previous year, according to data from Compdata Surveys’ 2016 annual BenchmarkPro Survey. As an industry, healthcare has one of the highest voluntary and total turnover rates across all industries, matching banking and finance and topped only by hospitality.
Your ability to retain top talent and cultivate a friendly, family feel is what creates an enviable, productive workplace with a patient-centered atmosphere…an atmosphere that also helps you meet patient-satisfaction metrics while growing your practice through positive online reviews, survey responses and word of mouth.
An invaluable investment in your success
Although-time consuming, a full practice assessment can be invaluable in delivering a data- and opinion-based, balanced view of internal and external factors impacting the practice. By selecting meaningful metrics and appropriate benchmarking numbers and using analytical tools to crunch the numbers and transform them from data to actionable information, practices can begin to make strategic improvements to the operational areas that will have the greatest positive impact on their operations and outcomes.
By learning what inefficient processes, people and other factors may be holding back your practice, a medical practice assessment can uncover the underlying problems and empower you to make informed decisions — decisions that will position you and your patients for success now and in the years ahead.
Related resources: Webinar
How to Conduct an Internal Practice Assessment, by Belinda Muench. Access the replay at your convenience, or check out other webinars on our website’s On-demand Webinars page.
Brenda Muench, MHA, is vice president of Strategic Services for Advantum Health. She can be reached at email@example.com.