Donald Rumsfeld was famously skewered for saying, "There are unknown unknowns...things we don't know we don't know." Yes, he was talking about the Iraq War at the time, but the saying could easily apply to practice administrators today, many of whom are operating in the dark when it comes to how their medical practice is performing.
Is your new associate seeing enough patients each month? Are you leaving revenue on the table with procedures? How many times do you need to contact a patient before the bill is paid? You may have a rough idea based on data you've collected in your practice—but shouldn't there be some standards? Some way to know if you're on the right track or if there's room for improvement?
That's where benchmarking medical practice comes in, and it's a practice administrator's or managing physician's best friend when it comes to figuring out what you don't know you don't know.
How exactly does benchmarking work?
Benchmarking is simply comparing your practice performance metrics against a standard figure for that particular metric. Most successful practices are already benchmarking within their own practice—comparing each month's performance against the average for your practice.
But to be truly useful, benchmarking should draw standards from an outside, much larger data set than one single practice's internal numbers. Where can you find such benchmarks? Here are some trusted sources:
- The Medical Group Management Association (MGMA). Check their practice tools section for operational and revenue benchmarks by specialty.
- The American Health Information Management Association (AHIMA). They cover important benchmarks for coding and EHR metrics.
- The Healthcare Billing and Management Association (HBMA). You'll find useful reimbursement benchmarks here.
- Your billing service is an excellent source of benchmark data and in fact, will often consult with you to give you a big picture look at your billing and reimbursement benchmarks compared to similar practices in your area and specialty.
What should you benchmark in your medical practice?
In most cases, benchmarks fall into one of two categories: Operational and Revenue. Most practice consultants recommend benchmarking the following metrics as a start (you may have other specific interests for your practice):
- Number of patient encounters per provider (monthly or quarterly gives a fuller picture). RVU tracking is even more helpful.
- Number of procedures performed per provider; again, an RVU analysis is helpful.
- Payroll analyses including total payroll as a percent of revenue and overtime hours as a percent of payroll.
- Average hold time, average wait time, average time to appointment for new and established patients.
- Days in AR.
- Adjustments as both a percentage and dollar figure.
- Total revenue and A/R by provider.
- Rejection and denial rate.
Related Article: 10 Ways to Improve Medical Practice Profitability and Efficiency
Armed with your own practice metrics, you're ready to compare them with specialty-specific benchmarks in your area to give you a fuller picture of how your practice is performing—and more importantly, what's achievable given the right approach. For example, if your practice is running at 46 days A/R and you see that the benchmark for your specialty is a snappy 33 days, you know that significant improvements are possible and you can begin isolating the factors holding your own performance back.
A few final thoughts about medical practice benchmarks
Data is only as useful as what you ultimately do with it—just knowing where your practice stands compared to others isn't particularly helpful. Setting achievable and measurable goals, regularly monitoring progress, and holding staff accountable for their performance is the surest path to lasting improvement.
If you're wondering how your practice stacks up to others in your specialty, or you'd like to speak with one of our billing consultants about improving your revenue and reimbursement outcomes, contact us today for a free consultation and billing analysis.