Many busy healthcare providers simply don’t have time or the staffing resources to identify and track all the different factors affecting a practice’s productivity. Dealing with daily business matters often leaves little time for assessing which benchmarks to use in comparing your practice to industry standards and figuring out how to implement the findings with an action plan for problem areas can be challenging. Providers and their administrators may find the following suggestions helpful for taking some of the guesswork out of using metrics and benchmarks effectively while saving time and resources.
Why use productivity metrics?
According to the Medical Group Management Association (MGMA) Physicians Compensation and Productivity Report, surveys showed a strong correlation between practices using quality data-based metrics and their financial success. Data needs to be collected over a period of time to show a true picture of trends and comparisons made between benchmarks.
Analyzing your revenue – income versus expenses
There are actually two collection rate percentages that are considered: gross (the initial charges before adjustments) and net.
Net collection rate is a better way to benchmark effectiveness of collections by showing the percentage (after any negotiated contract write-offs) of collectible funds that are actually collected by the practice. Calculating net collection: after subtracting the contractual adjustments, divide by the sum of the gross charges. Example: if your practice was owed $75 (after a $25 adjustment of the original $100 charge) and you collected only $50, the collection rate would be 50 divided by 75 (100 – 25) to give 67 percent.
Benchmark: If calculated correctly, a net collection percentage rate above 95 indicates a financially-healthy practice.
Areas where practices lose money:
Denied claims reduce the amount of profitability of the practice and the services that were paid for. The ability to identify and prevent denials is crucial to lowering rebilling, penalties and other denial-related expenses. Billers and coders can substantially reduce the chance of denials by submitting ‘clean’ claims the first time.
Note that a declining net collection ratio may also indicate an uptick in contractual write-offs or an insufficient number of denial appeals. It may be time to review your contracts for any changes as well as assess the performance of billing staff. If a thorough investigation doesn’t turn up the cause of dropping collections, then a consultation with a practice management expert or an audit may be in order to get to the root of the problem.
Productivity of the practice
The MGMA surveys on costs report specialty-specific rates for facilitating comparison between benchmarks. With that in mind, you can benchmark productivity with work relative value units (WRVUs) to compare yours with similar practices.
Calculating work relative value units: For each service performed, a Current Procedural Terminology (CPT) code is assigned and mapped to a specific level of WRVU to be billed to the payer. An example could be a CPT of 99213 (level 3 office visit for an established patient) which has a WRVU of .97. You will need to figure each provider’s WRVU of the practice.
Benchmark your results: After calculating, you will be able to compare your data to benchmarks of similar practices. Example: WRVUs for a full-time pediatrician are normally 4700 annually; a full-time general orthopedic surgeon would be much higher: around 8200.
To know more about the best way to utilize performance metrics for your practice, please contact M-Scribe, for a free consultation. Our practice management experts can help you identify which areas may need attention and how to create and implement plans for improvement. Call them today at 888-727-4234.