Benchmarking DataOctober 26th, 2012
As insurers continue to ratchet down reimbursement rates and deductibles continue to climb, medial practice will require more business management. In easier times, the success of a practice could be measured by its ongoing solvency, number of patient visits and the satisfaction of its patients and physicians. In today’s world, revenue and collections need to be monitored daily. Practices that manage by looking backwards at the bottom line after the month closes will find themselves seeing ever decreasing revenue. Rising deductibles, copays and lapses in insurance coverage within your patient base makes patient pay an area that needs to be monitored carefully. Success hinges on managing performance indicators that are vital to a practice’s long-term health. Practices need to have guidelines as to how are they are performing in comparison to the other like practices. Then, all the above needs to be reviewed by the managing physicians easily and quickly every morning as part of the daily routine. Precise timely data is the key to surviving and excelling in today’s ambulatory healthcare. Data and trending comparison within the practice and within the industry can easily be done today. Benchmarking is a proven management technique that allows practices to understand exactly how they are performing so that problems can be identified and corrected quickly. Equally important, benchmarking facilitates goal-setting that is essential to financial health for any medical practice.
Benchmarking is the process of comparing performance. Most medical practices conduct simple internal benchmarking, such as comparing the annual revenue per physician within the practice to identify the top performer and to see how other physicians compare to that individual. While such information may be useful, external benchmarking (comparing the performance of an organization against its peers) provides a much better picture of how well the practice is doing. Indeed, benchmarking is a standard and ongoing activity for many of the world’s biggest companies. Xerox used benchmarking to understand why it lost market dominance to Japanese competitors in the 1970s and to regain its global leadership position in the industry. Historically, few medical practices have used external benchmarking to systematically analyze their performance. However, external factors such as a changing payer mix (or, in some specialties, changes in the practice’s modality or test mix), rising salary and benefit costs, increasing malpractice insurance rates and new audit threats present new challenges to medical groups and require the use of innovative management techniques and tools. Savvy practices are starting to use external benchmarking as a key component of their strategic planning. By comparing a group’s processes and performance against its peers, practice leaders can understand strengths, weaknesses, industry trends and proactively adjust.
Vice President at Benchmark Systems