Benchmarking involves comparing business statistics to historical data or to the same type of data gathered across a wider spectrum. This is only one statistic, or metric, that can be used to evaluate a practice’s performance. In addition to physician productivity, practices often measure their quality of service and financial performance against internal goals or industry standards.
In any system of measurement, the selection of Key Performance Indicators (KPI) should reflect what is important to the organization. The focus should be on areas where there are either known or perceived gaps between performance and the desired goals, or where compliance with standards is important.
Let’s see how we can benchmark the financial performance of radiology practices:
Benchmarking Quality Metrics
The measurement of practice quality is an area that has gained interest in recent years, perhaps as a result of the federal government’s adoption of quality as a payment criterion in the Medicare program. According to a report in Radiology Business, a 2020 Quality Measures Survey (2019 data) conducted by the Radiology Business Management Association (RBMA) that included 199 respondents showed that the most common quality metrics used are:
- Turnaround Time (67% of respondents),
- Peer Review (42% of respondents), and
- Critical Results Reporting (19% of respondents).
Other metrics that could be used to measure quality include Subspecialized interpretations; Recommendation for further imaging; Outreach and accessibility; Requirement for night and weekend final reads; Call reports; Exam with standard report templates; Appropriate use of advanced imaging; Referring physician satisfaction surveys; Patient satisfaction surveys.
The most common use of such data is for internal comparisons or to support Professional Service Agreements (PSA). In either case, the benchmarking target can be structured to show improvement over a baseline measurement or to achieve a goal set by the practice or PSA. Goals can be set arbitrarily or by reference to an independent standard.
Just as with quality measures, there are many financial statistics that can be measured. Accounts Receivable (A/R) management is a common area of benchmarking, and the RBMA’s periodic A/R survey highlights the following metrics as key indicators:
- Adjusted Collection Percentage (Net Collection Ratio)
- Days Charges in A/R
- Total Write-offs vs. Gross Charges
- Total Write-offs vs. Adjusted Charges
- Bad Debt Recovery vs. Collection Agency Write-offs
- Billing/Collection Expense Percentage
- Billing/Collection Cost per Procedure
In addition, the aging of accounts is usually considered to be a KPI, especially the Percentage of Accounts Over 120 Days. Such surveys offer a practice the ability to see how their performance compares with other practices across the country. Other types of financial performance data might not be shared readily among practices. For example, the payment rate for various payers can be analyzed using the Medicare Fee Schedule as a benchmark.
This gives an assessment of the practice’s contracting and negotiating abilities. When monitored monthly it can show whether payments are being made as expected, according to the contract, or if a non-contracted payer’s reimbursement rate is changing over time.
Attaining quality goals can provide financial rewards, such as in the Medicare Quality Payment Program, and it can also serve to enhance the practice’s ability to retain and maintain favorable service agreements. Monitoring financial benchmarks related to the revenue cycle will assure the practice that it is maximizing its reimbursement and identify problems that arise before they become serious.
Regardless of the performance metrics selected, the goal of benchmarking is to provide actionable data. While benchmarking against other practices is interesting and can point out potential targets for improvement, real progress comes from tracking the practice’s own metrics over time. Regular review of KPI will identify any outliers so that their performance can be improved, thereby improving the performance of the entire practice.