Issuu

Building A

KPI DASHBOARD

Hailing from a background in management at both an outsourced medical billing company and a busy plastic surgery practice, John Gwin is the founder of The Auctus Group – a financial and operations consulting firm for exclusively for plastic surgeons and dermatologists. John has had the privilege of working with countless physicians for over a decade, aiding and assisting them in process, workflow and growth. From finances and workflow to staffing and beyond, John and his Chicago-based team look to continue aligning themselves with practices seeking growth and efficiency nationwide. He can be reached at john@auctusgrp.com.

By John Gwin

Key Performance Indicators (KPIs) are not a new concept to the business world. However, with the rise of data analytics and modern practice management technologies, there is no limit to the data your practice can measure. The term, KPI, is almost becoming a buzzword thrown at physicians, leadership in the healthcare middle-market and private practices alike all too often. What does this mean for dermatologists? You are probably seeing articles published on LinkedIn and Facebook from medical / financial thought leaders, or in one of the million e-newsletters crowding your inbox. You might get a monthly report from your billing team presenting standard reports with “best practice” KPIs. You may even have a KPI report built right into your practice management system. The problem is this: Any number cruncher worth their weight in spreadsheets can throw reports at you for the sake of numbers all day. A well-versed biller can distort and manipulate data to make it tell the story they want, or at the very least highlight the data they want you to see when they want you to see it. The solution is to develop KPIs that represent true indicators of the health of your practice and to find a delivery method that puts this information at your fingertips when you need it.

EXECUTIVE DECISIONS IN DERMATOLOGY |

Understand Your Numbers and What They Represent At the most basic level, you will need to have a general understanding of your charges, adjustments and payments, as well as your aged receivables. That said, different systems have different constraints, which pull these numbers in different ways. Your internal office workflow will define what the best method will be to pull meaningful numbers for you. For example, if you know you have a delay in documentation or charge entry, running your charge reports on input date versus date of service is going to give you more meaningful figures. Be honest with yourself here. The whole point of reviewing outgoing charges is to forecast future cashflow. If your charges are not entered for a few weeks, and you run the charges report based on the date of service for last month, you are not going to get the meaningful data you need and therefore cannot properly forecast. If you

have a delay in posting and you run reports on payment input date rather than payment received date, your receivables figures will not match your bank account. This will also throw off cash controls in your office, but that is a whole other conversation. For your aged receivables and your adjustment figures, keep in mind that this is mostly a reflection of your contracts and fee schedule inflation thereover. If you are marking up your charges 200% over your top fee schedule, the best adjustment to payment ratio you are going to see is 50%, and that is generous. The real figure is probably closer to 40-45% after factoring in multiple surgery reductions and denials. When you look at your receivables, know your inflation ratio at least roughly and / or have it denoted. Know that the $60,000 on your insurance AR doesn’t mean you have $60,000 hitting your bank account soon. Also, keep in mind that your patient AR shouldn’t be comingled with your insurance as the estimated collection rates will be different.

Consider Your Specialty There is likely at least a duality to your practice that needs to be accounted for in your KPIs. You are likely going to have your insurance practice, your cosmetic practice and potentially your retail business. You have potentially three revenue streams here, with three cash flow schedules and three measurable verticals within your one business. If you don’t segment these three sections of your practice, you will not get numbers that represent your business accurately as a whole. You probably pay more than you want to for your practice management system and many of us do not use them to their fullest extent. Leverage your available technology! Many will have the ability to assign what are typically referred to as “charge categories” or arbitrary groupings of codes. Pull your cosmetic charges into one bucket, CPTs into another to represent your insurance billing component and your retail services into their own respective buckets. You may want to drill down further and itemize

EXECUTIVE DECISIONS IN DERMATOLOGY |

out pathology, injectable, skin care or laser subcategories. Maybe you want to segment online sales versus in store. The key is to measure and monitor the figures that help drive the big picture financial decisions within your practice.

Consider Your Practice Every business is different. So is every practice. Valuable data / information for your colleagues may not be valuable to you. Think about tracking your productivity by provider or location. If you have a recent capital expense, like a shiny new laser, or a number of devices, consider monitoring productivity by device-specific service lines. Most of the examples provided thus far have referenced strictly financial metrics. You may want to consider tracking your marketing / sales figures such as leads and referral sources. If you want to get really fancy, you can dig into cost of lead acquisition and close rates, as well as return on investment (ROI) for given expenses. Depending on your resources and data detail, you can start tracking net profitability by segment / service / device after backing out related expenses.

Visualize Your Data Having access to your figures on a consistent basis and in an easily digestible format is just as important as being able to pull them. As previously mentioned, your financial gurus can drown you in spreadsheets if you want. Visual representations available on your smartphone or online with data that updates on a consistent basis allows you accessibility. This is key because time is nearly always the limiting resource of a manager, executive and / or physician. A few thousand dollars to invest in technology or with a consulting partner to spool your KPIs into a true dashboard that you can access at a glance not only gives you the ability to review more consistently, it forces you to pay attention. Practice management systems typically have a myriad of reporting resources, but many industry-specific marketing firms are beginning to delve into this space. There are also numerous new vendors in the market that are focusing on building KPI dashboards exclusively. The investment is worth it to have a pulse on your practice. You want to run your business from your books, not your bank account, so do not let one-time set-up costs scare you off.

Sound overwhelming?

YOU CAN DO THIS. This project is manageable, and it will have an invaluable impact on the way you run your business. As a practice administrator, you probably have more than a few hats to wear. Tackle the project in steps and give yourself time. Find your KPIs, find the reports you need to pull them, find the proper constraints and find the right technology fit. Worst case scenario: There are industry resources available to help manage the project and launch. Once your system is set up, maintenance is typically minimal, unless you are expanding your practice and re-evaluating your relevant business figures thereafter. If you are adjusting, it means you are growing…and that is a good problem to have! ■

EXECUTIVE DECISIONS IN DERMATOLOGY |