How to recognize KPIs that increase the profitability of ASCs
By Scott Allen, Senior Vice President of Managed Care Contracting
When selecting KPIs for your medical practice or ASC, it’s important to consider your specific goals and objectives. For example, if your goal is to increase patient satisfaction, KPIs such as patient wait time, patient feedback scores, and the number of patient complaints can be useful metrics to track.
Determining which KPIs drive the greatest profitability is a detail-oriented process that involves many layers of analysis. Continue reading to see how I break them down into actional outcomes that drive revenue in straightforward and meaningful ways.
Investing in KPIs and the future of ASCs.
Some of the most important KPIs for ASCs include patient satisfaction scores, patient outcomes, case volume, and revenue per case. These metrics can provide insight into the quality of care provided by the ASC, the efficiency of its operations, and its financial performance.
For example, if patient satisfaction scores are consistently low, the ASC may need to invest in training for its staff, improve its facilities, or adjust its policies and procedures to better meet patient needs.
As more complex procedures shift to the outpatient setting, the cost of implants used in these procedures can pose a significant financial burden for surgical organizations. Failure to receive payment for these implants can result in a significant loss, even if the procedure itself is profitable.
To capitalize on this opportunity, ASCs will need to invest in infrastructure and technology to support increased case volumes and expanded services. This might involve investing in new equipment, adding additional operating rooms, or expanding into new geographic areas.
Three KPIs that increase ASC profitability.
There are several key performance indicators (KPIs) that can help increase profitability, but here are three important ones:
Case volume: This is the number of cases performed over a specific time. This KPI tracks the number of procedures performed at a surgery center and it can help measure the effectiveness of marketing efforts, physician referrals, and overall demand for each service.
Case mix: This KPI tracks the types of procedures performed at the ASC, as well as the mix of payers. You can adjust your case mix and patient selection to maximize profitability by increasing the percentage of high-margin procedures compared to low-margin procedures by payer.
Net revenue per case: Increasing your cash per case and decreasing cost per case improves profitability on each procedure. This KPI tracks the total revenue generated per case minus the total cost. This can also be useful in measuring the average revenue generated per procedure per payer.
Keep this data handy when negotiating new contract terms in your favor.
KPIs for ASC growth: case volume vs cash per case.
The main difference between case volume and cash per case is the specific aspect they measure. Case volume measures the number of cases or patients seen in each period, without considering the revenue generated by each case. This KPI is important for tracking patient flow, identifying trends, and assessing the practice’s capacity to handle patient demand.
On the other hand, cash per case measures the amount of revenue generated by each case or patient seen in each period. This KPI is important for tracking the practice’s financial performance and profitability.
By analyzing cash per case, the ASC can identify areas where they may be able to increase revenue and profitability, such as by offering additional services or increasing prices for certain procedures.
You can also work towards increasing the volume of your most profitable cases by marketing your value to potential patients and referring physicians.
KPI strategies to decrease days in A/R.
Days in accounts receivable (A/R) tracks the average number of days it takes to collect payments. This is one of the most popular financial metrics, but it can be easily manipulated and misinterpreted.
For example, if your A/R team is taking the time to follow up and appeal underpayments, including implants, you might see longer days in A/R, but each claim is being worked until it is resolved.
On the other hand, if your payment posters are posting according to the explanation of benefits (EOB), this will reduce your days in A/R, but your cash collections and cash-per-case metrics will shrink if your team isn’t analyzing terms in managed care contracts or pursuing reimbursements.
To set up KPIs that decrease days in A/R and improve profitability, take a look at the past 90 days in A/R: what is your clean claim rate? Are there common reasons why certain claims are getting “stuck” – such as a coding error?
You can improve cash flow and your days in A/R by focusing on metrics that improve your clean claim rate. Automated processes and a more integrated revenue cycle workflow can decrease errors, increase clean claims, and decrease days in A/R.
KPI strategies to reduce days to bill.
Another heavily used metric is days to bill, which tracks the average number of days from the date of service to the actual bill date. Reducing days to bill is an important KPI for any medical practice or ASC, as it directly affects your revenue cycle and cash flow.
This KPI attempts to track the efficiency of the front and middle parts of your revenue cycle, but it doesn’t always take into account the reasons why certain turnaround times exist between each revenue cycle department.
For example, consider the time it takes for operative notes to be transcribed and coded. If your team accepts the surgeon’s notes without obtaining any clarifications, they’ll certainly reduce days to bill, but you may also see a higher percentage of denials, takebacks, and noncompliant claims.
If a certified coder takes the time to verify information with the surgeon, your days to bill will likely be higher, but this best practice will improve coding accuracy.
Tracking a combination of the accuracy of your claims and days to bill is ideal. Automating front-end workflows can speed up the process. A mobile or web-based dictation and transcription service can automatically notify team members when it’s time to review or approve documentation, which tightens turnaround time, communication, and days to bill.
The key to impressive KPIs: company culture.
Certain KPIs are going to be looked at every single day. Some can be weekly, monthly, or quarterly, but developing a rhythm and having constant meetings to discuss results will help your surgical organization stay on track and meet your goals.
Since A/R metrics will ultimately improve their workload, your team will be incentivized to work together on this common goal. When introducing KPIs to your staff, start by choosing one metric per month or per quarter to see how focusing on that one aspect ultimately improves overall quality and performance.
You can get everyone dialed into KPIs by offering a fun goal when a benchmark is reached such as additional time off, bonuses, or any other meaningful benefit.
Secure the reimbursements you deserve for implants.
As you dive deeper into optimizing your business operations, take advantage of new technologies such as machine learning, predictive analytics, and artificial intelligence. These tools can help your ASC gain a stronger grasp on the top metrics that drive orthopedic profitability.
When choosing what metrics to track, remember to think beyond the most common KPIs. Leveraging meaningful KPIs will maximize your cash per case and overall profitability to drive your business forward toward long-term success.
Are you looking for ways to improve your revenue cycle management? Take the first step towards optimizing your revenue cycle process by requesting a revenue assessment from our team of RCM experts. Request a demo.