Key Performance Indicators

for Physician Practices

Sam Eddy
Director, Physician Practice
Consulting, QHR

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Sam Eddy
Director, QHR Physician Practice Management
Director of Physician Practice Management Sam Eddy is a results-oriented
leader with more than 25 years of progressive healthcare business
experience. Prior to joining QHR, his professional background included
serving as the Director of Operations/Projects for FemPartners, Inc. in
Houston, Texas. In this position, Sam grew the business through physician
retention and recruitment, group practice operations, facility development and mergers, ultimately
achieving annual increases in revenue over an 8 year period. His experience also includes serving as
the Manager in the Healthcare Consulting Practice for Cap Gemini Ernst and Young, also in Houston.
While in this role, Sam created and implemented a complete operational redesign for 22 urban
clinics, including staffing and training.
In his current position, Sam is responsible for leadership and oversight of QHRs Physician Services
Consulting practice, which includes advising clients in the area of physician practice management,
practice operations and physician-hospital integration strategies. His clients also benefit from his
proven methodologies in strategic planning, contract negotiation and analyzing operational issues
within the practices to improve financial results of employed physician practices.
He is a member of the Healthcare Financial Management Association (HFMA) and the Medical Group
Management Association (MGMA).

Greetings and
Introductions

Agenda
Why are we looking at Key Performance Indicators Physician Employment Trends
What are the Key Indicators
Examples

PHYSICIAN EMPLOYMENT TRENDS

Hospitals Continue to Employ More Physicians.

Physician Practice Ownership
2002 2011 MGMA Survey
Physicians

Hospitals

100%

75%

50%

25%

0%
2002

2003

2004

2005

Source: Physician Compensation and Production Survey, Medical

Group Management Association, 2002-2010 data; 2011 survey.

2006

2007

2008

2009

2010

2011

Physician Practices Losses Also Continue.

Direct Operating Loss per Employed Physician
2011 MGMA (Based on 2010 Data) Scale by $100,000
2008

75th Percentile

2009

2010

Median

25th Percentile

-$45
-$81
-$104

-$104

-$158
-$190
-$215

-$282
Source: Medical Group Management Association,
2011: Merritt, Hawkins & Associates, 2010 Physician
Inpatient/Outpatient Revenue Survey.

-$333

Sources of Practice Losses

3%
9%

10%

59%

19%

Productivity vs. Compensation

Revenue Cycle
Coding
Source: Medical Group Management Association,
2011: Merritt, Hawkins & Associates, 2010 Physician
Inpatient/Outpatient Revenue Survey.

Payor Mix
Chargemaster

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The Knife Edge Physician Costs

Average Cost of Recruiting

$ 60K - $100K

Practice Start-up Costs

$156K - $250K

Downstream Hospital Margin

- $ 43K - $130K
$173K $220K

Net First Year Cost

Turnover Rate, 2010

6.1%

Turnover Rate, 2009

5.9%

Greatest in Years 1-3

12.9%

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No Room for Error

Average Hospital Inpatient Claim

$20,000+
Average Hospital Outpatient Claim

$5,000+
Average Physician Claim

$180 - $200
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Health Reform Is Here

The Goal:
Expand Access
to 32 Million More
People!

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KEY PERFORMANCE INDICATORS

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Why do we look at KPIs

In business, words are words, explanations are
explanations, promises are promises, but
only performance is reality.
Harold S. Geneen
Former President and CEO of ITT

If you cant measure it, you cant manage it.

Michael Bloomberg
Mayor of New York City and CEO of Bloomberg, Inc.

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What are KPIs

Numerical Factor

Used to Quantitatively Measure Performance

Activities, Volumes

Business Processes

Financial Assets

Functional Groups

Entire Revenue Cycle

Source: BearingPoint, Key Performance Indicators

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What is the Purpose of KPIs

View a snapshot of
performance at an
individual, group,
department, hospital, or
regional level

Assess the current situation and determine root

causes of identified problem areas
Set goals, expectations, and financial incentives for
any individual or group
Trend the performance of the selected individual or
group over time
Source: BearingPoint, Key Performance Indicators

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Where do we start with KPIs

It all boils down to two basic categories:

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Revenue

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KEY PERFORMANCE INDICATORS

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The Majority of KPIs fall into Revenue Cycle

Gross Charges
Net Charges
Adjustments
Gross Collection Percentage
Net Collection Percentage

wRVU's/Provider
Charges per wRVU
Collections per wRVU
Accounts Receivable Aging Overall
Accounts Receivable Aging Over
120 days
Days in AR
Days in AR per payor
Denial Rate by payor
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Denial Type
Denial Type by Payor
Charge Entry Lag
Days to Drop Claim
Days to Pay
Self Pay Balances
Active Accounts per Follow-up Staff
Bad Debt write off

Encounters per Hour/Day

No Show Rates
TOS Collections
New and Established Visit Curves
New patients as a percentage of
total Visits

Detail Counts
It is important to
get data by
provider.

Physicians are
the key
component in
healthcare.

It must be
understandable.

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Charges, Adjustments, Collections

Breakdown by meaningful category. Such as:

Office,
Surgery,
OB,
Lab,
Imaging
Others as necessary

While adjustments may not be broken out on

financials if you are in an accrual system, it is still
important to track them.

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Gross Collection Percentage

Measure:

Gross Collection Percentage

Purpose:

Measures revenue cycle cash flow, assists in

predicting cash flow

Value:

Shows opportunity for improvement in cash

flow

Calculation: Collections divided by Charges

$100,000
=

$ 62,000
25

62%

Net Collection Percentage

Measure:

Net Collection Percentage

Purpose:

Measures revenue cycle efficiency

Value:

Shows opportunity for improvement in

operations

Calculation: Collections divided by (Charges Adjustments)

Collections

$62,000
= 92.5%

Charges-Adjustments

$100,000 - $33,000

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Charges, Adjustments, Collections

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wRVUs by Provider
Measure:
Purpose:
Value:
Calculation:

wRVUs by Provider
Measures productivity of Providers
Shows true work output
wRVU per code multiplied by volume of code performed
totaled

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Charges and Collections per wRVU

Measure:
Purpose:
Value:
Calculation:

Charges/Collections per wRVU per CPT code

Measures consistency in charge master
Show when a procedure is under priced
Total Charges for code divided by total wRVUs

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wRVUs by Insurance Company

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Aged Accounts Receivable

Measure:
Purpose:
Value:

Aged Accounts Receivable by provider, by payor group.

Trending indicator of receivable aging and collectability
Indicates payment delays or revenue cycles ability to liquidate A/R

Calculation:

Aging category divided by total AR

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Days Charges in AR
Measure:
Purpose:
Value:

Days Charges in AR
Measures revenue cycle effectiveness and efficiency
Demonstrate potential additional cash

Calculation:

Total AR divided by the average charges per day for a given period

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Denial Rates
Measure:
Purpose:
Value:
Calculation:

Denial Rate by CPT Payor

Tracks payer denials and impact on cash flow and trends payment opportunity
and process improvement.
Drives root cause accountability in the revenue cycle processes.
Total number of Billed Dollars/Units divided by Total number of Denied
Dollars/units

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Charge Entry Lag

Measure:
Purpose:
Value:
Calculation:

Charge Entry Lag

Measure operational Efficiency
Demonstrates opportunity to accelerate cashflow
Total days of entry delay (DOS to DOE) divided by the number of entries (claims)

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Days to Pay
Measure:
Purpose:
Value:
Calculation:

Days to Pay
Measure delay in payment/cashflow
Perform calculation to predict cashflow, demonstrate payer effectiveness and
compliance
Total days from DOS to DOP divided by the number of claims

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Self-Pay Percentages
Measure:
Purpose:
Value:
Calculation:

Self Pay percentages

Measure Amount of Cash owed from Patients
Determine the effectiveness of revenue cycle
Amount of Billed charges (to the patient) divided by total charges
Total Amount of Self Pay AR divided by the total AR

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Quarterly View

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Calculations on Quarterly View

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Bad Debt Percentages

Measure:

Bad Debt Percentage

Purpose:

Measure the Quality of AR

Value:

Determine cashflow and efficiency

Calculation: Total amount of charges written of over a

period (annually) divided by total charges

Bad Debt WO

$1,800
=

Total Annual Charges

$100,000

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1.80%

Active Accounts/Follow Up Staff

Measure:

Active Accounts per Follow-up Staff

Purpose:

Measure staffing needs in Business Office

Value:

Assure staffing is effective to maintain cashflow

Calculation: Total open account (Non Zero Balance) divided by the staff
assigned to follow up

Open Debit Accounts

2,308

+ Open Credit Accounts

289
2,597

Number of Follow Up Staff (FTE)

2.30

Accounts Per Staff

1,129

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Time of Service Collections

Measure:

Time of Service Collections

Purpose:

Measure the Effectiveness of Front Office Staff

Value:

Maximize cashflow and minimize expense

Calculation: Amount collected at TOS divided by total amount collected

Total Monthly Collections

$55,000

Collected at Time of Service

$ 7,500

Percentage

14%

Is that good? Initial goal should be to collect $25 per visit.

Therefore, if you see 24 patients per day for 20 days per
month that would be 480 patient encounters. 480 times $25
is $12,000.
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Visit Code Ratios

Measure:

E&M Visit Code Ratios

Purpose:

Measure Actual work to Expected Curves

Value:

Shows opportunity to increase revenue and compliance risk

Calculation: Number of billed codes by procedure divided by total procedure

count

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Visit Code Ratios

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Visit Code Ratios

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New Patients to the Practice

Measure:

New patient Percentages

Purpose:

Measure the new patients coming to the practice

Value:

Determine practice growth and patient retention

Calculation: Total number of new patient E&M codes divided by total E&M Codes

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No Show Rates for Visits

Measure:
Purpose:
Value:
Calculation:

No Show rates
Measure the number of times Appointments are not kept
Determine scheduling templates and front office effectiveness
Total number of no shows divided by the total number of patients scheduled

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Patients Seen per Hour

Measure:

Patients Seen Per Hour

Purpose:

Measure the productivity of providers

Value:

Determine the staffing and facilities needed and their effectiveness

Calculation: Total Number of patients seen divided by the total number of office
hours available

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Operating Cost per Provider

Measure:
Purpose:
Value:
Calculation:

Operating Cost
Measure the costs and profitability
Determine where operating efficiencies can be gained
Total Operating costs (less salaries and benefits of physicians) divided by net
revenue

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FTEs per Provider

Measure:
Purpose:
Value:
Calculation:

FTEs per provider

Measure the staffing costs
Determine the optimal staffing needs and create efficiency
Total number of FTEs divided by the total number of providers

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Examples

Proprietary and Confidential

Physician Dashboards

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Physician Dashboards

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Physician Dashboards

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Physician Compensation

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Physician Compensation

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Physician Dashboards

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Physician Dashboards

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Operational Dashboards

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Operational Dashboards

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Financial Statements

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Financial Statements

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Financial Statements

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Financial Statements

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Upcoming Programs
Physician Contract Reconciliation (Trustee
Webinar)
February 12, 2013 12 noon 1:00 p.m. CT
Physician Recruitment, Part II (Trustee Webinar)
March 12, 2013 12 noon 1:00 p.m. CT
Physician Practice Strategy Consortium
June 19-21, 2013 Classroom Program
Loews Vanderbilt Plaza, Nashville, TN
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Evaluation Reminder!
Thank you for joining us today. We value your feedback and
hope that you will take a few minutes to evaluate this program so
that we may continue to improve and bring you the quality
educational programming you expect.
You will receive an email with the link to the online evaluation and
recording of this Webinar within two business days.
To receive credit for this program, please complete the evaluation
form as instructed in the email. You have ten days after receipt
to complete the online evaluation.
If you are unable to complete the evaluation within the ten-day
deadline, your certificate will be delayed. Please contact
Jessica_Bush@qhr.com for assistance.
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For More Information

Contact:
Jessica_Bush@qhr.com

(800) 233-1470, ext. 4513

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Thanks for Attending!

Intended for internal guidance only, and not as
recommendations for specific situations. Readers should
consult a qualified attorney for specific legal guidance.

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