Transcript Slide 1

David N. Gans, MSHA, FACMPE
Vice President Practice Management Resources
Medical Group Management Association
August 14, 2008
Benchmarking: Using Internal and External
Data to Measure Performance
Practice Change Fellows Audioconference
Copyright 2008. Medical Group Management Association. All rights reserved.
Learning Objectives
• Understand the benchmarking process
• Identify areas for operational and organizational
improvement
• Measure practice performance over time
• Compare performance to similar organizations
• Develop improvement strategies
• Present comparative information
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Benchmarking Process
Name, credentials
Organization
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Date
3
Benchmarking Rules to Remember # 1
You can drown in a lake that averages three foot deep.
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What is Benchmarking?
•
•
•
Comparison to a known standard
The continuous process of measuring and comparing
performance internally (over time) and externally (against
other organizations and industries)
Determining how the “best in class” achieve their
performance levels and using the analysis to change what
you do and how you do it (process benchmarking)
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Benchmarking Enables You To…
• Evaluate – Objectively evaluate performance and understand
organization’s strengths and weaknesses
• Observe – Observe where you have been, and predict where
you are going
• Analyze – Analyze what others do, to learn from their
experiences
• Determine – Determine how the “best in class” achieve their
performance levels so you can implement their processes
• Change – Convince internal audiences of the need for
change (overcome mural dyslexia)
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Why Comparison Is Important
• Practice Improvement
– Understand performance over time and compared to peers
– Objectively identify improvement opportunities
– Set goals for higher performance
• Decision-Making (Evidence-based Management)
– Reduces uncertainty and builds confidence
– Helps explain decisions and supports your management expertise
• Industry Advancement
– Data is a resource for all practices
– Allows advocates to speak more authoritatively
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Sources of Benchmarking Measures
• Internal information
• External information (surveys & networking)
• “Better Performing Practices”
– Modeled on organizations selected for attaining a particular goal or
achieving an increased level of performance
• “Best-of-Industry”
– Organizations, inside or outside of healthcare, noted for exemplary
performance
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Benchmarking Goals
• Increase:
– Productivity
– Revenue
• Decrease:
– Operational costs
– Organizational overhead
• Optimize staffing levels
• Improve efficiency
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Benchmarking Theory
Name, credentials
Organization
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Date
10
Benchmarking Rules to Remember # 2
Reality is not a bell shaped curve.
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Benchmarking Example: Comparison to a
Known Standard
Comparing your data to the benchmark
Benchmark =
A point of reference
for measurement
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Benchmarking Theory
• Step 1: Determine what is critical to your organization’s
success
– What activity supports the organization’s mission and vision
• Step 2: Identify metrics that measure the objectives (key
indicators)
– A metric or measure of organizational performance
– Quantitatively reflects the factors that drive business efficiency,
profitability, capacity or quality
– Standard unit of observation that facilitates comparison
• Step 3: Determine source of internal/external benchmarking
data
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Benchmarking Theory
Step 4: Measure your performance
Step 5: Compare your performance to the benchmark
Compute the difference of your data from the benchmark
= Your data – Benchmark
Compute the percent difference
= Your data – Benchmark
Benchmark
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Benchmarking Theory
• Step 6: Determine if you need to take action
• Step 7: If you need to take action, identify who does the
process best and how
• Step 8: Adapt the processes used by others in the context of
your organization
• Step 9: Implement changes, reassess practice objectives,
evaluate benchmark standards, recalibrate measurements
• Step 10: Do it again — Benchmarking is an ongoing process,
and tracking performance over time allows for continuous
improvement
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Benchmarking Theory
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Applied Demonstration: Situation
You manage a 3 doctor gerontology department and are
concerned that practice revenue is low. You review the
practice management system and extract the productivity
information from the reports.
You have a meeting scheduled to discuss the issues and want
to have recommendations for how to correct the problem.
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Applied Demonstration: Benchmarking Steps 1 and 2
Step 1: Determine what is critical to your organization’s success
– Have sufficient revenue to continue operations
Step 2: Identify metrics that measure the objectives (key
indicators)
– Total collections (geriatric physicians)
– Total ambulatory encounters (geriatric physicians)
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Applied Demonstration: Benchmarking Step 3
• Step 3: Determine source of internal/external benchmarking
data
– Internal: Practice Management System reports
– External: MGMA Physician Compensation and Productions Survey
Report
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Applied Demonstration: Benchmarking Step 4
Step 4: Measure your performance
Practice Data
Total Collections: Doctor A
Total Collections: Doctor B
Total Collections: Doctor C
Total Ambulatory Encounters: Doctor A
Total Ambulatory Encounters: Doctor B
Total Ambulatory Encounters: Doctor C
Benchmark Data*
Median Total Collections for Professional
Charges: Geriatrics
Median Ambulatory Encounters: Geriatrics
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$
$
$
185,066
195,290
201,625
2,126
2,390
2,475
$
197,389
2,348
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Applied Demonstration: Benchmarking Step 5
Step 5: Compare your performance to the benchmark
Practice
Benchmark* Variance
%
Total Collections: Doctor A
$ 185,066 $
197,389 $ (12,323)
-6.2%
Total Collections: Doctor B
$ 195,290 $
197,389 $ (2,099)
-1.1%
Total Collections: Doctor C
$ 201,625 $
197,389 $
4,236
2.1%
Total Ambulatory Encounters: Doctor A
2,126
2,348
(222)
-9.5%
Total Ambulatory Encounters: Doctor B
2,390
2,348
42
1.8%
Total Ambulatory Encounters: Doctor C
2,475
2,348
127
5.4%
* Source: MGMA Physician Compensation and Production Survey: 2007 Report Based on 2006 Data
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Applied Demonstration: Benchmarking Step 6
Step 6: Determine if you need to take action based on the
benchmark
1.
2.
3.
4.
What is shown in the data?
Are the physicians under performing?
What appears to be the problem?
What should you do?
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Applied Demonstration: Benchmarking Steps 7 to 10
• Step 7: If you need to take action, identify who does the
process best and how
• Step 8: Adapt the processes used by others in the context of
your organization
• Step 9: Implement changes, reassess practice objectives,
evaluate benchmark standards, recalibrate measurements
• Step 10: Do it again — Benchmarking is an ongoing process,
and tracking performance over time allows for continuous
improvement
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Presenting Data
Name, credentials
Organization
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Date
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Benchmarking Rules to Remember # 3
If you torture the data long enough, it will confess.
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Benchmarking Dilemma
Benchmarks & Measures
Cheap, Quick,
& Dirty
Costly, Slow,
& Accurate
Caveats
&
Limitations
Validity = meaningfulness
Reliability = repeatability
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Most Common Benchmarking Statistics
•
•
•
•
•
Median
Mean (Average)
Standard Deviation
Percentile
Count / “N” (Number of observations)
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Presenting Data to Physician Leaders
EXCELLENT
90th %tile =
_________
Your Practice =
_________
75th %tile =
_________
Indicate position of
your practice’s value
on vertical line using
Median =
___________
the ◊ symbol
Mean = ____________
25th %tile =
_________
10th %tile =
_________
POOR
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Standardizing Organizational Data for Comparison
• Organizations of different sizes can be compared using
appropriate ratios
– Examples:
• Per unit of input
– Per FTE physician
– Per FTE provider
– Per square foot
• Per unit of output
– Per patient
– Per RBRVS unit
– Per procedure
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MGMA Benchmarking Data
• Physician Compensation & Production Survey – information
from more than 50,000 providers
• Cost Surveys – information from more than 1,500 single and
multispecialty practices
• Performance and Practices of Successful Medical Groups
– “Better performers” who exceeded a recognized performance
standard
– Focuses on the underlying business practices and “success stories”
with case study information that share successful behavior
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Common Formulas and Ratios
Name, credentials
Organization
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Date
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Benchmarking Rules to Remember # 4
“Sometimes what counts can’t be counted
and
what can be counted, doesn’t count.”
Albert Einstein
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Common Formulas & Ratios
•
•
•
•
•
Staffing
Accounts Receivable & Collections
Bad Debt
Profitability & Expenses
Productivity
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Common Formulas & Ratios: Staffing
• Support Staff Breakouts
–
–
–
–
Total FTE Administrative Staff
Total FTE Front Office Staff
Total FTE Clinical Support Staff
Total FTE Ancillary Staff
• Total FTE Support Staff per FTE Physician
• Total FTE Support Staff Expense per FTE Physician
• Total FTE Support Staff Expense as a Percent of Total
Medical Revenue
• Total FTE Support Staff Expense per RBRVS Relative Value
Unit
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Common Formulas & Ratios: Accounts Receivable
& Collections
• Adjusted FFS Collections
– Goal: Higher the better
• Percent of Total A/R over 120 Days
– Goal: Lower the better
• Months Gross FFS Charges in A/R
– Goal: Lower the better
• Bad Debt due to FFS Activities as a Percent of Gross FFS
Charges
– Goal: Lower the better
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Common Formulas & Ratios: Profitability &
Expenses
• Total Medical Revenue after Operating Cost per FTE
Physician
– Goal: Higher the better
• Total Medical Revenue after Operating Cost as a Percent
of Total Medical Revenue
– Goal: Lower the better
• Total Cost per Medical Procedure (Inside the Practice)
– Goal: Lower the better
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Common Formulas & Ratios: Productivity
• Total Gross Charges per Physician
– Goal: Higher the better
• Total Collections for Professional Services per Physician
– Goal: Higher the better
• Total / Work RVUs per Physician
– Goal: Higher the better
• Physician Weeks Worked per Year
• Physician Clinical Service Hours Worked per Week
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Internal Data Sources
• Standard Financial Statements
– Income Statement
– Balance Sheet
– Appointment Schedules
• Special Reports
– Appointment Schedules
– Patient billings systems ad hoc reports
– Clinical information systems ad hoc reports
• Special Surveys, Inventories, or Assessments
– Number of staff
– Periodic patient satisfaction survey
– Stop watch assessment of patient waiting time
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Questions?
David N. Gans, MSHA, FACMPE
Vice President, Practice Management Resources
Medical Group Management Association
[email protected]
mgma.com
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Benchmarking Rules to Remember # 5
In life’s classroom everything not covered in lecture or in
the readings will be covered on the final exam.
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