I grew up playing and teaching people how to play tennis. Some players would practice and practice, but it was not until they actually played in a tournament that they got real feedback on how they were progressing. Similarly, as you work day to day in your medical practice, it is easy to operate in a vacuum. However, you can solve this problem by benchmarking your practice against others locally and around the country.
Practicing medicine is data driven. You spend years learning to quickly review and interpret data to improve patients’ lives. This data driven mindset can help you optimize your practice as well.
There are four keys to successful benchmarking:
(i) The ability to produce accurate data in your own practice
(ii) Access to quality data on key metrics for comparable practices
(iii) Proper analysis and interpretation of the data
(iv) The will to execute on your findings.
Producing Your Own Data
How much do you know about your own practice? It’s hard to make comparisons to others when you don’t know your own numbers. This starts with creating sound accounting practices. What type of accounting software are you using? Can it track all of the detail you need? Is the information easily accessible? Work with your accountant or practice consultant to ensure you are capturing the necessary data. As bestselling author Stephen Covey taught, “you want to begin with the end in mind.” Therefore, think about the data you want to be able to review, and then make sure that you have the systems and data collection to give you what you need.
Comparable Key Metric Data
You want to look both at practice characteristics and productivity measures when analyzing comparable data. For example, practice characteristics include: size of patient base, number of exam rooms, hours of operation, number of physicians, number of staff, fees, and payor mix. Productivity measures include revenue per square foot, annual revenue per active patient, gross revenue growth, patients per day, gross revenue per exam, staff turnover, percentage of gross income and net income for staff, marketing, insurance, etc. It is also helpful to compare salaries, rent costs, and insurance premiums.
Where do you get this type of information? There are associations such as the Medical Group Management Association that have a great deal of this type of information available. I’ve also found that practice focused associations also generally have good data on practice areas. Finally, some of the medical industry vendors (e.g. pharmaceutical and device manufacturers) have very good data as well.
Analyze the Data
Your job is to practice medicine, not to be a forensic accountant. Therefore, your practice reports should be clear and easy to understand. You’re looking for trends and patterns in the data. It should not make you cross-eyed to interpret the data. I prefer nice graphs and charts to graphically illustrate the information. This helps me to spot changes over time. One additional point is to know the value of your time. I encourage professionals to do the basic equation (income / hours worked) to know their “hourly rate.” This is very helpful when you consider how you spend your time and what things need to be delegated or outsourced.
As you know and understand your own data then you can better compare it to the benchmark data you review. It’s important to make sure that you are comparing “apples to apples” in your analysis so be cognizant of distinctions based on urban/rural settings, practice size, and geography. How does your practice stack up? Are you managing costs appropriately? Is your practice being productive with the resources allocated? It takes time to actually compare this important data. This is truly thinking “on your business” versus thinking “in your business.” Take the time to set aside good thinking time to review the data. I would recommend getting out of the office so you’re not interrupted. You may want to get some of your trusted advisors or staff to review it with you. Having more than one perspective can be helpful. What is the story that the data is telling you? Write down your conclusions and potential action items.
Act on What You Learn
I have spoken with many physicians who are disappointed when their patients don’t act on the valuable medical advice they receive. As any physician knows, it’s not what you know that counts, but what you do with what you know. Once you’ve taken the time to create the systems to produce accurate data in your practice, gather quality third party data, and to thoughtfully review and analyze the information, now it is time to act. Create written goals and action items based on your findings. Make sure you have action items delegated to those who can get it done. Most importantly, you want to follow up and make sure your organization is accountable to complete the proposed changes. Finally, it’s important to remember that this process is an ongoing one. It creates a positive feedback loop in your practice. I would recommend at least annually making sure that your practice is on the right track!