Benchmarking - Keeping It Simple TOP

Slide 1: Benchmarking - Keeping It Simple RHC Technical Assistance Audio Conference With Linda Goldsmith, BSc, Health Administration July 26, 2006 3:00 pm, EDT

Benchmarking - Keeping It Simple TOP

Slide 2: Linda Goldsmith As the President and Principal Associate in Goldsmith & Associates, Inc., a rural health consulting firm, Linda Goldsmith provides a variety of consulting services designed to optimize administrative performances of rural physician groups and hospitals. Linda possesses 20 years of primary care management experience focusing on rural providers. She has strong leadership skills and a track record of proven results. Combining innovation and experience to teach on topics related to RHC certification and operations, Linda has presented practice management workshops to physicians and clinic managers across the country.

Benchmarking - Keeping It Simple TOP

Slide 3: Conference Objectives At the conclusion of the session, the participant will: Understand what is meant by the term "benchmarking" Understand the benefits of benchmarking Be able to develop a plan to benchmark using key indicators for their own clinic Understand the limitations of benchmarking

Benchmarking - Keeping It Simple TOP

Slide 4: Agenda Definition Background Benefits Process Limitations Conclusion

Benchmarking - Keeping It Simple TOP

Slide 5: Benchmark Defined Webster's Dictionary defines benchmark as "a standard by which something can be measured or judged." Translation for Rural Health Clinics: "Benchmarking" your clinic is the process of comparing the performance of selected indicators from your clinic to the performance of other clinics. For Example: The owner of your clinic thinks too many ancillary staff are employed. In order to confirm this belief, you need to benchmark the number of employees you have to the number of employees of other similar clinics. As a result, you can say "my clinic staffing is at, above or below the average staffing ratio compared to similar clinics."

Benchmarking - Keeping It Simple TOP

Slide 6: History of Benchmarking The process of benchmarking is used by all industries. Benchmarking for medical practices did not begin to develop until the 1980's when clinics began to use computerized A/P systems and A/R systems. The computer made it easier to gather specific data. Primitive examples of benchmarking prior to 1980's included comparison of fees and salaries to other clinics.

Benchmarking - Keeping It Simple TOP

Slide 7: Why Start Benchmarking Now? Many RHCs are struggling with increased overhead, capped RHC AIR, discounted fees, increased indigent population, shortage of qualified & motivated staff, and demanding patients. Benchmarking can help you determine if your performance lags behind other comparable clinics. Years of routine can institutionalize ineffectiveness and prove costly to a RHC. Benchmarking can "open the eyes" of the practice by showing you how well best performing practices are functioning.

Benchmarking - Keeping It Simple TOP

Slide 8: What Can Benchmarking Do For Your Clinic? The process of benchmarking will identify missed opportunities and create an environment to work smarter. In reality, most RHC owners and managers will use benchmarking to get a better sense of the clinic's financial weak points.

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Slide 9: Benefits of Benchmarking Through the comparison process gives owner/manager feedback regarding areas of operations that are performing good & areas that need improvement Provides a foundation or "baseline" to begin to measure improvement Provides objective basis for discussing operations improvement Encourages new ideas, innovation and creative thinking Identifies specific improvement opportunities Can use benchmarking process as a basis for initiating an incentive program and/or an effective budget process.

Benchmarking - Keeping It Simple TOP

Slide 10: Let's get started!!!

Benchmarking - Keeping It Simple TOP

Slide 11: Step 1: Identify Clinic Indicators You Want to Benchmark The following are examples of useful indicators for a RHC. There are many more indicators that can be added, depending on the scope of a project A. Financial: "No profit margin; no viable practice" Charges Annual Gross Charges Percentage of various payers Adjustments Percentage Collections Annual Collections Gross Collection Percentage Net Collection Percentage Accounts Receivable Ratio

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Slide 12: Step 1: Identify Clinic Indicators You Want to Benchmark Expenses Total Practice Expenses Overhead Percentage Payroll Employee Benefits Medical Supplies & Drugs Facility Related Expenses Physician Compensation Other Employee Compensation Operating Margin

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Slide 13: Step 1: Identify Clinic Indicators You Want to Benchmark B. Other Staffing ratio Visits per week Hospital inpatient visits per week New patients per week

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Slide 14: Step 2: Identify An Appropriate Dataset 1. You need to identify and purchase an appropriate dataset that resembles your clinic's profile. For example: Similar/same specialty Family/General Practice vs Surgery General Internal Medicine vs Cardiology

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Slide 15: Step 2: Identify An Appropriate Dataset Similar/Same Clinic Size Solo vs Group Practice Small Group vs Large Group RHC vs Fee-for-Service Practice Independent RHC vs Provider Based RHC RHC vs FQHC

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Slide 16: Step 2: Identify An Appropriate Dataset Similar Geographical Demographics Rural vs Urban Region South North East West Central

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Slide 17: Step 2: Identify An Appropriate Dataset Sources 1. Practice Support Resources, Inc. 1-816-478-8766 Positives Has large data base Breaks down according to geographical regions Good definitions Inexpensive ($49 for single specialty) Negatives Uses ranges instead of actual standard

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Slide 18: Step 2: Identify An Appropriate Dataset 2. Medical Group Management Association (MGMA) 1-800-ASK-MGMA Positives Good for large groups (6+ FTE Providers) Good for specialty groups Good definitions Negatives Expensive ($500+) Too few family practice clinics

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Slide 19: Step 2: Identify An Appropriate Dataset 3. National Association of Healthcare Consultants 1-202-452-8282 Positives Has regional breakdowns (northeast, south, north central, and west) Negatives Expensive ($250+ for non members)

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Slide 20: Step 2: Identify An Appropriate Dataset 4. American Academy of Family Physicians www.aafp.org/query.html Search: Facts About Family Physicians. This document is a series of tables displaying the datasets. Positives Huge data base for family physicians Excellent regarding productivity of family physician Breaks down according to geographical area and rural vs urban Free Negative Does not contain collection and other relevant operational data

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Slide 21: Step 2: Identify An Appropriate Dataset 5. NARHC At the Summer Institute Ron Nelson presented benchmarking data for RHCs. Ron's presentation will be available on NARHC website soon. 6. Ask the consultant that prepares your cost report to see if he/she keeps a set of benchmarks representing data from their clients

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Slide 22: Step 3: Gather Data to Analyze Once you have purchased the benchmarks that resemble your clinic the most, carefully read the definition provided by the source for each indicator you wish to benchmark. Set up your clinic's A/P system to track expense information according to the definitions used in the dataset you purchased. Creating specific subcategories of expense accounts will help in both benchmarking and cost reporting. Set up a spreadsheet for tracking A/R data according to the definitions used in the dataset you purchased. Information is obtained from month end reports produced by your billing system.

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Slide 23: Step 3: Start Analyzing Indicator Per FTE Benchmark Your Data My Clinic vs Benchmarks Gross Charges $637,386 $629,236 -$8,150 or -1.27% Gross Collections 77% 85% +8% Net Collections 98% 113% +15% A/R Ratio 1.5 2.0 +.5 Operations Margin % 40% 43% +3% RHC Visits Dr. Smith 105 128 -8% Joe Smith, PA-C 85 100 +18%

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Slide 24: Step 4: Develop Action Plan to Close or Improve Gap on Indicators Brainstorm ideas/strategies to address problem indicators Select those that are doable Implement strategies Review progress every 3 months to see if improvement

Benchmarking - Keeping It Simple TOP

Slide 25: Limitations of Benchmarking Process One benchmark will not tell the whole story. Even if you find a variance; you may find a reasonable explanation and won't need to start a quality improvement program Unique clinic characteristics, such as geography, age of practice and patients, service mix, and practice style can affect validity of national benchmarks Remember, benchmarks are status quo

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Slide 26: Conclusion There is no perfect benchmark and as a clinic manager, one should not rely on just one way of looking at things. Benchmarking process can help you identify issues, set targets, take action and measure your success. The benchmarking process will provide a very effective process to be successful.

Benchmarking - Keeping It Simple TOP

Slide 27: The End Linda Goldsmith Goldsmith & Associates, Inc. 27 River Valley Road Little Rock, AR 72227 (501) 224-9848 = Office (501) 425-7579 = Cell l.goldsmith27@comcast.net