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
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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.
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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
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Slide 4: Agenda
- Definition
- Background
- Benefits
- Process
- Limitations
- Conclusion
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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."
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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.
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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.
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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.
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Slide 10: Let's get started!!!
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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
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Benchmark
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Your Data
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My Clinic vs Benchmarks
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Gross Charges
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$637,386
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$629,236
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-$8,150 or
-1.27%
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Gross Collections
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77%
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85%
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+8%
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Net Collections
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98%
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113%
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+15%
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A/R Ratio |
1.5
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2.0
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+.5
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Operations Margin %
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40%
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43%
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+3%
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RHC Visits |
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Dr. Smith |
105
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128
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-8%
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Joe Smith, PA-C |
85
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100
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+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
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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.
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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
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