Financial Benchmarking for Private Medical Practices: Key Metrics to Track for Success
Running an efficient and profitable private medical practice takes more than just being a talented physician or provider. In today’s complex healthcare environment, you also need to have a firm grasp of the financial and operational drivers that impact your organization’s success. This is where financial benchmarking comes in – it provides the metrics and insights you need to ensure your practice is healthy and optimized.
Financial benchmarking is the process of tracking key performance indicators and comparing them to industry standards. This allows you to measure the fiscal vital signs of your medical practice so you can identify opportunities and make data-driven decisions. With the right benchmarks, you gain visibility into what’s working, what’s not, and where you stand relative to top-performing peers.
The key is knowing what metrics to benchmark and how to effectively collect and analyze the data. In this article, we’ll explore the most important financial KPIs for medical practices and how benchmarking can lead to better performance.
The right financial KPIs to track for your medical practice include:
- Total revenue
- Revenue per patient
- Revenue per provider
- Revenue per service line
Tracking your total annual revenue gives insight into growth trends. Revenue per patient shows how much you collect on average per person. Revenue per provider helps gauge individual productivity. Breaking revenue down by service shows profitable areas.
- Total expenses
- Rent, payroll, supplies, etc as % of revenue
- Cost per patient
Look at overall expenses annually and monthly to detect problem areas. Break expenses into categories like rent and payroll to see if any particular costs are too high. Per patient cost helps measure efficiency.
- Net income
- Profit margin
- Accounts receivable days
Net income demonstrates overall profitability. Profit margin shows income as a percentage of revenue. Receivables days measures how long it takes to collect – aim for less than 30 days.
Patient Volume Metrics
- Number of patient visits
- New patients per month
- Patients per provider
Track visits monthly and annually to determine growth. New patients show how well you acquire. Patients per provider measures panel size balance.
Utilization & Productivity Metrics
- Percentage of capacity used
- Patient wait times
- Revenue per hour of operation
Knowing utilization shows open capacity. Patient wait times affect satisfaction. Revenue per operational hour demonstrates productivity.
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Benchmarking Tools & Resources There are resources that provide benchmarks to measure against. Some examples include:
- Medical Group Management Association (MGMA)
- The Advisory Board Company
- Hospital and healthcare compensation surveys
- Specialty-specific organizations like the American College of Radiology
Revenue, expenses, profitability, patient volume, utilization – these are some examples of essential benchmarks. But benchmarking only delivers value if done consistently and paired with action.
That’s why partnering with a TRUTSED ADVISOR can help medical practices institute financial benchmarking as a regular business practice.
TSAT is an experienced healthcare accounting firm, our TRUSTED ADVISING can help you:
- Determine the right metrics to track based on your specialty and goals
- Access trusted benchmark data for accurate comparisons
- Collect, organize and analyze your financial KPIs
- Identify priorities and opportunities based on benchmarking insights
- Create an action plan and timeline for improvement initiatives
- Establish processes for ongoing benchmarking as a best practice
Financial benchmarking provides a competitive edge. Contact us today to discuss how we can partner with you to implement benchmarking and drive better fiscal performance for your medical practice!
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