## Welcome to Mazars Healthcare Digest: A Comprehensive Guide to Medical Practice Key Performance Indicators
Hello, welcome to Mazars Healthcare Digest! In this episode, we will be diving deep into the world of Medical Practice Key Performance Indicators (KPIs). I’m Marc Lion, a partner at Mazars in our Accounting and Advisory Group. Joining me is Jackie Jacox, a director in our Healthcare Consulting Group. Together, we will provide you with an overview and examples of KPIs in medical practices, as well as share insights into KPI dashboards.
### Overview of KPIs in Medical Practices
KPIs play a vital role in helping practice management evaluate their performance in a meaningful and efficient manner. The purpose of KPIs is to provide a high-level snapshot of practice performance compared to predetermined targets, objectives, or industry benchmarks. By leveraging KPIs, medical practices can quickly identify areas of focus and monitor their progress towards goals. As the saying goes, without measurement, you cannot have effective management.
### Identifying Profit Leaks in Your Practice
Profit leaks can be detrimental to the success of a medical practice. While financial statements provide valuable information, they often do not capture all the necessary insights. This is where KPIs come in handy as they provide deep insights into various areas of your practice that may require attention. For instance, monitoring the net collection percentage, which measures how effectively you are collecting payments compared to what you are allowed to collect based on payer contracts, can help identify profit leaks. A drop in this percentage below an acceptable threshold, typically around 90%, can indicate issues with billing practices and denials. It’s crucial to review and audit your billing practices to ensure you are following up on denials and maximizing your collections.
### Work Relative Value Units (wRVUs) – A Key Driver of Practice Collections
In a fee-for-service world, work relative value units (wRVUs) play a crucial role in determining practice collections. Benchmarking your wRVUs against peers is essential for understanding your practice’s performance. Furthermore, wRVUs are often used to determine physician compensation arrangements. It’s important to have a clear understanding of how wRVUs work and how they contribute to practice productivity and equality among physicians.
### Analyzing Payer Mix to Optimize Collections
Understanding your payer mix is vital for optimizing collections. A Payer Mix Analysis looks at the collections a practice receives from different payer contracts and determines their contribution to the total collections. By benchmarking your payer mix against industry standards, you can identify opportunities to optimize revenue. For instance, if your practice has a high percentage of public payers, who typically provide lower reimbursement rates, you may want to explore ways to attract more commercial or private payers to balance your payer mix and maximize collections.
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In the latest episode of Mazars Healthcare Digest, Partner Marc Lion and Director Jacki Jacox provide an overview and examples of KPIs in medical practices and share examples of dashboards.