Benchmarks enable managers to gain knowledge of their organizations and build a culture of accountability
Corporate CEO Jack Welch adopted a statement of management expert Peter Drucker (1909–2005) as a favorite saying: What gets measured gets managed. This phrase is particularly true when applied to radiology and imaging practices. To be an effective manager and strategic leader, it is vital to use the many resources available to you and to apply them studiously to your practice setting.
To hold yourself accountable to the goals, mission, and vision of your organization, however, you must first create the financial reports, statements, and benchmarks necessary to measure these goals. Benchmarks are a tool that managers can use to measure the effectiveness of the organization, both historically and in future years. They allow standard measurements to be established and can graphically depict moments in time in an organization’s financial structure.
Part of the challenge of producing meaningful benchmarks is sorting through the mountains of data that are available to a practice administrator, followed by synthesizing those data into concise and relevant formats. Benchmarking begins with understanding your specialty, then creating the tools needed to measure and examine your performance.
Understanding Your Business
Health care, in particular, is a complicated industry. Take the revenue cycle as an example: From the moment that a patient schedules an appointment to the point when payment is received, a multitude of steps and procedures are conducted. Many people are involved, including front-desk personnel, clinical staff, physicians, coders, transcriptionists, and billing/collections staff.
In addition, it is not unusual today to see electronic medical records, claim submissions, and payment deposits, and these functions play a vital role in the collection of revenue. All of these factors emphasize the importance of understanding the components of your particular type of practice. These components will become some of the critical measurement factors that an effective benchmarking tool will include.
The revenue cycle is a key component of any practice’s success, but is only one example of an area of a practice that should be tracked. Other critical areas for measurement could include physician productivity, office overhead, accounts-receivable management, radiology procedures or patient visits/encounters, staffing ratios, and fee-schedule analysis.
Figure 1 Physician compensation per total RVU, as compared with Medical Group Management Association (MGMA) benchmarks.
With respect to physician-productivity benchmarks, there are several options available to a manager. Historically, gross charges or billings were the standard measurement for physician productivity, and in some cases, this is still a worthwhile statistic. In recent decades, however, RVUs, as established through the Medicare Physician Fee Schedule, have become the standard measurement of a physician’s productivity. RVUs establish a weighted value for most CPT® codes that is based on the physician’s time, the office expense, and the malpractice expense of the procedure.
Most practice-management systems are capable of tracking RVUs by physician and by CPT code. Some systems are also able to track RVUs by physician by work RVUs, in addition to total RVUs. If this information is available, it should be used, as it is a more accurate measure of the physician’s work required for particular CPT codes. These data would be valuable in preparing several benchmarks. As shown in Figure 1, we could use these data to map physician compensation per total RVU.
This figure shows that the average physician compensation per total RVU has dropped from $20.57 in 2007 to $17.18 in 2008, and it also shows some industry comparisons from the Medical Group Management Association (MGMA), Englewood, Colo. Specifically, an educated manager would be able to interpret these data in line with the typical reimbursement per RVU and could deduce the cost per RVU for the practice by subtracting the compensation per RVU from the typical reimbursement per RVU. This is a solid example of how industry knowledge would allow a manager to interpret multiple benchmarks from one set of statistics.
Figure 2. Physician compensation per work RVU, as compared with Medical Group Management Association (MGMA) benchmarks.
To take this idea one step further, we can look at Figure 2. This