By Dixon Davis and Vanessa Sindell
Whether your title is manager, administrator, director, chief operating officer, or CEO, one of your many duties is presenting valuable information to owners or board of directors to help guide business success. Knowing that, you may be wondering: What is the best data to present?
Admittedly, the list below is not exhaustive, and it may differ depending on the medical organization, but the three data sets are key to effectively running a business based on our consulting experience.
- Financial budgets/projections
- Operational benchmarks
- ASC KPIs
Purpose: Budgets and financial projections allow you to have meaningful discussions with owners or board members about important decisions that can impact current and future operations. For example,
- What must be accomplished with revenue generation to meet profit goals?
- What is the financial plan to bring on a new provider, including initial costs and future returns?
- What is the impact of adding new services or making changes to current services?
- How can we navigate specific challenges placed upon the practice?
What good looks like: A budget, or financial projection, should include predictions for the next 12-18 months. It can either continue to roll forward each month or be focused on a calendar or fiscal year. It’s important that a budget includes and regularly tracks the following:
- Revenue projections based on realistic provider productivity and services.
- Accurate projections of expenses, including cost of goods sold (COGS) and other operational expenditures.
- Projection of staff payroll, which is often measured separately because it’s usually one of the largest expenses and can fluctuate based on patient volumes. Providing accurate projections on staffing costs, including new staff for times of growth, is vital to good financial planning.
- Capital expense projections, including an estimate of how much and when these expenses will be incurred. (Don’t forget to add revenue in the revenue section when a capital purchase is planned.)
Tools/resources: This budgeting process likely sounds daunting and time-consuming, but a good template can make the endeavor manageable and serve as a valuable resource in your monthly meetings with owners and other key staff. Helpful budgeting templates and tools can be found on eSupport under the the eSupport tab, Business Operations Category.
What good looks like: An operational dashboard should include metrics that are relevant to your practice, comparable to industry benchmarks, and readily obtainable. This information should be presented in an easy-to-read format for key stakeholders. Examples of common operational dashboard metrics include:
- Collections per provider: This allows you to monitor provider productivity. It also gives you insight into scheduling effectiveness, patient flow efficiency, marketing efforts, and provider performance improvements.
- Volume of patient visits & collections per visit: These metrics provide information on office efficiency, premium conversions rates, fee schedule optimization, and scheduling effectiveness —all of which impact profitability.
- Overhead ratios: This data provides information on how efficient the office is using its resources to turn revenue into profit. It’s a way to identify opportunities for revenue growth and/or operational expense reduction (although cutting expenses can only go so far…).
- Payroll & occupancy ratios: These metrics provide great insight into how efficient the office is with its staff and physician space. Staffing is likely your largest cost, and therefore, it’s an expense to closely monitor. Occupancy expenses are usually fixed, and this metric provides insight into how well you are using your space.
Tools/resources: Good dashboard templates make data gathering easier, not to mention provide nice visual reports for stakeholders. eSupport offers operational dashboards and benchmark reports under Business Operations Section > Benchmarking. These reports can help you keep on top of these key operational metrics.
ASC Key Performance Indicator (KPI) Dashboard
What good looks like: A KPI dashboard should provide a snapshot of critical indicators within an ASC. It should show owners key financial trends in terms of volume, utilization, revenue, and expenses in a simple chart. This dashboard should also include industry benchmarks as a way to evaluate the ASC’s performance in a broader context and ensure it’s functioning at optimum efficiency and profitability. A KPI dashboard should include:
- Case volume, including days of surgery and cases per day, can provide insight into the efficient use of the center and how productive staff are within the given space. Keeping a close eye on these measures can help ensure you are staying as productive as possible with current resources.
- Supply & labor cost per case, which should be broken down by percentage of revenue, can help determine your efficiency in using staff and supplies, and if there are opportunities for greater efficiency in using staff or negotiating supply costs.
- Revenue per case: This provides insight into the profitability of the ASC and serves as a good review of case mix, scheduling, and whether fee schedules are optimized. ASCs can thrive when proper staffing is coordinated with a profitable case mix.
These dashboards should be tracked month-over-month and year-over-year to distinguish trends and variances. They should also do their best to include a supporting narrative that explains dashboard metrics and any variances.
Tools/resources: A KPI dashboard is vital to running a successful ASC. An industry standard KPI dashboard and other ASC financial reporting tools can be found on eSupport. While there, you’ll also find a comprehensive board package tool that can be customized and used in your ASC for regular, effective financial reporting.