Benchmarking is a tool, not a definitive answer
Benchmarking is a tool, not a definitive answer
There are no one-size-fits-all solutions
When Sandra McGraw, MBA, runs a benchmarking course for physician practices, many participants get nervous about using the right methodology and getting the same answers as their peers.
McGraw, chief executive officer of The Health Care Group, a Plymouth Meeting, PA, health care consulting firm, cautions them to stop, take a deep breath, and think of benchmarking as a tool, not the end-all, be-all answer to the practice’s performance.
"People are looking at benchmarks as the answer. That’s not the way they were intended to be used. What’s right for one practice could be wrong for another," she says.
For example, there are two 20-physician orthopedic groups. One practice has a high referral base. The other has been in the community for years and gets a significant number of its patients by word of mouth.
The group with the referral base may have a higher procedure-to-visit ratio than the other group, simply because the referring physicians are weeding out patients who just need routine care. The other group may get a large number of people in the community who come in for minor problems.
At the same time, the practice with a lot of referrals may have a higher number of technicians to help move patients through the office. The other group may not need as many technicians because it is doing basic primary care.
This means that the personnel ratios in both groups are very different. "It helps to know what the national data are but don’t necessarily assume something is wrong if you don’t meet the national norms," McGraw says.
Practices with high volume often have high overhead, particularly if they are groups that depend on expensive technology. However, the group may make a lot of money, and that will be an acceptable trade-off.
"I encourage people not to think that if you differ from the benchmarks it’s a bad thing. It could be a good thing," says Elizabeth Woodcock, MBA, FACMPE, an Atlanta-based independent consultant with the Medical Group Management Association (MGMA) in Englewood, CO.
For instance, if you look at MGMA’s statistics, the groups with higher profitability tend to have higher staffing ratios than their peers. "That why people shouldn’t assume that the difference between the statistics and the benchmark is bad. If you look at it in another light, a physician may be able to be twice as productive with more support staff," Woodcock says.
Do you know your practice’s personality?
The biggest single influence on benchmarking statistics is the personality of the practice, McGraw points out. For instance, some physician groups prefer high volume and have a large staff to help them. Others want a slower pace.
There are many other factors that influence the way your benchmarks stack up against those of other practices. For instance, if you just opened a new building, your occupancy-to-revenue statistics wouldn’t be comparable to those of other practices. "If you’re benchmarking yourself against your peers, be careful in making comparisons. There is no right or wrong answer. Benchmarks vary over time," McGraw points out.
For instance, if your practice decided to add ancillary services, invest in clinical equipment, or add staff, your overhead could be higher. You may be spending a lot more money than your peers on those items but still making money.
Just as there’s no one benchmark to suit all practices, there’s no one way to get benchmarking data. If you’re measuring your liquidity ratio, it’s not important that you use exactly the same formula as the practice down the street. What is important is that you measure it the same way year after year.
"Not only is there not a right answer, it doesn’t matter how you do it, as long as you are consistent," she says.
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