Contributed by David Fein, CEO of ValuSource, a Colorado Springs, Colo.-based provider of business valuation and medical practice benchmarking technology.
Most people know that benchmarking can improve a medical group’s financial performance. However, not everyone is aware that there’s increasing evidence of a positive correlation between strong financial performance and higher quality patient care.
Let’s start with benchmarking. Who can benefit? According to David Gans, vice president of practice management resources at the Medical Group Management Association, 85 percent of practices can. After carefully documenting a set of best practices and surveying a broad range of the industry, the MGMA found that only 15 percent of today’s practices are operating at peak performance.
Benchmarking, Gans says, is “the ultimate total quality method,” because it involves not only comparing a medical group with known standards but also mandating a continuous process of measuring and comparing performance, both internally over time and externally against other organizations and industries.
Good benchmarking also analyzes how best-in-class groups achieve their performance and uses that analysis as the basis to measure what a practice is doing and how it’s doing it.
“If you’re going to convince physicians or managers of the need for change, I’ve found you need data,” Gans said. Most organizations are bound by inertia and often suffer from what Gans calls “mural dyslexia” – the inability to read the writing on the wall.
After a practice decides to benchmark, it can choose several metrics to measure – financial performance, productivity, clinical performance or patient satisfaction. There’s more than one way to achieve improvement within a practice. Some practices have decided to become the world’s best in a specific aspect of patient care in the belief that the money will follow, even if they don’t focus on it immediately. Other practices begin by benchmarking financial performance and then turn to incorporating other forms of benchmarking.
Most practices find plenty of room for financial performance improvement. “Benchmarking typically identifies opportunities to save at least 5 percent to 10 percent by reducing overhead alone,” says Greg Reardon, CEO of The Reardon Group, a Glen Mills, Pa.-based healthcare tax, management consulting and valuation services firm.
“When you add more efficient processes to handle physicians’ time, that in turn increases productivity, allows for additional patient visits and can substantially increase top line revenue,” Reardon said. Solid financial benchmarking, he adds, has helped several practices he’s worked with increase their bottom lines by 20 percent or even 30 percent.
But just as important, by implementing best practices and improved processes identified by these forms of analyses, practice management can spend more time focused on issues related directly to quality of care, and physicians are able to spend more time focused on each specific patient.
This last point is particularly interesting and is increasingly being noticed by others in the benchmarking business. Gans, for instance, concurs with Reardon: “There is anecdotal evidence that if you do good, you can also do well.” Practices that focus on financial performance also have an unusually strong concern for maintaining excellent quality in delivering patient care.
Part of this may be a straightforward argument for general competence. After all, it’s logical that an effective and efficient office that runs on time and is patient-focused will provide high-quality care.
But whatever the reason, benchmarking is correlated not only with superior financial performance but also with quality care. Organizations that engage in benchmarking experience a collective attention shift that helps physicians and staff members focus on what is really important – optimal service to the patient. Running optimally, a practice feels less fear, engages in less frantic activity and requires less constant management attention.