Management Essentials

Benchmarking for a Better Bottom Line

With staff "buy in," you can set the bar higher.

By Farrell "Toby" Tyson, M.D., F.A.C.S.

Effective leadership of a practice is not arrogant, condescending, overbearing or demeaning. It should be inspiring, enabling and clear in its missions and goals. Benchmarking is one way to show the staff what is expected of them and how well they are meeting the practice's goals. It's the big measuring stick that allows administrators and doctors to set their goals and priorities without having to be perceived as the bad guy.

Most staff inherently feel that their production, and therefore the practice, is better than average. Only after practice benchmarking has been obtained and compared to national averages do all parties involved see the necessity for improvements. A thorough top-down evaluation of the practice should be performed; looking first at accounts receivables, payment posting, patient visits, optical performance and visit efficiencies. This allows for quick inspection of areas that need help.

A/R Timeline and "No-Show" Decreases

When we first started benchmarking, it was clear that our accounts receivable needed quick attention. Even though we had good cash flow, it was obvious that the number of days to collect was much greater than the national average of 45 days, and 120+ days A/R was too high a percentage of total A/R. We immediately added staff to attack the receivables over 120 days. Once this was accomplished, our staff could work more effectively on more recent claims, resulting in our number of days to collect to fall under 30 days. An added benefit of this was increased revenue as less claims were going stale.

We then began benchmarking not on a yearly basis but on a monthly basis. This allowed for timely analysis of changes in the practice. For example, our goal for "no-shows" is 5%, but one month we had a 9% no-show rate. We quickly realized that our staff was not verifying all upcoming appointments. This was remedied, and the next month the no-show rate dropped back to 6%. If this had not been caught quickly, it would have resulted in significant lost revenue.

Staff Ownership

Many administrators hoard the benchmarking findings, only showing them to their physicians. This is very shortsighted. To get the maximum benefit of benchmarking, all parties need to be involved.

Our department managers are in charge of obtaining monthly benchmark data for their departments. The data are collated and distributed to the physicians. The managers then get to show their staff how effective their efforts have been. This leads to "buy in" by the staff and increases morale as goals are met. Once basic benchmarking is in place, you can address areas in more detail. Remember, you can only manage what is measured — and the facts don't lie.

Our next area of concern was our optical department. We only had a general overview of cash flow and inventory here. We put in place benchmarking to look at average sale price, number of sales per optician, days to completion, anti-reflective coating percentage and progressive bifocal percentage.

We learned that our average sale price was on par with national averages, but our sales per optician, anti-reflective coating percentage and progressive bifocal percentage were below them. We brought in industry help to educate and train our staff on the products and how to effectively sell their value. After a couple of months, we started to see a nice jump in second sales with much higher anti-reflective and progressive bifocal use. In addition, a friendly competition began between our opticians as we would publish the monthly benchmarking results.

This increase in readily available knowledge leads to transparent supervision. When this happens you have different aspects of your practice understanding and indirectly monitoring each other. This leads to departmental and personal pride, as no one wants to be on the bottom of the scale. It also encourages others to help out when they see an area of the practice floundering. This help can come directly in the form of more man-hours to a task, or indirectly, by providing new ideas from a different perspective. Once managers and individuals are educated and empowered with benchmarks, doctors and administrators are free to focus on more long-range projects. OM