South Florida Hospital News
Sunday August 25, 2019

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May 2018 - Volume 14 - Issue 11



Examine the Profitability of Your Practice with Healthcare KPIs

You may believe your medical practice is profitable, but how do you really know? Even if you know how much money you’re making, you likely don’t know how much you’re leaving on the table.

Most providers spend the majority of their time focusing on the clinical side of the practice. However, paying attention to the business side is critical to ensuring a healthy, profitable practice.
To fully understand your practice’s operations and financial condition, you’ll need to go beyond top-line key performance indicators (KPIs) to measure and examine metrics on a more granular level.
Imagine having the information you need to answer questions such as:
•“How much profit is our new ultrasound machine generating?”
• “If we lose a payer relationship, how much would that affect our practice?”
• “Which of our office locations is least profitable?”
Looking more closely at your business metrics can arm you with the information to make strategic decisions and enable you to identify inefficiencies in areas such as revenue cycle management, which can significantly impact your bottom line.
While there are endless metrics you can track, you should start by deciding on a reasonable number of specific measures that can have the greatest impact on profitability. If your practice has multiple locations or physicians, collect and measure this data at the lowest possible levels: per provider, office location or specialty.
Healthcare KPIs can be broken into five main categories:
1. High-level profitability KPIs - gross margin, operating margin, net margin, etc.
2. Revenue cycle KPIs – reimbursement rate, denial rate, resubmission rate, approval rate per denials, date of service to date of submission, etc.
3. Cost KPIs – total overhead expenses as percentage of revenue, total vendor fees as a percentage of revenue, salaries to net patient revenue per provider, etc.
4. Liquidity KPIs – A/R distribution, cash conversion, current ratio, average daily collections, etc.
5. Productivity KPIs – charges by provider, receipts by provider, ratio of claims collected to fees incurred, etc.
Metrics in the first category can give you a big-picture view of your business. As you move into the other areas, you can start to see a more comprehensive view of practice performance and profitability.
There’s no question that healthcare is one of the most dynamic and challenging industries. To survive and thrive, it’s important to be nimble and build a sustainable, scalable practice. The good news is you already have plenty of data that can help you do that – you just have to know where and how to look.
Download this free checklist to learn more: Healthcare KPIs to Measure Profitability.

Kevin N. Fine, MHA, is a director of healthcare advisory services in the Miami office of Kaufman Rossin, one of the top accounting firms in the U.S. He can be reached at

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