This is Part 1 of a two-part series on Key Performance Indicators (KPIs). Part 1 discusses how to create effective KPIs, while Part 2 discusses how to use them and some traps to to watch out for.
Everyone loves to talk about “data”, but chances are, unless your anesthesia practice is big enough to have a data analytics team, you probably have a lot more data than you actually use. Rather than worry about tracking and monitoring every data point available to you, it’s helpful to narrow the scope down to a few key performance indicators (KPIs), which are measurable data points that show progress towards a particular company/divisional/individual goal. It’s easy to establish simple KPIs like “revenue” or “income” and rate the entire company based on those broad metrics. But while those items may be easy to track, they often won’t provide much insight into how each division/employee is performing. I’ve found that effective KPIs have the four following characteristics:
1. Objectively Measurable
Any KPI you establish should be able to be measured without anyone questioning the metric. If people question the methodology of calculating the number, they won’t accept being evaluated by it. There may be subjective parts of your business you want to track, but unless there is a way to convert those into objective metrics, they won’t be effective KPIs. To paraphrase management guru Peter Drucker, “If you can’t measure it, you can’t manage it.”
Good examples for an anesthesia practice: New revenue, patient satisfaction, provider utilization, days in accounts receivable, net collection percentage, revenue per unit, cost per case, recovery time, turn over time, and even certain clinical data (objective data from an EHR/EMR system can be really helpful)
2. Easily Measurable
Ideally, you should be able to use systems that are already in place for tracking KPIs instead of creating new tracking systems. If you need to dedicate significant resources to just tracking the data, chances are it won’t be worth the effort.
Good examples for an anesthesia practice: Revenue and net income, patient satisfaction or certain clinical data, provider/OR utilization, number of cases, on-time starts, same day cancellation rate
3. Connects with Practice Goals
Any KPI you establish needs to fit with your overall practice goals. So before you work on establishing individual KPIs, ensure that you know what your practice goals are. United Airlines knows that its customers care about getting where they need to go on time (without their flight being cancelled) and with their baggage. So as part of their Global Performance Commitment, all United employees are measured, at least in part, based on the entire company’s on-time arrival percentage, completion factor (flights that weren’t cancelled), and mishandled baggage rate (MBR). Not every employee can affect these metrics on a daily basis, but United knows that if the company performs well on these metrics, their market share, customer satisfaction, and profit will all improve.
Good examples for an anesthesia practice: Provider utilization, new revenue, net income/margin, on-time starts
4. Influenceable by the Employee/Department
If an employee has no impact on a particular metric, it’s unlikely that they’ll ever really buy into using it as a KPI. While United’s KPIs are objectively and easily measurable—and fit with the company’s overall goals—each division in United needs to translate those KPIs into how that division can actually impact those KPIs. For example, the maintenance division needs to implement specific actions/plans to ensure minimal downtime of United’s fleet, which would lead to fewer cancellations and more on-time arrivals. Without this last step, employees won’t feel ownership over the KPI and therefore won’t work on improving it.
Good examples for an anesthesia practice: Patient satisfaction (for your clinical staff), average revenue per unit (for your billing department), provider utilization (for your admin team)
Putting It All Together
Establishing effective KPIs provides a common language with which to discuss and measure performance of your staff. Having ineffective KPIs is a waste of time and energy. Make sure you are clear on your overall practice goals, and then establish employee- or department-specific KPIs that are objective, easy to measure, and something that the employee/group can actually impact.