Measuring Financial Success
Key Financial Indicators (part 5 of a 5 part series)

By Marty Hudson

Previously we have discussed your organization’s need for a strategic plan, the importance of budgeting and forecasting, the preparation of a financial reporting package, and the need to understand, value, manage and monitor accounts receivable. Monitoring of accounts receivable through a system of key indicators is absolutely imperative, as it is likely the largest current asset of your organization. But monitoring key indicators goes beyond management of assets and is essential in managing your daily operations. Key indicators are driven from the organization’s strategic plan, are formulated through budgeting, are key in forecasting and should be a fundamental part of the financial reporting package. Be prepared to change your focus of key indicators, dictated by changes in operations, adjustments to forecast, and attainment of the overall strategic plan.

Key financial indicators should support and enhance the financial package. Determine what is important to your organization. Identify areas of opportunity and risk; create indicators to give a “heads-up” display of trends, and progress of achieving planned objectives. If reducing overtime is a focus of the organization, create a heads up analysis by major categories of overtime hours, or overtime hours as a percentage of regular hours. Present this by department, pod or job function. Percentage of overhead to net revenue is an excellent monitor of areas that may work their way out of acceptable ranges over a period of months. Without key indicators, slow moving negative changes can creep up on you, and be a major problem that may take time to correct. Be proactive and monitor key indicators to head off issues before they arise. Use graphs or tables depending on your audience and what works best for the quick “heads-up” display and analysis.

Other potential indicators may include:

• Charges and collections by operating day – this puts months on an equal basis, regardless if they consist of 20 operating days or 23 operating days.
• Charges and collections by provider – this helps focus on fluctuations based on workdays vs. vacation or CME days by providers.
• Nurse hours vs. w/RVUs.
• Support Staff Worked Hours per In-Clinic Patient Visit.
• In-Clinic Patient Visits per Provider FTE.
• Support Staff Worked FTE per Provider FTE.
• Support Staff Salaries as a percent of Net Revenue.
• Gross Revenue Trends.
• Major Surgery Procedures.
• Payor Mix Analysis.
• Charge Ticket Lag-time comparisons.

The list can go on and on. Focus on key areas of your organization. Create opportunities to reduce overhead and improve productivity. Always search for ways to work smarter not harder.

MedicalGPS utilizes GPSMapping TM to create “heads-up” provider dashboards, administrator dashboards, and trending and analysis reports. GPSMapping gives the ability to trend key indicators in your organization and drill down into the details to uncover opportunities for improvement. GPSMapping creates key indicators automatically each download cycle, whether monthly, weekly or even daily. You can view a demo of GPSMapping on line at - www.medicalgps.com, or contact MedicalGPS to receive a customized demonstration utilizing your organization’s data.

Remember; stay focused on your organization’s purpose and strategic plan. Utilization of budgets, forecasting, good financial management and key indicators will keep you on track to reach your objectives.