What are Healthcare Finance KPIs?
Healthcare finance key performance indicators (KPIs) are quantifiable measurements that help hospital finance and department leaders effectively gauge financial and operational performance against set goals.
By comparing internal data at various levels — such as hospital, department, physician, treatment type, and more — to industry KPIs, finance leaders can determine which service lines and areas of the businesses drive revenue and which areas offer opportunities for financial and operational improvement. Having the market context to know whether your hospital is lagging or leading the industry is critical in today’s rapidly evolving healthcare landscape.
Healthcare Metrics vs. Healthcare KPIs
Not all metrics are KPIs, but all KPIs are metrics. KPIs are a selection of critical metrics used to evaluate progress towards goals and are often used to help organizations focus on areas that will have the greatest impact.
Why are KPIs Important for Healthcare Finance Teams?
Tracking your organization's KPIs can help you improve services as well as your bottom line. KPIs help answer questions that determine how to drive the business forward: Where are our opportunities for operational improvement? Where should we invest additional dollars? Where should we cut back on spending? Do we need to increase staffing levels? Where should we expand our services? How are we performing compared to our peers?
Additionally, relevant and impactful KPIs will:
- Increase visibility and improve buy-in across the organization
- Determine opportunities to improve
- Empower data-driven decision-making
- Evaluate progress and guide course correction if needed
- Drive performance
What Kind of Data is Needed to Track Healthcare KPIs?
The value of data deteriorates over time. Timely access to accurate, trustworthy, and robust data is essential. Using data that is 6-12 months old simply won’t cut it in today’s rapidly changing market. Any lag time makes it difficult to provide context to the numbers.
Data cleanliness or accuracy is a challenge for organizations across all industries, and healthcare is no exception. Rather than waiting for your data to be perfect, identify trustworthy data and use it to guide improvement. Capture data monthly from both internal and external sources, ideally within an integrated enterprise performance management platform that makes reporting easy.
Access to peer benchmark data provides context to measure performance against the market. It should include financial, patient, and clinical data and financial, labor, and clinical benchmarks drawn from at least 1,000 hospitals that represent the country’s hospitals by geography, bed size, and type. The breadth and depth of data enable finance leaders to identify relevant peer groups for comparative analysis across multiple performance dimensions.
There are hundreds, if not thousands, of healthcare KPIs that hospitals can track, but less is more when it comes to measuring operational and financial performance. Consider monitoring the following top 10 hospital finance KPIs, several of which should be tracked at various levels — organization, hospital, department, provider, etc.:
- Operating Margin: Measure profit after accounting for costs
- Volume: Track the output and utilization at all levels of the organization
- Revenue: Ensure incoming cash is sufficient to cover expenses and monitor changes in various revenue-producing areas
- Total Expense: Monitor total cost at various levels of the organization
- Labor Expense: Determine the percentage that labor contributes to total expense and monitor the composition of the labor expense
- Length of Stay: Evaluate the amount of time your patients spend in the hospital
- Costs by Payer: Understand the types of health insurance your patients have and how that impacts your bottom line
- Physician Investment: Track how much your health system spends to subsidize physician practices
- Compensation: Evaluate whether you are over- or under-paying the position types within your organization, including Physicians
- Productivity: Understand the output of each department, practice, and facility in relation to labor time and cost to produce that volume of output
How to Use Healthcare KPIs and Peer Benchmarks
For many healthcare organizations, comparing internal KPIs to peer performance remains an untapped opportunity. Comparative analysis helps healthcare organizations gain a more comprehensive and detailed view of whether they’re performing better, worse, or about the same as similar organizations. With data that proves performance improvement opportunities exist and peers are executing on those opportunities, healthcare leaders are motivated to pursue targeted corrective actions.
Consider these six steps as a roadmap for ensuring you get the maximum value through the effective use of comparative analytics.
- Determine which KPIs support your organization’s strategic priorities and initiatives.
- Determine how and where to locate required inputs.
- Create or adopt a common taxonomy that enables comparison to peer organizations.
- Agree to common key volume definitions and measurements.
- Incorporate modern technology solutions to support a rigorous approach to comparative analytics.
- Nurture a management culture that embraces comparative analytics and prioritizes and supports initiatives based on achievement of targets.
Improve Performance with Accurate, Timely Hospital KPIs
Syntellis offers vital insights, KPIs, and peer benchmarks needed to support sound decision-making on critical hospital investment, expense, and other business strategies. Axiom™ Comparative Analytics sources data from more than 1,000 hospitals monthly and includes more than 6,000 measures spanning 139 aggregated specialty categories. For healthcare leaders seeking more in-depth analyses, the data can be customized into specific peer groups — such as by specialty, practice size, or region.