Oncology Practice Leaders Refocusing Efforts to Improve Long Term Viability
By Ryan Ciarrocchi and Luzie Hagerman
Oncology practices are experiencing acute challenges in today’s rapidly changing healthcare environment. Costs for treating patients are increasing, regulatory changes are affecting the way practices operate, and there are significant changes in reimbursement – compounded by a 2% reduction in fees as a result of the recent sequestration. In addition, payers are moving away from the traditional fee-for-service payment model towards value-based models that recognize quality and patient outcomes.
These shifts require practice leadership to make preserving or increasing revenue and cash flow a top priority. After all, practices cannot provide care if they cannot afford to stay in business. So, how should practice leaders re-tool and re-focus their efforts to keep their practices financially viable and thriving in these challenging times?
Assessing Your Practice’s Performance by Utilizing Key Benchmarking and Operational Metrics
Across the board, practice leaders who understand the current condition of their business through attention to operating metrics make more informed decisions. It may sound fundamental, but many businesses, healthcare-related or not, have not established a structured approach for gathering and analyzing the data necessary to build operating metrics. Nor have they established targets for high-performance. Busy practice leaders often lack the time, resources or system support to get it done on their own, but in today’s environment, the margins for success and profitability are too narrow for oncologists not to have a pulse on all aspects of their business.
Benchmarking performance—comparing a practice’s performance to available comparators—is an important first step because it helps practice leadership identify areas of opportunity for increasing revenue and reducing unnecessary costs. It also provides the information they need to make strategic and operational decisions, outline goals and priorities for the year ahead, and encourage innovation and creative thinking.
Good benchmarking also compares a practice to similar practices and to its own performance over time. It requires a consistent approach for gathering and analyzing data, and a process that clearly defines which data should be collected and compared, whose responsibility it is, and how often it should be done. Many practice administrators lead the oversight and interpretation of the overall benchmarking process with specific data gathering and reporting functions assigned to staff members. Benchmarking quarterly, or trending monthly, helps smooth one-time occurrences and brings true patterns to light. Comparing quarters or month’s year-over-year is another good strategy to highlight potential explanations related to seasonal or other variances.
There are many key performance indicators (KPIs) associated with revenue and cash flow specifically that practices should track and benchmark against. A sample of some of the important metrics is included in Table 1.