‘Benchmarking’ is a term that has been around for many years in the business world, and it can go in and out of fashion just like your favourite pair of jeans.
So, in today’s healthcare industry, is benchmarking still relevant? How does it work and how do you interpret results?
Let’s examine these issues so you can determine whether benchmarking is a worthwhile exercise for your practice.
Benchmarking – what is it?
Benchmarking is a process where key items of your practice are compared against other similar practices.
First, the key to a successful benchmark is to ensure meaningful items are measured. What are the key things that worry you about your practice? Do you worry about your performance against your competitors? Are their areas you think could be improved upon? These are the items you should talk about with your advisors to ensure they are covered in the benchmark.
Second, a benchmark is only as good as the database used to make the comparison. In general, it is very difficult to accurately benchmark a specialist practice, as there is simply not enough similar data to compare against – the practices are quite variable. By comparison, benchmarking can be very useful for general practices and, in some cases, you can even benchmark by region to get a clearer picture of your practice’s performance.
Why is it useful?
Many people believe the primary role of benchmarking is to compare your practice against competitors. To do only this would miss the power of what benchmarking can actually do for your business.
The real power of benchmarking is that it enables you to identify any issues in your practice before they develop into big problems. Think of it as a flashlight you shine into the corners to find things that may be lurking unnoticed.
Benchmarking can assist you in the running of your practice in many ways including:
- Identifying areas of success in your practice
- Identifying areas which need improvement, before they become a problem
- Comparing your practice against the competition and industry trends.
Here are some of the key issues that can be identified, in particular, for a general practice:
- Are you generating as much revenue as you can? If not, why? Is it due to your pricing, your appointment mix, your policy on private billing, your use of item numbers, etc?
- Are you paying doctors and staff within industry averages? Does this match with the perception in your practice?
- Are there any expenses that are much higher than they should be?
- What things are you doing better than your competitors?
What areas should be benchmarked?
There are two types of benchmarking to consider – clinical and financial. It’s important to gather both financial and qualitative information and compare these figures to industry trends.
From a financial perspective, the key areas to benchmark include:
– Number of available appointments
– Pricing schedules and opening hours
– Percentage of bulk versus private billing
– Patient fees generated versus patient fees capable of being generated
– Key expenditure such as medical supplies, wages and rent
– Doctor contract payments.
This will give you a broad range of results to help you review your practice.
How to use the results?
If the real power of benchmarking is the identification of issues, make sure you get advice on how to interpret the results. Ideally, it should lead to a discussion with your advisors on some key actions that you can then implement into your practice to either improve your results or address the issues that have come to light.
The power is in the action plan, not the numbers generated.
By way of example, I recently benchmarked a practice that had been underperforming for a few years and, despite everyone working harder, the results were not improving. They came to me tired and disillusioned.
We benchmarked the practice in order to identify where the key problems were, and the results showed they were not in expenses but in revenue. Their appointment rostering system did not utilise all of the available doctors and rooms. Accordingly, they were not maximising the number of patients that could be seen.
This information helped this underperforming practice to focus their energy in an area that would give them better results – work a little smarter, not harder.
Need help with benchmarking your practice? Speak to your local William Buck advisor.