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  • Lorea Lastiri

21 Effective Healthcare KPI Measurement Techniques


Many factors are critical to efficiently running a healthcare facility or group. These factors play vital and interconnected roles in dispensing your primary goal of delivering high-quality patient care.

These factors include organizational design, internal processes, labor, supply-chain management, labor and workforce composition, business model configuration, patient satisfaction, clinical operations, capital allocation, and more.

Thus, there are many details for healthcare providers to track and monitor to ensure you continue to thrive and meet your regulatory obligations.

Healthcare professionals can develop and use key performance indicators (KPIs) to track and measure these details.

However, there are effective and ineffective KPIs. Examples of effective healthcare KPIs include average treatment costs, average patient wait time, patient room or bed turnover rate, staff-to-patient ratio, bed occupancy rate, and readmission rate.

With effective healthcare KPIs, you can make informed decisions about every aspect of your medical facility.

Below, we examine 21 effective KPIs you can adopt if you work in the healthcare industry.

1. Average treatment costs

This KPI measures the average cost the hospital spends per patient. It’s even more effective when you track this KPI across multiple conditions.

You can then use this metric to track trends over time across disease, demographics, patient history, and more.

You can answer questions like:

  • Why are our average treatment costs per patient changing? Is it due to supply chain challenges?

  • Is there a huge disparity between how much patients with similar chronic conditions pay? Is this disparity random, or there’s a massive difference in cost with different doctors?

Also, having an idea of the average cost per patient across multiple conditions will allow you to plan and make budgets accordingly.

For example, you may deduce how much of a product you need per time for a hospital rather than keep a massive inventory you may not need. This allows you to allocate resources more effectively.

Lastly, it’s important to stress that the goal with this metric is not to reduce it and increase profitability but to identify patterns that can inform your decisions.

2. Average patient wait time

Patient wait time is an operational KPI that helps you know how long patients wait before getting any consultation after checking in.

According to the National Center for Health Statistics (NCHS), the “mean wait time was 24.1 minutes in emergency departments (EDs) with less than 20,000 annual visits, compared with 48.7 minutes in EDs with 50,000 or more annual visits.”

The patient data above really highlights the effect of overcrowding. Long wait times affect patient satisfaction, often affecting their propensity to return to the hospital.

Thus, some patients may miss future appointments because of previous poor experiences.

However, you can manage overcrowding by tracking wait times, irrespective of the number of patients. You do this by spotting trends such as the days, hours, and periods you have overcrowding. You can then estimate by how much you must adjust staffing schedules to meet demands per time.

3. Patient room or bed turnover

There are two layers to monitoring bed utilization in your hospital. Firstly, you can use it to investigate your hospital’s quality of care. A short average patient’s stay duration does not necessarily mean the patient received poor care, but it can be concerning and worth probing.

You must also look into a long average duration to ensure patients are not neglected for a large swathe of their stay. It’s a delicate balancing act, but this KPI can help with improving operational efficiency.

Secondly, you can use this KPI to gauge the effectiveness of your environmental services (EVS) department.

Does the EVS department clean the room after a patient is discharged per the “bed priority” code issued by the nurse?

Failing to meet the time limit consistently can negatively influence how efficiently and effectively patients move through your hospital system.

4. Staff-to-patient ratio

The staff-to-patient ratio has a significant impact on patient outcomes. According to the Journal of the American Medical Association, hospitals with one nurse to eight patients “experience five additional deaths per 1,000 patients than” hospitals with one nurse to four patients.

It all starts with monitoring patient wait times and overall volume per time and ensuring there are enough staff to meet demand.

Before, each healthcare provider had a prerogative to determine their optimal staff-to-patient ratio, despite recommended levels.

Now though, more states are mandating new rules. For example, New York now requires state hospitals to have 1 nurse to 2 patients in their critical care units (CCU).

So it’s something to track to avoid regulatory sanctions in areas they are compulsory.

Optimal levels of staff-to-patient ratio ensure your staff do not burn out.

That said, the goal is not just to reduce this metric but to use it in consonance with other healthcare metrics like wait times to determine if you need more staff or need to make alterations to staff schedules.

5. Bed occupancy rate

Bed occupancy rate measures the utilization of a health facility over a given time frame. You can calculate this metric by dividing the total inpatient service days for the period by the total bed days available. It’s expressed as a percentage.

The number of beds is calculated by multiplying the number of days in the assessed timeframe by the number of beds available for treatment.

For example, if you have 30 beds available for use each day and trying to determine the bed occupancy rate over a year, then the bed days available would be 30 * 365 = 10,950.

You can use this data to track seasonal trends. Additionally, you can compare your data with the national average. The average bed occupancy rate in the United States was 64.4% in 2019.

A very low bed occupancy rate may signal poor healthcare services. It could also be indicative of your marketing team’s skills.

6. Medical equipment usage

The purpose of this metric is to ensure every gadget or equipment you have is serving a purpose. You must also determine if its purpose justifies the initial price and continuous maintenance costs.

By tracking this metric, you can quickly make course corrections if you discover that you made wrong purchasing decisions; perhaps you fell for a product’s marketing.

You can either repurpose the tool or see how you can sell it to hospitals that need it.

Sometimes, the solution may just be to move the equipment to a department that has a higher utilization rate for that equipment.

You can also save on maintenance costs by decommissioning or selling equipment you rarely use or just gathering dust and allocate the funds to more modern and advanced tools.

7. Readmission rate

The readmission rate measures the number of patients who return to the hospital after their initial discharge. It’s typically measured over a seven or 30-day period.

In 2018, there were 3.8 million readmissions in the United States over 30 days, with each readmission cost over $15,000 on average.

There are many ways you can leverage this data to improve your operations.

  • Are patients readmitted over the same principal diagnosis during their original stay?

  • What fraction of the readmission is planned and unplanned?

The answers to these questions can highlight the quality of care patients receive at your hospital.

Additionally, it can indicate if there’s a need for more coordination toward better post-discharge planning to ensure patients do the things that will progress their healing further.

You can also segment the data by condition and demographics. Perhaps certain demographics receive subpar care at your healthcare facilities, or specific departments are responsible for your inflated figures.

You can then take appropriate action against bias in your practice if it exists to save costs from hospitalization.

8. Patient no-show rate

No-show patients can disrupt your schedule and cause unrealized income. The average no-show rate was reported to be 18.8% in the United States in 2016. It costs providers about $150 billion in revenue loss.

It can also contribute to patients’ health outcomes for those that missed their appointments and those that could have filled that slot and showed up. The latter group will receive delayed care they could have gotten earlier.

You can calculate the weekly no-show rate by dividing the total number of no-shows in a week by the total number of appointments scheduled for that week.

By tracking this behavior over time, you can identify trends such as days with the most missed appointments or risk factors such as age.

You can then devise strategies to reduce no-shows, such as switching to scheduling software that helps you send reminders about their appointments.

It also springs the question of how appointments are made. You may need to solicit more patient input to fit appointments around their schedule and cost concerns.

9. Medication errors

Medication errors can have adverse effects on a patient’s health. But your facility is also at risk of reputational and financial damages. So, it’s imperative to monitor how often your healthcare professionals are making mistakes when dispensing or administering medication.

The mistake can stem from doctors during diagnosis. It can come from the pharmacy when dispensing drugs, and it can be an error while giving the dosage to the patient.

You can calculate the medication error rate for a period with this formula:

  • Total errors from diagnosis, wrong dispense, and wrong dosage/total number of patients

Regular tracking of this metric can help you identify when errors are creeping up.

You can investigate the cause of these errors, with potential causes including fatigue, inadequate supervision, inexperience, poor training, and much more.

You can then develop strategies to reduce the error rate and prevent mistakes in the future.

10. Average hospital stay

This KPI tracks the days patients spend at your healthcare facility after a procedure. It is best measured per category to gain better context. It’s also important to stress that this metric will vary depending on if you operate a long- or short-term care facility.

This metric can help gauge your hospital’s efficiency and resource utilization.

Your facility consistently getting longer than average hospital stays for a condition speaks more to a department’s effectiveness.

However, low average hospital stays with high readmission suggest the quality of care in that department needs scrutiny.

Tracking this metric over time can also pinpoint when a shift occurred, which can be good for diagnosing the causes. You can easily trace potential triggers or catalysts for positive or negative change.

The goal is to reduce the length of stay without compromising care or increasing readmissions.

11. Patient follow-up rate

Patient follow-up can be instrumental in forestalling readmission or ensuring complete recovery, especially for treatments and procedures with a high risk of readmission.

Despite their importance, many patients fail to show up for their post-treatment check-ups without canceling their follow-up appointments.

This differs from the no-show rate, which covers new patients’ missing their first appointment.

A low patient follow-up rate can lead to the following:

  • Poorer outcomes than when patients come in for post-treatment care or check-up

  • Poor record of patient’s health and how their condition is progressing

  • Poor patient-physician relationships

Some of the recommended ways to improve follow-up rates include adopting telehealth technology to reduce inconvenience and save patient time, sending periodic reminders, and installing an in-office drug dispensing system.

12. Average insurance claim processing time & cost

Medical claim settlement cycle time is the time it takes to receive claim payment after submitting the claim to the insurance provider.

The formula is:

  • (Sum of Medical Claims Settlement Cycle Times)/ Number of Medical Claims Settled.

Long average insurance claim processing time has many negative effects, including increased administrative costs, the inability to meet immediate financial obligations, and operational instability from uncertainty around funds.

You’ll need to investigate why claim processing takes time. Some of the common culprits include poor claims data quality and manual processing.

You can reduce processing time by automating claims intake and adjudication tasks, restructuring the claims unit, and training administrative staff on the best coding and billing practices.

13. Claims denial rate

Your revenue cycle management is key to your survival as a healthcare provider. The claims denial rate is a prominent part of it. This metric measures the percentage of claims insurance payers decline to pay over a period.

The formula is:

  • The number of claims/total number of claims submitted.

A high claim denial rate can throw a spanner into your financial plans and performance, including increased administrative costs.

It can also affect patient satisfaction and access to care as they struggle to make payments for the service they receive.

Tracking this metric can help you determine the root causes of denials. Potential causes include:

  • No coverage or eligibility issues

  • Missing information

  • Coding errors

You can improve denial rates by improving your front-end processes like eligibility verification, staff training, partnering with payers, and adopting technology to automate repetitive tasks that often lead to errors.

14. Patient satisfaction

Patient satisfaction summarizes how patients feel about their interactions at every stage of their hospital visit. This includes how the receptionist made them feel, how the lab technician attended to her, the quality of food in your cafeteria, and much more.

So, it captures the quality of the care and its delivery. This makes it essential in measuring how your service matches patients’ expectations.

Meeting patient expectations can lead to better clinical outcomes, improved doctor-patient relationships leading to post-care instructions, and improved patient retention rate and overall patient loyalty.

The key is to ensure you’re getting feedback from patients at every touchpoint they have during their visit.

While it’s a subjective measure, you can still leverage the information to ascertain touch points that patients are experiencing the least satisfaction.

15. Total and operating margin

Operating margin or net profit margin measures the profitability of a healthcare organization. It is total operating revenue less the total of all operating expenses as a proportion of total revenue

The formula is:

  • (Total revenue - total operating expenses)/total revenue.

The operating margin is different from the total margin. The latter takes into account all sources of income, including grants and donations, while the former only takes into account revenue from patient care.

A positive value means your facility is profitable, while a negative figure shows you’re running at a loss. Zero means break even.

You can compare your operating margin value with similar hospitals to benchmark your financial performance.

Underperforming hospitals in your area or nationwide may suggest you’re dealing with a poor supply chain, over-bloated administrative costs, duplication of effort across the board, poor scheduling, and much more.

16. Labor expense as a percentage of operating revenue

This metric shows hospital management how much operating revenue they spend on labor. Labor costs include expenses like salaries, wages, benefits, and bonuses.

High labor expenses as a proportion of operating revenue may suggest staffing decisions need adjustments or a complete overhaul.

For the most part, many hospitals base their needs on historical data. However, past data may not fully account for new dynamics critical to your staffing needs.

Hence, you need more proactive measures like using predictive technology to forecast staffing needs.

Also, managing staff schedules more effectively may lead to labor cost savings.

We must stress that balancing labor costs with the need for adequate and highly-qualified staff is not an easy feat and is a top concern for most hospitals.

Hence, why keeping an eye on this metric can arm you with information to benchmark labor expenses and balance quality care with sound fiscal responsibility.

17. Patient safety

As patients interact with your healthcare system and processes, they’re at risk of adverse events through no fault of theirs. Patient safety indicators (PSI) measure how often these adverse events happen to patients when they come to your facility.

Tracking this measure is important because most errors are avoidable with the right system and processes. According to that report, about 80% are preventable.

The Agency for Healthcare Research and Quality (AHRQ) puts it this way: “These events are likely amenable to prevention of adverse events by changes at the system or provider level.”

Examples of adverse events include post-operation infections, diagnostic errors, medication errors, unsafe injection practices, surgical wound infection, sepsis, radiation errors, and much more.

18. Outbound referrals for unsupported specializations

It’s standard practice to refer cases you have no expertise to other providers. Tracking such cases can help you identify potential areas of opportunity.

There’s also another layer to this. Patients can be unsatisfied, and you may lose their patronage in the future, especially if they feel they got better service there compared to your facility.

Notwithstanding, you need to do your due diligence in assessing the opportunity. You must weigh the costs and potential revenue to determine whether it’s feasible and profitable.

Remember, you’ll have to hire more staff, buy equipment, do marketing, and assess if there’s ample room to set up a new specialization.

You’ll need to check out the competition and forecast demand in the future. Irrespective of the supposed short-term opportunity, you don’t want to invest in a specialization with a downward trend.

19. Costs by payer

This metric helps you understand the kind of insurance policies your patients have. The options include Medicare, Medicaid, private insurance, or fully out-of-pocket.

Tracking this metric over time can tell you if the composition changes or if there’s a set pattern. The latter offers more predictability to your operations and financial management processes.

However, the former may pose more complexities in forecasting future revenues, thus making budget planning harder.

You can also segment the data to see how the distribution burden is spread across payers for different conditions.

For example, a 2013 study found that uninsured patients represented 16% of overall healthcare costs but only 9% of inpatient trauma costs.

20. Staff retention rate

The 2023 NSI National HealthCare Retention & RN Staffing Report showed the national average hospital turnover rate was 22.7% in 2022.

You must strive to retain staff that deliver top-notch care and keep retention rates lower than the national and local average.

Losing quality staff has many potential negative effects, including high recruitment costs to fill the vacancies and the impact on the quality of care.

The report also notes that losing a registered nurse may cost a hospital about $52,350 on average. These statistics emphasize why retaining quality staff is super important.

A poor staff retention rate suggests a poor working environment, inadequate pay, a toxic work culture, and low quality of equipment and resources.

You can use periods where this rate spiked or reduced to track policies or strategies responsible for such.

21. Professional health staff ratio

This healthcare KPI measures the number of healthcare professionals in proportion to the total number of employees at your facility.

Healthcare professionals include nurses, doctors, and lab technicians, while the other group consists of accountants, clerks, electricians, receptionists, security, valet, and more.

You want to strike a good balance to ensure patients get quality care without compromising the hospital’s maintenance, administrative, and operational capabilities.

In the long run, gaps in either group will eventually play out in patient outcomes and overall satisfaction.

Why are healthcare KPIs and metrics important?

Healthcare KPIs are important for the following reasons:

Strategic goals

KPIs play an important role in tracking your progress toward meeting your short and long-term strategic objectives or goals.

For example, KPIs like retention rate and medication errors can show that you’re far from achieving your strategic objectives of scoring higher in patient satisfaction surveys.

You can equally create strategic goals directly from a single KPI. For example, you can say your goal is: “Reduce the average patient waiting time by 20% within the next year.”

Make informed data-driven decisions

With effective KPIs, you can make plans, develop strategies, and make decisions backed by data rather than how you feel. KPIs can inform hiring decisions, budgetary allocations, staff scheduling and rostering, choice of new specialization, and much more.

KPIs also allow you to pivot from strategies not yielding the desired results. As such, you don’t have to spend more time and resources on unprofitable ventures or positions.

Enforce standards and provide feedback

You can present data and dashboards to give employees feedback about their performance.

They can also see the underlying reason for your decisions and would readily back a strategy when they can get the why behind it.

Preventative strategy

Tracking important healthcare KPIs can help you see trends as they develop. You can use historical and real-time data to make dashboards you can monitor.

You can equally add alerts to these dashboards to ensure you know when certain thresholds are reached or breached.

This equips you with more information or prompts investigations that can prevent costly events in the future.

Benchmarking

Tracking KPIs also helps you compare your facility to similar healthcare organizations. You may be happy with an operating margin of 2% and find that similar organizations made 5% and above.

Takeaway: Learn about effective KPIs for proactive healthcare management

Choosing the right healthcare KPIs gives you superpowers in managing your hospital.

You’ll become more proactive in dealing with issues before they metastasize. They’ll also help you track progress toward meeting your strategic objectives or goals.

You’ll become more effective and strategic in dealing with the many factors critical to efficiently running a healthcare facility or group.

Kippy allows you to import, define, and monitor your KPIs in addition to helping you cascade your strategic objectives to every layer of your healthcare organization.

Ready to seamlessly track and monitor healthcare KPIs? Book a demo and see how Kippy can help.

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