What is a Healthcare KPI?
What is a KPI? A healthcare Key Performance Indicator or metric is a well-defined performance measure that is used to observe, analyze, optimize, and transform a healthcare process to increase satisfaction for both patients and healthcare providers alike. These metrics are commonly used by care facilities to compare their performance to other care facilities and identify areas of improvement.
This post will explain why you should be using healthcare KPIs, the top 25 healthcare KPIs and metrics to use in your 2023 reporting, how each KPI is calculated, and how you can use a healthcare dashboard to streamline your reporting process.
Why Your Business Should Be Using Healthcare Specific KPIs
In this day and age, healthcare professionals are not only focused on the science behind their area of expertise, but on how to provide the best possible care, ensuring optimal hospital performance, and effectively managing occupancy and costs. To do this, most healthcare facilities have transitioned from paper to digital record keeping. Patient charts and records are now input into a digital database. This reduces the amount of “lost” patient information and makes it easier for care providers to access a patient’s files as they are all kept in one central location. While this digital revolution makes things easier for healthcare providers and creates a higher quality of care, it can also provide a quantitative analysis of the operational performance at a hospital or clinic. Patient data can be extracted and transformed into healthcare KPIs that can be monitored on a dashboard or provided to executives in the form of reporting.
Now that you have an idea of the potential behind these digital databases, let’s take a look at the curated healthcare KPI list that we have created for your 2023 reporting.
Operational Healthcare KPIs
Operational healthcare KPIs focus on the performance of the healthcare facility. Improving on these metrics will help your hospital or clinic increase operational efficiency, in turn optimizing operational costs and increasing patient satisfaction.
- Average Hospital Stay: This healthcare KPI tracks the average length of time patients stay in the hospital. While this metric is very useful, it is also very general. To get a higher resolution image of what is happening at the hospital, patients should be grouped by their treatment type. For example, recovering from heart surgery will always require a longer stay than treating a sprained wrist or ankle. An average hospital stay by treatment type will enable hospital staff to identify outliers that may be a result of unseen complications.
Average Hospital Stay = Total Stay Duration / Total Number of Stays
- Bed or Room Turnover: This is a healthcare KPI that tracks how quickly patients are moving in and out of the facility. This metric should be tracked in conjunction with readmission rates to ensure patients are not being discharged prematurely, only to be readmitted again.
Bed or Room Turnover = Number of Discharges (including deaths) / Number of Beds
- Medical Equipment Utilization: How many MRI machines does your hospital need? This modern healthcare metric measures the utilization of advanced equipment at your facility. This is a key metric to help control expenses as specialized equipment carries a heavy price tag. On the flip side, equipment being over utilized can lead to increased maintenance expenditures and unexpected downtime, leading to treatment delays.
- Average Patient Wait Time: Healthcare facilities are often very busy with long wait times. As the name implies, this metric tracks the average amount of time a patient must wait between checking in and seeing a provider. This is an important metric when it comes to staffing, scheduling, and providing insight into patient satisfaction.
Patient Wait Time = Total Wait Time / Number of Patients
As we eluded to earlier in this healthcare KPI list, the primary objective of a healthcare facility is to provide the highest quality of care possible to patients. However, this is only feasible if the hospital or clinic is able to keep its finances in the black.
Healthcare Financial Metrics
Financial healthcare KPIs measure the top and bottom line within your care facility. These healthcare financial metrics include costs associated with treatments, claims, and human capital. They play a key role in identifying and reducing inefficiencies. As such, it is strongly recommended to include these in your healthcare reporting solution. Mistakes made here will trickle down into all other areas of your business.
- Patient Drug Cost Per Stay: This is a modern healthcare metric that is often overlooked by hospital managers. Many drugs have high price tags associated with them. If your staff are not conscious of this, they could end up administering something that the patient cannot afford, or something that their insurance plan does not cover. This could in turn result in a higher-than-expected write-down for the hospital if it is not able to collect payment.
Patient Drug Cost per Stay = Total Drug Cost / Number of Stays
- Average Treatment Charge: This performance indicator shows the average amount a hospital charges for treatment. This indicator best gauges the effectiveness and efficiency of the treatments provided by your facility. This metric can be broken down by treatment type or even by treatment category. Average treatment charge is an excellent measure to use when looking to reduce hospital costs.
Average Treatment Charge = Total Treatment Charges / Number of Treatments
- Insurance Claim Processing Time: Everyone likes to be paid on time. This healthcare performance metric monitors the amount of time associated with processing insurance claims. Different insurers can take varying amounts of time to issue payment to your facility; it is vital to track this for cash flow and accounts receivable (AR) management.
- Claims Denial Rate: Most healthcare costs are typically paid by insurance providers. However, there are instances in which the insurance provider sees reason not to pay. Typically, institutions should be looking for a claims denial rate below five percent. A low claims-denial rate means that the organization has more time to focus on patient care and spends less time on paperwork.
Claims-Denial Rate (%) = (Number of Denied Claims / Total Number of Claims) * 100
- Average Cost per Discharge: Does your care facility track the average costs per patient discharged? This healthcare financial metric can aid hospitals in understanding which areas of care see overspending. It also shows which areas provide the most revenue. Tracking this metric can help hospitals understand long-term spending by care area and adjust care provisions accordingly.
Average Cost per Discharge = Total Cost of Discharges / Number of Discharges
- Operating Cash Flow: As we mentioned previously, the medical system needs money to operate. There are lots of facilities that receive government subsidies, but at the end of the day, they do need to charge for their services. This healthcare financial metric measures the amount of money that is generated from normal operations at the hospital or clinic.
Operating Cash Flow = EBIT + Depreciation – Taxes – Change in Working Capital
- AR Turnover: Most medical facilities receive payment directly from the patient, an insurance company, or through a government contract. This performance metric is used by management to determine how efficiently the care facility is collecting its receivables (money). A high AR turnover indicates that payments are being collected in a timely manner, while a low turnover indicates collection issues.
AR Turnover = Net Credit Sales / Average AR
- Net Profit Margin: At the end of the day, you need to be “in the black.” The net profit, or “bottom line” as people like to call it, is compared to the amount of revenue that your business generates, giving you your net profit margin.
Net Profit Margin = Net Income / Net Sales
Now that we have gone over the operational and financial healthcare metrics that you should be monitoring, let’s talk about how you can manage all these data in an elegant fashion.
How a Healthcare Dashboard can Streamline Your Reporting
Healthcare facilities are busy places. Staff are often run off their feet and struggling to handle all of the work they have. Why not make things easier for your doctors, nurses, and admin? Most medical facilities will make use of a specialized ERP to manage all the data collected from day-to-day operations, however, this doesn’t provide any insights to your staff. At insightsoftware, we have created industry-leading healthcare reporting software that is able to interface with your existing ERP to make KPI tracking and reporting a breeze. Here are some of the benefits of using our healthcare reporting software:
- Automated data collection. Manual data collection is inefficient, cumbersome, and prone to mistakes. insightsoftware’s healthcare reporting solutions are able to collect data from your existing ERP and automatically process them for your dashboard.
- Centralized data. Centralized patient data is something that healthcare professionals yearn for. Unfortunately, they are not something that many healthcare systems have. However, you can have centralized performance data at your facility. Our healthcare KPI dashboard brings your data to one centralized location so that you have access to what you need, when you need it.
- Pre-built KPI templates with ERP interface. Everyone in healthcare is busy – we understand. That is why we have pre-built KPI templates that will automatically extract the data from your ERP.
- Reports at your fingertips. All of the heavy lifting has been done for you already. The data has been automatically collected, located in a central location, and presented in a pre-built dashboard. All you have to do is click “print.”
If you are interested in learning more about the benefits of using a healthcare BI software, don’t hesitate to request a free demo, and we will show you what our software is capable of. In the meantime, let’s get back to the KPIs.
Healthcare Facility KPIs for Monitoring Internal Processes
Internal KPIs in healthcare are built around staff and internal processes. Staff management is a huge part of ensuring your organization’s success. As such, the KPIs in this area revolve around training and safety. This internal healthcare KPI list should be used in conjunction with the operational and financial KPIs mentioned above to get a holistic understanding of how your care facility is operating.
- Error Rate: This rate measures the number of mistakes made by staff in a medical facility when treating a patient. This is the most important metric for understanding the effectiveness of your staff. These errors are typically broken into categories that include: type of medication, dosage amount, and type of therapy recommended.
Error Rate (%) = (Number of Treatment Errors / Total Treatments) * 100
- Training per Department: There are a lot of times in life when you can make a mistake or not really know what you are doing, and it isn’t really a problem. Healthcare facilities are not the kind of place that you should be “winging it.” To ensure proper care is given, healthcare facilities will track the amount of training that staff in each department receive.
- Cancellation Rate: This is a KPI for outpatient clinics as well as hospitals. If a patient misses a scheduled appointment, the result is a wasted resource, as well as a negative effect on the patient’s relationship with the physician or specialist. Measure this value over time so you can address the issues and improve the attendance via reminders or additional calls to patients.
Cancellation Rate (%) = (Number of Missed Appointments / Total Number of Appointments) * 100
- Readmission Rates: This tracks the percentage of patients that are admitted back into the hospital for the same condition or complication they were originally admitted for. Higher hospital readmission rates can indicate that physicians and other care providers are not delivering the proper care to patients, whereas lower hospital readmission rates indicate a strong quality of care. This metric should be used in conjunction with the error rate and training per department to help identify what drives the readmission rates.
Readmission Rate (%) = (Number of Readmissions / Number of Discharges) * 100
- Patient Safety: Does your facility have protocols in place to keep patients safe? This healthcare metric measures the ability of a hospital to deliver quality care to its patients and keep them safe from contracting a new infection or having post-operation complications. It is extremely important to track this metric closely so that you can identify where problems occur, which stage of the process can be improved, and mitigate the chance of outbreaks.
Internal processes are extremely important in the healthcare industry as they can literally be the difference between life and death for a patient. That being said, public healthcare is considered by many to be much more important as it impacts the whole population.
Public Healthcare Metrics
Assessing public health through the use of performance metrics may arguably be more critical to the healthcare system as a whole than evaluating the performance of healthcare facilities. A highly educated general public that receives preventative care will be less likely to put strain on the emergency response healthcare system.
- Childhood Immunization Rate: This healthcare metric measures the number of children who have received immunizations. This is particularity important as it can be treated as a measure of general populous herd immunity. Herd immunity is important for care facilities as it reduces the strain on your care centers and frees up resources to treat other illnesses.
Childhood Immunization Rate (%) = (Number of Children Immunized / Total Number of Children) * 100
- Number of Educational Programs: A population is only as smart as the education it receives. This public healthcare metric tracks the number of education programs in each region. Because this is a pretty broad metric, it is often broken down into program types as well as the target audience for each program.
As we mentioned above, preventative care reduces the burden on the reactive healthcare system. However, that doesn’t mean that we should neglect the reactive portion of the healthcare system.
Emergency Department KPIs
Emergency department healthcare KPIs are metrics focused on patient survival. These can be used to help get an understanding of when people decide they need to visit the emergency room, as well as analyze how well your emergency department is operating.
- Time Between Symptom Onset and Hospitalization: Do people know when they should be seeking medical attention? This healthcare metric measures the time between when a patient begins to experience symptoms and when they are hospitalized. Getting patients into the hospital as quickly as possible is always better. It can help identify and treat conditions before they reach critical stages. Public healthcare officials should use this metric in conjunction with the Number of Educational Programs metric.
- Patient Mortality Rate: This is a healthcare performance metric that many people try not to think about. It measures the percentage of patients that pass away in a hospital’s care before they can be discharged. This healthcare metric is a strong indicator of a hospital’s ability to stabilize a patient’s condition. The industry average for this metric is around two percent, but care facilities should always aim for a lower percentage.
Patient Mortality Rate (%) = (Number of Patients Deaths / Total Number of Patients) * 100
- Emergency Room Wait Time: The emergency room is a chaotic place, dealing with the direst of cases. The emergency room wait time KPI measures the amount of time between the arrival of a patient in the ER and the moment he or she is met by a care provider. This number is similar to the average patient wait time, but is more specific as its focus is only on the emergency room. Evaluate this metric to know when the rush hours of the day are and the busiest days of the week. This will allow for more effective staff scheduling and could, in turn, save lives.
Emergency Room Wait Time = Total Wait Time / Number of Patients
Care Quality Metrics in Healthcare
Quality of care metrics are helpful for two different reasons. When a patient receives high quality care, there is a lower chance of readmission and a higher rate of patient satisfaction. Here are our top care quality metrics in healthcare:
- Staff-to-Patient Ratio: The quality of care you receive in a healthcare facility is highly dependent on the amount of attention a patient receives. The easiest way to track this is by comparing the number of staff to the number of patients. This healthcare metric is so critical that the state of California has a legally enforced staff-to-patient ratio to ensure a minimum quality of care.
Staff-to-Patient Ratio = Number of Staff : Number of Patients
- Patient Follow-Up Rate: Measures the number of patients who receive a follow-up after their stay at the facility. This could be from a physician, nurse, or other staff member asking about the patient’s improvements. This metric is used in conjunction with readmission rate; a higher follow-up rate will often lead to a lower readmission rate.
Patient Follow-Up Rate (%) = (Number of Follow-Ups / Total Number of Patients) *100
- Overall Patient Satisfaction: This is a healthcare metric that calculates patient satisfaction. This can be a great marketing tool for your organization if satisfaction is high, but a low satisfaction level could signal a problem with the facility and its services.
You have now learned the top 25 healthcare KPIs to use in your 2023 reporting and how healthcare dashboard software can streamline your financial reporting. This may seem overwhelming at first, but we are here to guide you on your way to creating a healthcare dashboard. If you have any questions about healthcare dashboard software or healthcare reporting solutions, please contact us, and one of our reporting specialists would be more than happy to help.