Financial and Operational Benchmarking Trends & Techniques Susan Petrie Chief Operating Officer October 31, 2018 1
Capital Link - Overview Launched in 1995, nonprofit, HRSA national cooperative agreement partner Offices in CA, CO, MA, FL, LA, MO, and WV Over $1.1 billion in financing for over 231 health center capital projects Metrics and analytical toolkits, trainings, and assistance in measuring, evaluating, and implementing performance improvement With HRSA support, have created the Capital Link Benchmarking Toolkit: www.caplink.org/resources/publications 2
Capital Link Benchmarking Toolkit www.caplink.org/resources/publications 3
Capital Link Data Sources Proprietary database that merges financial and operational information for national FQHCs: Over 80% of annual FQHC financial audits for 10+ years 100% of UDS reports for 10+ years With HRSA support, have developed the 2013-2016 National Trends Report www.caplink.org/resources/publications HRSA is also supporting an updated 2014-2017 National Trends Report: Expected publication date: early calendar 2019 4
National Trends Report www.caplink.org/resources/publications 5
Data Included in Charts/Trends National FQHCs Data 2014 2015 2016 2017 Financial Audits 1,022 1,112 1,113 977 UDS Data 1,278 1,342 1,320 1,348 6
Staffing Financial Operations Productivity Improved Access, Quality Care, & Financial Sustainability Patient Satisfaction Utilization Clinical Outcomes 7
Why Metrics Matter You can t manage what you don t know and You can t know what you don t measure Given insight, becomes Given meaning, becomes Given context, becomes 8
Data 9
Data by Itself Is Not Always Helpful But, using metrics to show the relationship between various pieces of data to reveal trends and/or indicators for deeper analysis provides more useful information. 10
Performance Benchmarking Benchmarking/Questions to Ask WHAT do I want to track? WHERE do I find the data? WHICH metrics do I need? WHO do I compare to? WHAT does it mean? 11
Creating Performance Dashboards Building Performance Dashboards Dashboards should be customized Identify your target audience Board members vs. executive management vs clinic managers Choose your financial and operational metrics Limit what you are tracking (5-10 metrics) Stay consistent with your ratio definitions & calculations Match your reporting objectives to your available data sources Annual data often most reliable: Audits, UDS, OSHPD, etc. Monthly/quarterly data better support real-time decision making: PMS systems, interim financials, etc. Explore your available reporting tools Look to Excel as a simple tool for charting performance Time intensive to set up, then efficient for routine reporting 12
Patient Access, Service and Patient Mix, Revenue & Expense Trends 13
National Patient and Visit Trends Millions 120 100 80 60 84 88 93 99 106 110 40 20-21 23 24 25 26 27 2012 2013 2014 2015 2016 2017 Patient Visits 14
Patient and Visit Growth: National Median 8% 7% 6% 5% 5% 5% 5% 7% 5% 5% 6% 4% 3% 3% 3% 3% 2% 1% 0% 2013 2014 2015 2016 2017 Patient Growth Rate Visit Growth Rate 15
Services Provided by Health Centers Number of Health Centers 400 350 300 250 200 150 100 99 258 347 314 366 50 42 0 One Two Three Four Five Six or more 16
Annual Growth in Visits by Service: National Median 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 2% 16% 14% 14% 7% 7% 5% 5% 6% 4% 4% 3% 2014 2015 2016 2017 Medical Dental Mental Health 17
Number of Patients by Service: National Total Millions 40 35 30 25 20 15 10 5-2.6 2.5 2.4 1.8 2.1 2.1 2.2 4.5 4.9 5.3 5.7 6.2 1.2 1.3 1.5 19.2 20.1 21.0 22.3 23.3 2013 2014 2015 2016 2017 Medical Dental Mental Health Substance Use Other Professional Vision Enabling 18
Patient Mix: National Median Percentage of Patients by Payer Source 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 15% 16% 17% 18% 8% 9% 9% 9% 40% 43% 45% 45% 26% 22% 21% 20% 2014 2015 2016 2017 Uninsured Medicaid Medicare Public Insurance Private Insurance 19
Payer Mix: National Median Percentage of Collections by Payer 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 11% 11% 13% 13% 9% 9% 10% 10% 61% 62% 62% 62% 9% 8% 7% 7% 2014 2015 2016 2017 Uninsured Medicaid Medicare Public Insurance Private Insurance 20
Operating Revenue and Expense Growth: National Median 16% 14% 12% 10% 8% 8% 9% 10% 13% 13% 13% 11% 10% 6% 4% 2% 0% 2014 2015 2016 2017 Operating Expense Growth Rate Operating Revenue Growth Rate 21
Financial and Operational Metrics 22
Financial and Operational Metrics Metric 1 Operating Margin 2 Bottom Line Margin 3 Personnel-Related Expense 4 Days Net Patient A/R 5 Days Cash on Hand Why This Is Important Measuring stick of your business model; margins typically small but need to be positive Is performance dependent upon large capital grants and/or other sources of non-operating revenue? Consumes 70-75% of budget; key driver of financial performance Financial management starts with collecting your money efficiently Is there enough liquidity to keep operations running smoothly? 6 Physician Productivity (visits) Productivity is the basis for revenue generation 7 Mid-Level Productivity (visits) Productivity is the basis for revenue generation 8 Dental Provider Productivity (visits) *Capital Link Performance Benchmarking Toolkit Productivity is the basis for revenue generation 23
Financial Health: Important Metrics Operating Margin = Change in Net Operating Assets / Total Operating Revenue Personnel-Related Expenses as a % of Total Revenues = Salaries & Related Expenses + Fringes & Payroll Taxes + Professional/Contracted/Consultant Fees Total Operating Revenues Days Cash on Hand = Unrestricted Cash (Total Operating Expenses Depreciation) / 360 days) 24
Operating Margin 12% 10% 9.2% 10.1% 9.2% 8% 6% 4% 2% 0% -2% -4% 6.8% 4.3% 3.7% 3.6% 1.9% -2.2% -0.2% 0.5% 2014 2015 2016 2017 75th Quartile Median 25th Quartile Benchmark -0.2% 25
Bottom Line Margin 12% 10% 9.9% 10.9% 11.4% 10.3% 8% 6% 4% 3.3% 5.1% 5.5% 4.4% 2% 0% -2% -0.4% 1.3% 0.8% 0.9% 2014 2015 2016 2017 75th Quartile Median 25th Quartile Benchmark 26
Personnel-Related Expenses as a Percent of Operating Revenue 80.0% 75.0% 70.0% 65.0% 78.1% 72.4% 65.3% 76.6% 75.4% 70.9% 70.2% 64.0% 63.2% 76.6% 71.8% 65.0% 60.0% 55.0% 50.0% 2014 2015 2016 2017 75th Quartile Median 25th Quartile Benchmark 27
Days in Patient Accounts Receivables 70 65 60 55 50 45 40 35 30 25 65 62 60 57 43 41 41 39 29 28 29 27 2014 2015 2016 2017 75th Quartile Median 25th Quartile Benchmark 28
Days Cash on Hand 140 120 100 91 106 115 121 80 60 40 20 42 18 53 24 63 67 28 29 0 2014 2015 2016 2017 75th Quartile Median 25th Quartile Benchmark 29
Provider Productivity Visits per FTE: National Median 12,000 10,000 8,000 6,000 4,000 1,048 946 947 963 1,927 1,904 1,819 1,762 2,535 2,443 2,439 2,401 3,035 2,933 2,859 2,780 2,000 0 2,817 2,704 2,650 2,575 2014 2015 2016 2017 Total Mental Health Visits per Mental Health FTE Total Dental Visits per Dental FTE Total Advanced Practice Visits per Advanced Practice FTE Total Physician Visits per Physician FTE Total Medical Visits per Medical FTE 30
Percentage Change in Productivity: 2014 to 2017: National Median 0-1 -2-3 -4-5 -6-7 -8-9 -10 Total Medical Visits per Medical FTE Total Physician Visits per Physician FTE -9% -8% Total Advanced Practice Visits per Advanced Practice FTE -5% Total Dental Visits per Dental FTE -9% Total Mental Health Visits per Mental Health FTE -8% 31
Additional Critical Operational Metrics in FFS Model 32
Revenue per Patient and Visit: National Median $1,000 $900 $800 $700 $600 $500 $400 $300 $200 $100 $- $900 $931 $834 $772 $206 $224 $238 $246 Operating Revenue per Patient Operating Revenue per Patient Visit 2014 2015 2016 2017 33
Visits Per Patient Per Year 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 4.3 4.4 4.4 4.5 3.6 3.7 3.7 3.7 3.1 3.1 3.1 3.2 2014 2015 2016 2017 75th Quartile Median 25th Quartile 34
Evolving Business Models 35
Transition from FFS to Value-Based Reimbursement 36
Value Transition Based from Transition FFS to Value-Based Reimbursement 37
Transition from FFS to Value-Based Reimbursement Fee for Service Volume Individual Health Quality is a concern Stand-alone systems can thrive Little financial risk Manage revenues Value-Based Outcomes Population Health Quality is financial driver Collaboration is essential Increased financial risk Manage costs 38
Transition from FFS to Value-Based Reimbursement Redesigned Incentives 39
Transition from FFS to Value-Based Reimbursement Metric Why This Is Important 9 Medical Provider Productivity (patients) Becomes more important in transition to team-based care 10 Medical Team Productivity Who are your teams? How do they perform? 11 Cost (Revenue) Per Visit How are your visit costs changing over time? 12 Cost (Revenue) per Patient With the move to PCMH, how are patient costs changing? 13 Medical Support Staff Ratio How strategic is the staffing the medical teams? 14 Non-Clinical Staff Ratio Non-clinical employees are not revenue drivers *Capital Link Performance Benchmarking Toolkit 40
Medical Patients per Medical Provider 1,150 1,100 1,050 1,000 950 900 850 800 750 700 650 1,108 1,082 1,054 1,032 933 899 876 864 751 717 715 699 2014 2015 2016 2017 75th Quartile Median 25th Quartile 41
Medical Patients per Medical Team Member 400 380 360 340 320 300 280 260 240 220 200 387 370 365 356 319 304 299 295 263 247 242 241 2014 2015 2016 2017 75th Quartile Median 25th Quartile 42
Cost Per Patient and Visit: National Median $1,000 $900 $800 $700 $600 $500 $400 $300 $200 $100 $- $843 $874 $755 $788 $200 $211 $224 $234 Operating Expense per Patient Operating Expense per Patient Visit 2014 2015 2016 2017 43
Medical Support Staff Ratio 2.5 2.0 1.5 2.3 2.3 2.4 2.3 1.9 1.9 1.9 1.9 1.5 1.5 1.5 1.5 1.0 0.5 0.0 2014 2015 2016 2017 75th Quartile Median 25th Quartile 44
Non-Clinical Staff Ratio 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 43% 42% 42% 41% 38% 38% 37% 37% 33% 33% 33% 32% 2014 2015 2016 2017 75th Quartile Median 25th Quartile 45
How Does Your Health Center Compare: Dashboard Sample 46
Capital Link Performance Evaluation Profile 47
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Benchmarking Benefits Productive Teams Stable Operations High Staff and Patient Satisfaction Quality Outcomes/Access/Depth of Care Financial Sustainability 52
Questions? Contact Susan Petrie Chief Operating Officer 617-422-0350 spetrie@caplink.org Jonathan Chapman Director of CHC Advisory Services 970-833-8513 jchapman@caplink.org Visit us Online: www.caplink.org Learn more about our products and services Download our free publications and resources Register for upcoming webinars Sign up for our e-newsletter, Capital Ink Subscribe to our blog at capitallinksblog.blogspot.com 53