Financial and Operational Benchmarking Jonathan Chapman Director of Community Health Center Advisory Services October 24, 2017 1
Capital Link - Overview Launched in 1995, nonprofit, HRSA national cooperative agreement partner Offices in CA, CO, MA, ME, MO, SC and WV Over $1.1 billion in financing for over 225 health center capital projects In addition to the direct assistance towards planning for and financing operational growth and capital needs, we have developed metrics and analytical services for measuring, evaluating, and promoting performance improvement With HRSA s support and assistance we have gathered audited financial information for at least 80 percent of health centers and almost 100 percent of UDS reports Enabled the development of the 2012-2015 National Trends Report www.caplink.org/resources/publications 2
Benchmarking - Origin Originates from the chiseled horizontal marks that surveyors made in stone structures, into which an angle-iron could be placed to form a "bench" for a leveling rod 3
Benchmarking 1. A surveyor's mark cut in a wall, pillar, or building and used as a reference point in measuring altitudes. 2. A standard or point of reference against which things may be compared or assessed. 4
Think Thrice, Measure Twice, Cut Once 5
What Does Success Look Like? Time, Info, Resources to Plan Productive Teams Improved and Stable Operations Staff and Patient Satisfaction Improved Patient Outcomes Financial Sustainability 6
Goal: Financial Sustainability and Access to High Quality Care Staffing Financial Operations Productivity Improved Access & Financial Sustainability Patient Satisfaction Utilization Clinical Outcomes 7
Performance Benchmarking Benchmarking/Best Practices WHAT do I want to track? WHERE do I find this data? WHICH metrics do I need? HOW do I analyze it? WHO needs to know? 8
Growth and Expansion 9
Patients & Visits in Millions Five-Year Grantee Trends 120 100 1,500 1,250 80 60 40 1,000 750 500 Grantees 20 250 0 2012 2013 2014 2015 2016 Patients Visits Grantees 0 10
Millions Payer Mix: Number of Patients by Payer Source 30 25 20 15 10 4.0 3.5 2.9 3.0 0.3 0.3 2.1 0.5 0.5 1.9 1.6 1.8 8.3 8.8 10.6 11.8 4.4 0.3 2.4 12.7 Private Insurance Public Insurance Medicare Medicaid Uninsured 5 7.5 7.5 6.3 5.9 6.1 0 2012 2013 2014 2015 2016 11
Payer Mix: Percentages of Patients by Payer Source 100% 90% 80% 14% 14% 16% 17% 17% 2% 2% 1% 1% 1% 8% 8% 9% 9% 9% 70% 60% 50% 40% 40% 41% 47% 49% 49% Private Insurance Public Insurance Medicare Medicaid 30% Uninsured 20% 36% 35% 10% 28% 24% 23% 0% 2012 2013 2014 2015 2016 12
Billions Total Revenues by Source $25 $20 $15 $10 $5 $3.2 $3.1 $2.5 $2.3 $0.4 $0.6 $9.0 $9.8 $3.3 $2.9 $0.3 $11.4 $3.6 $3.5 $0.2 $13.7 $3.9 $4.3 $0.1 $15.5 Other HRSA Operating Grants Capital Grants Net Patient Service Revenue (Collections) $0 2012 2013 2014 2015 2016 13
Percentage Revenues by Source 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 21% 20% 18% 17% 16% 16% 16% 16% 17% 18% 4% 2% 2% 1% 0% 60% 62% 63% 65% 65% 2012 2013 2014 2015 2016 Other HRSA Operating Grants Capital Grants Net Patient Service Revenue (Collections) 14
Financial 15
Financial Health: Some Key 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 16
Financial Health: Some Key Metrics Operating Margin = Change in Net Operating Assets / Total Operating Revenue Personnel-Related Expenses = 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) 17
Operating Margin by Quartile 12.0% 10.0% 9.1% 9.8% Preliminary 2012 2013 2014 2015 2016 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% 6.9% 6.9% 5.9% 4.5% 3.6% 2.0% 1.3% 1.9% 0.8% -0.2% -1.8% -2.0% -2.6% 75th Percentile 50th Percentile 25th Percentile Benchmark Minimum 18
Bottom Line Margin by Quartile 12.0% 11.5% 10.4% 10.6% 10.0% 10.0% 8.6% 8.0% Preliminary 2012 2013 2014 2015 2016 6.0% 4.0% 3.8% 3.2% 3.4% 5.1% 5.6% 2.0% 0.9% 1.5% 0.0% -2.0% -0.1% -0.6% -0.2% 75th Percentile 50th Percentile 25th Percentile Benchmark Minimum 19
80% 70% 60% 50% 40% 30% 20% 10% Personnel-Related Expenses as a Percent of Operating Revenue Preliminary 2012 2013 2014 2015 2016 0% 75th percentile 50th percentile 25th percentile Benchmark 20
Days in Patient Accounts Receivables (Medians) 65 Preliminary 2012 2013 2014 2015 2016 60 55 50 45 40 35 30 Median Benchmark Maximum 21
Days Cash on Hand by Quartile 140 120 120 109 Preliminary 2012 2013 2014 2015 2016 100 86 87 90 80 68 60 40 20 40 43 43 18 18 18 54 25 32 0 75th Percentile 50th Percentile 25th Percentile Benchmark Minimum 22
Operational 23
10,000 Provider Productivity Visits per FTE 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 1,010 984 975 932 926 958 931 927 904 893 2,810 2,739 2,703 2,632 2,611 3,394 3,316 3,241 3,152 3,095 1,128 1,090 1,048 997 984 2012 2013 2014 2015 2016 Total Mental Health Visits Per Mental Health FTE Total Dental Visits Per Dental FTE Total Other Provider Visits Per Mid-Level FTE Total Physician Visits Per Physician Total Medical Visits Per Medical FTE 24
Percentage Change in Productivity, 2012 to 2016 0% -2% 1 Total Medical Visits Per Medical FTE -4% Total Physician Visits Per Physician -6% -8% -10% -12% -9% -7% -7% -8% Total Other Provider Visits Per Mid-Level FTE Total Dental Visits Per Dental FTE Total Mental Health Visits Per Mental Health FTE -14% -13% 25
18% 16% 14% 12% 10% 8% 6% 4% 2% Annual Percent Growth in Visits by Service 0% -2% 2013 2014 2015 2016 Medical Dental Mental Health Enabling Services 26
Visits Per Patient Per Year 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5-2012 2013 2014 2015 2016 75th Percentile 50th Percentile 25th Percentile 27
Cost Per Patient and Visit $900 $800 $700 $680 $716 $764 $793 $836 $600 $500 $400 $300 $200 $179 $189 $202 $210 $218 $100 $0 Operating Expense per Patient Visit 2012 2013 2014 2015 2016 Operating Expense per Patient 28
How Does Your Health Center Compare? 29
Capital Link Benchmarking Toolkit www.caplink.org/resources/publications 30
Benchmarking within Managing 31
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. Look to Excel as a simple tool for charting performance Explore your available reporting tools Time intensive to set up, then efficient for routine reporting 32
Enhanced Performance Evaluation Profile 33
34
35
36
37
38
Evolving Business Models 39
Transition from FFS to Value-Based Reimbursement 40
Value Transition Based from Transition FFS to Value-Based Reimbursement 41
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 42
Transition from FFS to Value-Based Reimbursement Redesigned Incentives 43
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 15 Visit/Patient Growth Rates Are visits growing faster than patients? Is demand growing? *Capital Link Performance Benchmarking Toolkit 44
Thousands Medical Staffing (FTEs) 55 50 45 40 35 30 25 20 15 10 5 48.6 45.4 40.6 37.1 35.1 23.9 22.2 18.0 18.9 20.3 2012 2013 2014 2015 2016 Medical Provider FTES Medical Support Staff FTEs 45
Medical Services Productivity Medical Support Staff Ratio (Total Medical FTEs - Midlevel FTEs - Physician FTEs) (Midlevel FTEs + Physician FTEs) 1.92 1.90 1.88 1.86 1.84 1.82 1.80 2012 2013 2014 2015 2016 46
Medical Services Productivity 1000 Medical Provider Productivity Medical Patients / Medical Provider FTEs 980 960 940 920 900 880 2012 2013 2014 2015 2016 47
Transition from FFS to Value-Based Reimbursement 48
What Does Success Look Like? Time, Info, Resources to Plan Productive Teams Improved and Stable Operations Staff and Patient Satisfaction Improved Patient Outcomes Financial Sustainability 49
Jonathan Chapman Tel: 970.833.8513 jchapman@caplink.org 50