10+ Important KPIs in Healthcare: A Guide for Businesses

Published by Martha Pierson at January 12, 2023, Last Updated at January 13, 2023

“If you can’t measure it, you can’t manage it.”

The late W. Edward Deming’s quote rings true for many businesses today. Ensuring top-notch performance while maximizing profitability is something most companies strive for, including healthcare facilities. To measure the effectiveness of facility operations, finances, and internal management, many institutions implement healthcare KPIs.

KPI in Healthcare: Overview

Key Performance Indicators, or KPIs for short, are metrics used to assess the overall performance of a particular department, company, or organization. When clear-cut and calculable, these indicators are of great use to professional sectors, and the healthcare system is no different.

doctor measuring healthcare KPIs

Healthcare KPIs can be implemented to improve facility operations and pinpoint areas that need improvement. The most common KPIs tracked by healthcare facilities may include:

  • Average hospital stay
  • Bed and room turnover
  • Staff-to-patient ratio
  • Average patient wait time
  • Average charge for treatment
  • Average insurance claim processing time and cost
  • Claim denial rate
  • Permanent employee wages
  • Number of staff in training
  • Average number of mistakes
  • Cancellation rates
  • Readmission rates
  • Patient safety

The Benefits of Measuring Healthcare KPIs

KPIs in healthcare can present a more comprehensive understanding of patient-specific and departmental operations. These metrics can help analyze a hospital or clinic’s performance and contribute to more data-driven decision-making. By measuring healthcare KPIs, your medical operation can:

  • Increase satisfaction among patients
  • Boost the efficiency of delivering care
  • Improve standards of care within facilities
  • Compare performance to other hospitals and clinics
  • Reduce costs, improve revenue, and identify avoidable expenditure

What Metrics and KPIs to Track?

Healthcare facilities generally collect and partake in the creation of data in abundance. And technically, all data is valuable. However, a key step in building a more efficient hospital or clinic is singling out KPIs that will prove most helpful. These KPIs may not be the same for all hospitals or clinics, as pain points vary from one facility to another. And while there are thousands to choose from, below is a list of KPIs specific to healthcare providers:

Operational KPIs for Healthcare

As the title suggests, this healthcare KPI can help improve the operational efficiency of your facility. By better understanding operational costs and the resources at hand, facilities may transform processes and develop new ideas. All these can, in turn, help boost patient satisfaction.

Average Hospital Stay

Given that in-hospital care is expensive for patients and the facility, tracking and managing this KPI can help cut costs for both parties. In addition to lower costs, shorter stays may also contribute to higher patient satisfaction and attest to the quality of care. On the other hand, longer than average hospital stays are usually a symptom of poor effectiveness and quality of care.

average hospital stay

For example, if a hospital finds one of its patients spending a significant amount of time in recovery, staff may not be properly allocated to care for new patients. This may have a negative effect on patient satisfaction.

A common way to calculate this KPI is by dividing the total days spent in the facility by all patients by the number of discharges and admissions. However, this calculation will not take into account more complicated procedures and their respective recovery times. For more accurate results, you can calculate average hospital stays by procedure category.

Bed and Room Turnover

This healthcare KPI is a means of measuring patient turnover and is usually reported alongside bed availability. It helps staff identify trends and recurring issues related to patients and available facilities. For instance, if this metric is low, beds are likely insufficient compared to the patient population.

A possible way to improve bed and room turnover is to strengthen communication among staff. This especially applies to nursing and transport teams, as potential delays in turnover times can occur because of a lack of handoff when a patient is discharged.

This KPI is calculated by dividing the total hospital discharge number (including deaths) by the number of beds the facility has available. Also, it is advised to track this KPI in conjunction with the readmittance rates to ensure that patients are not leaving the facility while still unwell.

Staff-to-Patient Ratio

Hospitals should calculate their staff-to-patient ratio to ensure they are providing quality care and proper staffing levels. The ratio of staff to patients can be determined by dividing the number of patients visiting the hospital in a fixed period of time by the total number of staff. This ratio helps hospital administrators ensure that they provide the proper amount of care and staffing for the patient population.

When calculating the staff-to-patient ratio, it is important to consider the number of staff members who can provide direct patient care. This includes physicians, nurses, nurse practitioners, and other health care professionals. It is also important to consider the number of administrative, non-clinical, and support staff. This may include nursing aides, receptionists, housekeeping staff, and other workers who provide essential services to the clinic

The staff-to-patient ratio can also be calculated for specific departments or services within the clinic. For example, a unit or speciality may have more staff than patients, while another may have a lower ratio. Knowing this information can help the hospital better allocate resources and staff in the right areas.

Average Patient Wait Time

To understand how much wait time a patient goes through on average, this healthcare KPI is measured by taking the total wait time and dividing it by the number of patients.

Patients sitting in the waiting room

On top of increasing the quality of patient care, this metric is useful in bettering your facility’s staffing and scheduling needs.

Emergency Room Waiting Duration

While it might seem similar to the above KPI, this metric focuses more on the time a patient has to wait in emergency rooms. As regular hospital visits differ in urgency from emergency room visits, it may be helpful to have a healthcare KPI that tracks just that.

To calculate this, a facility divides the total wait time in the emergency room by the average number of patients that visit the emergency room. Tracking this KPI can help improve patient satisfaction rates when waiting in a hospital’s emergency room.

Financial KPIs for Healthcare

The following KPIs may help assess the overall budget of your healthcare facility. They can also aid in reducing costs and improving revenue.

Average Treatment Charge

The average treatment charge KPI is used in hospitals and clinics to monitor the cost of treatment for their patients. It is a key indicator of overall healthcare cost efficiency for the provider. The average treatment charge KPI is calculated by taking the total amount of money patients paid for treatments and dividing it by the number of patients treated.

The average treatment charge KPI is a great tool for clinics to monitor their performance and ensure that they provide care at the most cost-efficient rate. Additionally, by understanding their average treatment charge, clinics can compare it with other providers in their area to determine whether they offer competitive treatment rates and services.

Patient paying receptionist

Also, this data could be used to uncover any additional charges or expenses that may not be necessary for providing care. By using the average treatment charge as an indicator of performance, clinics can ensure that they are utilizing resources wisely and delivering quality care at a reasonable cost.

Clinics should include all types of treatments in their average treatment charge KPI calculation, including medical, surgical, laboratory, diagnostic imaging, and other speciality procedures. As a result, providers can receive an accurate picture of their overall cost efficiency, as well as provide insights into what types of treatments may be more expensive or cost-effective.

Finally, clinics should also separate the average treatment charge KPI for each department, such as surgery and laboratory services, to get a deeper overview of their performance and patient financial experiences. This way, providers can identify areas of potential cost savings, such as reducing the average cost of laboratory services or eliminating unnecessary treatments.

Average Insurance Claim Processing Time and Cost

Monitoring cash flow is key to most business practices. For instance, when your facility uses several different insurers, it can be useful to track how long it takes them to issue payment. Implementing this KPI can help monitor both on-time and delayed payments.

If this KPI is low, facilities can rest easy as it may indicate that all payments are received on time. However, if this KPI is high, it may suggest that the insurer is inefficient in solving claims. Additionally, it can negatively affect customer satisfaction. In this situation, a healthcare facility can outsource claim processing to a third party to increase efficiency.

Claims Denial Rate

This healthcare KPI measures the percentage of claims not covered by medical insurance providers. A high rate may lead to patients forgoing treatment because it is too expensive.

As a result, healthcare clinics should keep this rate below 5%. In turn, a low rate may mean more effort is focused on patient care.

This KPI is calculated by taking the total claims that were denied and dividing them by the number of total claims that were issued. To mitigate the damage denial claims bring, a healthcare facility may try preventing them in the first place. To do this, a hospital must look for the common reasons claims get kicked back. Here are some examples:

  • Authorization is not obtained before the service is performed.
  • Incomplete or incorrect information ranging from a blank field to an incorrect plan code.
  • The procedure is not covered by the payer.
  • Claims filed outside the payer’s required days of service.

Permanent Employee Wages

How much your institution spends on employee compensation is an important KPI for healthcare facilities to measure. It shines a light on whether or not a staff member is getting overpaid or underpaid. And while wages are considered an expense on the healthcare provider’s part, aiming to dramatically decrease this figure may result in a lack of employee motivation. This, in turn, can negatively affect a patient’s overall experience at a hospital or clinic.

Patient with two nurses

To ensure sufficient employee wages, a healthcare facility could look into the median living cost and the average salary for said position in the area.

Internal KPIs for Healthcare

These KPIs are usually shaped around staff and internal management. To ensure a clinic is running smoothly and that employee performance is top-notch, it can be helpful to compile a list of internal healthcare KPIs and implement them just as thoroughly as the above metrics.

When it comes to healthcare management, it is important to remember that while there may be several independent sectors, they are all interrelated. Bettering communication between all staff and sectors and improving the quality of service and equipment can all benefit patient satisfaction.

Staff in Training

This KPI compares the number of facility staff in training to the total number of staff in general. It is calculated by dividing the latter by the former. By providing regular training, a healthcare facility may ensure that all its team performs at their highest abilities and that patients receive the best care possible.

Average Number of Mistakes

Mistakes happen. However, it is especially vital to keep that number around the bare minimum in the healthcare industry. Mistakes by staff can be calculated by dividing the number of errors by the total treatment amount. And when it comes to assessing the overall effectiveness of staff members, this metric can help pinpoint areas for improvement. Here are some examples of the errors medical staff can make:

  • Medication errors
  • Lack of coordinated care
  • Equipment-acquired infections
  • Anaesthesia errors
  • Surgical errors
  • Incorrect diagnoses
  • Written errors (illegible handwriting and non-standard abbreviations for medications).

A hospital or clinic may combat these pain points by implementing more training sessions for the staff and strengthening communication methods between the staff themselves, as well as between staff and patients. Furthermore, a facility may benefit from technological improvements like tablets and cloud-based customer relationship management (CRM) software.

Cancellation Rates

Cancellations are commonplace in healthcare facilities. They occur due to a lack of accepted insurance, services, appointment flexibility, as well as high treatment costs. If a patient cancels, the patient-specialist relationship may be negatively affected in the future. As a result, measuring this KPI can be valuable in addressing the root cause and potentially reducing cancellation rates.

Close up on patient holding cellphone with doctor's appointment reminder

This metric may give a facility insight into whether or not they need to send out appointment reminders, conduct a survey on office hours, offer priority scheduling, or reduce waiting time. This KPI is calculated by dividing the number of missed appointments by the number of appointments in total.

Readmission Rates

Patients are readmitted to healthcare facilities for a myriad of reasons. These reasons range from recurring conditions to further complications but tracking these can indicate to what degree the quality of care is delivered. High rates may suggest poor quality of care, while lower ones point to a more satisfactory picture. But the point is, having this KPI tracked alongside the two above touch points can help understand readmission processes better. Measuring this KPI is done by taking the number of readmissions and dividing them by the number of discharges.

It’s worth mentioning that steps taken to improve this KPI tend to be facility-specific. For instance, a hospital could implement a follow-up process to prevent readmission. Additionally, the facility could reach out to patients post-discharge to check in and see if they are properly following aftercare instructions. This may include regularly undergoing physical therapy or follow-up visits with a specialist.

Patient Safety

Quality care also goes hand in hand with patient safety. How is your facility going about protocols that keep patients from contracting new infections or having further complications?

Tracking a patient safety KPI can help pinpoint where issues arise and the areas that should be improved to minimize any chance of outbreaks and infections. For instance, if patients admitted for relatively simple procedures are having longer than expected stays, this might indicate that some treatments result in infections previously unaccounted for. Here are a few indicators to look out for:

  • Surgical wound infections
  • Hospital incidents, such as patient falls, equipment damage, medication errors, or security issues
  • Patients’ mortality rate
  • Medication side-effects

Conclusion

Healthcare KPIs are a metric through which many institutions measure their overall performance. These can give healthcare providers a data-driven picture of facility operations, budgeting, and internal management. If implemented regularly, well-defined KPIs can aid growth, help pinpoint areas to improve, and contribute to patient retention strategies.


Martha Pierson

Editor-in-ChiefMartha is Editor-in-Chief at Finturf.com. Her career began in 2003 when she started as an investment banking analyst. Martha continued her career path as a financial advisor for investments. She has a passion for writing and is mainly focused on covering financial and business management topics.

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