Comprehensively Categorized KPIs of the Healthcare Industry

Overview

The Healthcare industry is one of the fastest-growing industries all over the globe and one of the key objectives of the healthcare industry is to provide a quality and healthy life to every individual they serve on a day-to-day basis.

Moreover, with the complex operating systems and millions of lives at stake, it is crucial for the healthcare industry to constantly keep a check on the efficiency and productivity of various aspects involved in healthcare operations. That is where the role of key performance indicators becomes highly crucial.

To elaborate, key performance indicators are quantifiable metrics that assist in providing strong insights into the strengths and weaknesses of various segments of a particular industry. In simpler terms, KPIs offer a quantifiable evaluation of the progress of strategic goals and plans. For the healthcare industry, given the complex nature of operations and their contribution to society, tracking the success of strategic plans is highly essential.

But what are the key performance indicators that the top management of healthcare companies need to be looking after? Are the KPIs for the healthcare sector very different from other industries? How are healthcare KPIs actually calculated? This article presents the most crucial metrics for the healthcare industry to track on a regular basis. With such effective tracking, the enterprises in the industry can consistently optimize their operational performance and capabilities to excel in a fast-changing world. After all, KPIs can always offer genuine scope for integrating the prerequisite change management process.

Exhaustive catalog of KPIs for the Healthcare Industry

Operational KPIs linked to the healthcare sector

1. Staff to Patient Ratio

Staff to Patient Ratio indicates the availability of the staff according to the patient vising the hospital on a daily or weekly basis. The key goal of tracking the Staff to Patient Ratio is to ensure that every patient is taken care of effectively and is provided with the best optimal service. A more specific KPI to consider under a similar category is the Nurse to Patient Ratio which assists in tracking the number of nurses available to attend to the number of patients visiting the hospital regularly.

Staff to Patient Ratio as a KPI

Staff to Patient Ratio can be an effective KPI because it can assist in calculating the requirement of staff in the hospital or clinic. Furthermore, maintaining the balance between ratios can help in increasing the efficiency of the overall operations and can also enhance patient satisfaction. To elaborate, a higher Staff to Patient Ratio means higher availability of staff to deal with patients resulting in better patient care.

Formula to Calculate Staff to Patient Ratio

Example

Calculate Current Ratio

2. Patient Bed/Room Turnover

The patient bed turnover ratio is basically a measure of the productivity that a hospital gets out of its beds. To explain, it is measured as the ratio between the total number of discharges in a given period of time and the total number of beds available with the hospital or nursing center during that period. In terms of operational efficiency, it represents how productive a hospital is in preparing a bed/room for a new admission after the discharge (or death) of a previous occupant.

Patient Room Turnover Rate as a KPI

Patient Room Turnover Rate can be one of the crucial KPIs in the healthcare industry because it can assist in improving the functional efficiency of the medical institutes. To elaborate, the higher turnover reflects better efficiency which states that hospitals manage to get the room ready for the next patient in the least time possible.

Formula to Calculate Patient Bed/Room Turnover

Example

Calculate Patient Bed/Room Turnover

3. Patient Wait Time

No patient likes to stand and wait in long queues before getting service in the hospital. Hence, it becomes an obligation for the management to minimize the wait time of the patient in the hospitals. To keep a track of a wait time, Patient Wait Time is used and is calculated as the average amount of time patients have to wait before they get to see the doctor or service provider in the hospital.

Patient Wait Time as a KPI

Patient Wait Time could be a very useful KPI that can be used by hospitals to track and calculate the wait time of patients. This can assist hospitals in providing effective insights regarding the management capacity of the staff and the satisfaction rate of patients by providing quick and efficient service.

Formula to Calculate Patient Wait Time

Example

Calculate Patient Wait Time

4. Medical Equipment Utilization Rate

Medical Equipment Utilization Rate refers to the usage of equipment in providing the most efficient service in identifying or healing a patient. Lack of trained human capital or delays in maintenance can be a few causes of decreased utilization of medical equipment. Moreover, a better utilization rate of medical equipment reflects more efficient results and enhanced quality care for patients.

Medical Equipment Utilization (MEU) Rate as a KPI

Medical Equipment Utilization Rate can be an effective KPI for the te hospitals to track and measure the efficiency rate of the equipment utilized in diagnosing and treating patients. After applying this as a KPI, the factors that are contributing to the declination of the capacity can be eliminated, and hence, the utilization rate can be increased. To elaborate, an enhanced MEU rate can lead to more productivity and can also assist in increasing the revenue generation of the hospitals.

Formula to Calculate Medical Equipment Utilization Rate

Example

Calculate Medical Equipment Utilization Rate

Financial KPIs linked to the healthcare industry

5. Average Cost Per Discharge

Average Cost Per Discharge assists in tracking the cost a hospital spends on every patient visiting on a daily basis. It can help in identifying the key factors that are adding unnecessary additional costs to the expense of hospitals.

Average Cost Per Discharge as a KPI

Average Cost Per Discharge can be an effective financial KPI for the healthcare industry because it can assist in calculating the profit margin and in eliminating the factors contributing to the overspending of the hospital. In addition, it can also assist in creating a long-term strategy for maintaining the profit margin per patient.

Formula to Calculate Average Cost Per Discharge

Example

It indicates that a hospital charges $95 on average to every individual patient visiting the hospital.

Calculate Average Cost Per Discharge

6. Account Receivable Turnover Ratio

Account receivable refers to the amount of the service that has been provided or delivered but the payment is still due from the consumer’s side. Accounts Receivable Turnover Ratio assists in keeping the track of the average amount due on the balance sheet and in calculating the credit due from the end of the stakeholder.

Factors such as financial conditions of the patient pr poor collection operations of the hospital can delay the clearance of the bill. Furthermore, the Account Receivable Turnover Ratio can also be converted into days which will calculate the number of days it takes for the patient to clear out all the dues.

Accounts Receivable Turnover Ratio as a KPI

Utilization of Accounts Turnover Receivable Ratio as a KPI in hospitals can be an efficient method of tracking the efficiency of payment collection methods of the hospital in receiving the payments and dues from their patients. After identification of the ratio, effective strategies can be implemented to boost or improve the ratio for efficient results and successful attainment of SMART Goals.

Formula to Calculate Account Receivable Turnover Ratio

Example

It implies that it takes 5 days for patients to clear out dues and implies that the hospital has an efficient bill collection method.

Calculate Account Receivable Turnover Ratio

7. Patient Drug Per Stay

Enough stocking of the drugs and medications is one of the key responsibilities of the hospitals because a lack of drugs can interrupt the operational processes and can affect the overall efficiency of the hospital. Hence, tracking the number of drugs required as per the need of patients or per stay is crucial.

Patient Drug Per Stay as a KPI

Patient Drug Per stay can be considered as a key performance indicator in the healthcare industry because it can assist in managing the drug requirements according to the number of patients visiting the hospital for medications. This can assist in predicting future requirements and can also prevent wastage of resources and contribute to the smooth operations of hospitals.

Formula to Calculate Patient Drug Per Stay

Example

It implies that it takes 5 days for patients to clear out dues and implies that the hospital has an efficient bill collection method.

Calculate Patient Drug Per Stay

8. Average Treatment Charge

Average treatment per charge refers to the cost a hospital charges to its patient on average in exchange for medical health facility and service. The average amount charged per treatment depends on the complexity of the case and other operational processes involved in the treatment.

Average Treatment Charge as a KPI

Average Treatment Charge will be an effective KPI for hospitals because it will assist the medical institutions in keeping the record of revenue as well the amount of profit they earn from each treatment on average. Furthermore, keeping a record of the average cost charged to the patients will also assist in matching the cost of hospital expenses to the overall profit of the organization.

Formula to Calculate Average Treatment Charge

Example

This depicts that a hospital charges $285.7 on average to a patient admitted in the hospital for treatment.

Calculate Average Treatment Charge

9. Overall Operating Margin

Overall operating margin is an effective metric that can assist in calculating the overall margin that is earned by the hospitals by investing all the operational expenses. All the operational costs like rent, salaries, maintenance of equipment, cost of utilities and food, etc. are included in the operational cost of the hospitals.

Overall Operating Margin as a KPI

Overall Operating Margin can one of the crucial KPIs in the healthcare industry because it can assist in calculating the profits and losses that are encountered by the hospitals. Furthermore, it can assist in analyzing and identifying the key factors that are contributing to overspending and are decreasing the profit margin which can be further eliminated by the hospital to reverse the consequence.

Formula to Calulate Overall Operating Margin

Example

This entails that the hospital has an operating margin of 80% which is a really good profit margin.

Calculate Overall Operating Margin

Internal KPIs linked to the healthcare industry

10. Cancellation Rate

The cancellation rate refers to the percentage of appointments that got canceled or missed by the patient. Moreover, every time an appointment gets canceled it affects the financials of the hospitals and may often lead to the wastage of resources as well. Calculating the Cancellation Rate can effectively assist in keeping the track of the canceled appointments and visits.

Cancellation rate as a KPI

The cancellation rate can be an effective key performance indicator for the hospitals to effectively calculate the appointments that are missed or canceled by the patient. To elaborate, a lower cancellation rate depicts better retention of the patients and enhanced efficiency of the hospital. Hence, it is crucial for hospitals to keep the track of cancellation rates to eliminate or fix the factors that are leading to the cancellation of appointments.

Formula to Calulate Cancellation Rate

Example

Calculate Cancellation Rate

11. Hospital Readmission Rate

Hospital Readmission Rates refers to the percentage of patients that returned to the hospital shortly after getting discharged. Various factors like a patient’s health condition and quality of care can affect the Readmission Rate of the hospital.

Hospital Readmission Rate as a KPI

Hospitals' Readmission Rates can act as one of the effective key indicators for the hospitals because they can assist in creating an effective strategy of arranging resources beforehand. Higher readmission rates can also depict the inefficiency of the treatments at the previous checkups or operations. Hence, the indication of readmission can assist in implementing various strategies to improve the quality of the healthcare provided to the consumers.

Formula to Calulate Hospital Readmission Rate

Example

Calculate Hospital Readmission Rate

12. Medication Errors

Medication errors determine the number of times errors occurred while providing medications or dosage to the patient. Wrong medications can severely impact the health of the patients and can even cause serious damage for which the hospital would be held accountable.

Medication Errors as a KPI

Medication Errors, when utilized as a key performance indicator can assist in identifying the key aspects that are causing the errors and can be improvised or replaced. Lower medication errors can depict the efficiency of the staff whereas, higher medication errors can affect the patient’s trust and reliability in the hospital.

Formula to Calulate Medication Errors

Example

Calculate Medication Errors

To encapsulate, the healthcare sector in any economy of the world plays a crucial role and with health issues becoming more prevalent than ever before, the role of the industry will only get bigger. Having said that, leaders of healthcare enterprises, irrespective of the leadership styles that they preach should ensure that they identify the right metrics for tracking the performance of their strategic goals and keep filling the gaps that KPIs will highlight. The quantifiable measure of progress is what will ultimately lead to the tangible success of strategic plans.