1. Key Metrics in a Healthcare Business
Cameron Cox, III, MHA, FACMPE
CEO, MSOC Health

3. First Discussion More data than you can shake a stick at
Overwhelming where to start…sometimes delays our start
Be consistent when you do start

4. My Soap Box Moment…..
…..about what and why we should measure differently

5. Let’s start with in the box thinking
Source: Dilbert Classics by Scott Adams

6. The Usual Ones

7. What we all expect Net Collections – Lots of trickery
Gross Collections – Most important to understand
Days in AR – many different formulas
Accounts Receivables (AR Aging)

9. Performance

10. More of what we expect No Show Rate Denial Rate (Clean Claims)
Number of patients per day/month

11. No Show Rate

12. Denial Rate (Clean Claims)

13. Number of patients per day/month

14. Let’s get down to work

15. Patient (Customer) Metrics
Customer Acquisition Costs
Retention Rate
Patient (Customer) Lifetime Revenue
Patient (Customer) Satisfaction Metrics
Patient (Customer) Wait Time
1. Customer Acquisition Cost (CAC)
CAC measures -- you guessed it -- the cost of acquiring a new customer. The easiest way to calculate CAC is to pick a specific time period and then divide your cost of marketing and sales by the number of customers you gained. For example, if you spent $1,000 to get 20 customers, your CAC is $50.
Clearly, the lower your CAC the better, but how low depends on your business model and your industry. If you're in the prepared meal kits business, your CAC may be over $100 per person. If you're selling iPhone charger cables, it'll probably need to be in the pennies.
A rising CAC can be a sign of trouble, but not if you've introduced a new product or service with much higher margins. Like most metrics, CAC can't be evaluated in a vacuum; it should be evaluated in conjunction with a number of other metrics. Such as ...
2. Retention Rate
Also known as churn rate, retention rate evaluates the percentage of customers that stay with you and the percentage that leave over a given time period. (That's why it's particularly relevant for subscription business models.)
The formula can be a little complicated, but one way is to subtract the number of new customers from your total customers at the end of a given period, then divide that number by the number of customers you started the period with.
For example, if you started the month with 10 customers, gained five new ones, and lost two, the calculation is 13 (total customers at the end of the month) minus five (new customers) equals eight, divided by 10 equals .8, or 80 percent. That means your retention rate is 80 percent -- you kept 80 percent of your customers.
(Or, if you prefer, you can calculate churn rate in very simple terms: If you have 100 customers at the start of the month and at the end of the month have 97, that means your churn rate is three percent.)
The goal is to keep your retention rate as high as possible, or your churn rate as low as possible. 
3. Customer Lifetime Revenue (CLR)
Also known as Customer Lifetime Value, this metric measures the revenue you receive from repeat customers. While it can be tough to predict CLR in the early stages of a business, once you have a reasonable data set you can start to make certain assumptions.
If yours is a subscription- or recurring-revenue model and you keep your average customer for 14 months, then that 14 months' revenue can be considered your CLR.
Why do you care? For one thing, knowing your CLR can help you determine how much you can afford in CAC: The greater the lifetime revenue of a customer, the more you can afford to spend to acquire that customer.
CLR can also help you evaluate the quality of your customer service; some customers will leave because they don't like your products or services, but many will leave because they feel your customer service is inadequate.

16. Customer Acquisition Costs
What does it cost to actually secure a new patient into the practice?

17. Retention Rate
Retention is essential in any business. Retention helps grow “sales” and creates more people to spread the word about your practice. This rate demonstrates repeat users of the practice.
Retention Rate = ((PE-PN)/PS)) X 100
PE = number of patients at the end of a certain time period (1 year, for example)
PN = number of new patients acquired during the same time period
PS = number of patientss at the start of the time period

18. Patient (Customer) Lifetime Revenue

19. Patient (Customer) Wait Time

20. Inventory Metrics Profit Margin on inventory (aggregate/individual)
ROI on products
Inventory Turnover

21. ROI on Products/Service
ROI (Return on Investment) measures the gain or loss generated on an investment relative to the amount of money invested. ROI is usually expressed as a percentage and is typically used for financial decisions, to compare a company's profitability or to compare the efficiency of different investments with a product line or service line.
Multiply this by 100 and explain as percent

22. Inventory Turnover Why?
Inventory turnover shows how many times a company has sold and replaced inventory during a given period
This helps businesses make better decisions on pricing, servicing, marketing, and purchasing new inventory
A low turnover implies weak sales and possibly excess inventory, while a high ratio implies either strong sales or insufficient inventory
An alternative method includes using the cost of goods sold (COGS) instead of sales. Analysts divide COGS by average inventory instead of sales for greater accuracy in the inventory turnover calculation because sales include a markup over cost. Dividing sales by average inventory inflates inventory turnover. In both situations, average inventory is used to help remove seasonality effects.

23. Brass Tacks Revenue – Does it match your forecast/budget?
Gross Profit Margin – Measures a company’s efficiency of operations
EBITDA – Profit is good, but the real test is EBITDA. This reveals the true operational profits without the effects of non-cash accounting entries.

24. RVU, RVU, RVU, RVU!!!

25. Relative Value Units Implemented in 1992 by CMS
Sets the reimbursement rate for each CPT code
Each CPT code has three RVU parts
Physician effort/intensity RVU
Practice Expense RVU
Malpractice Expense RVU

26. RVU Teaser
The only true common denominator that physician practices have.
Baselining expenses per RVU and revenue per RVU can be invaluable
Just ask Medical Economics 
“Knowing the costs and revenues associated with specific procedures and payers can yield an additional benefit, Cohen notes. In most cases, costs and revenues tend to increase relative to each other. But occasionally a practice may encounter certain procedures where, for whatever reason, the cost-to-revenue ratio is much higher than in others.
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28. Thank You Thank You MSOC Health Cameron Cox, III (919) 960-0336
200 Timber Hill Place Suite 221 Chapel Hill, NC 27514