Given their sensitive nature (regulatory, labor intensive business model, etc.), medical clinics typically have high operating costs. That’s why, from a business standpoint, medical clinics owners must track certain KPIs to break even and maximise profits.
In this article we’ll look at the most important KPIs medical clinics should track. Let’s dive in!
1. Average Hospital Stay
This metric gives a representation of a medical clinic’s performance and service delivery. It tracks the average length of time patients spend at the clinic before discharge.
This KPI is important to track regularly (e.g. at least weekly) as it helps making sure there is enough capacity in your medical clinic to receive and treat all patients. For example, assuming the average hospital stay would increase from 5 to 10 hours from one quarter to the other, you could look into expanding the number of rooms and beds in your clinic.
Average Hospital Stay = Total Stay Duration / Total # of Stays
Suppose the clinic’s recorded total number of stays in a given month is 200, and the total stay duration is 645 hours, the average hospital stay would be:
Average Hospital Stay = 645 / 200 = 3.23 hours per stay
2. Average Patient Wait Time
One of the essential factors of patient satisfaction is patient wait time. It tracks how long it takes for someone to visit your clinic from the time they register to the time they see a doctor and receive care.
It’s also very important to monitor this KPI for emergency rooms to assess how quickly the hospital provides urgent treatments to its patients.
The average patient wait time is calculated as follows:
Average Patient Wait Time = Total Wait Time / # of Patients
Suppose the clinic treats 400 patients in a given week, and the total wait time is 200 hours. The average patient wait time would be:
Average Patient Wait Time = 200 hours / 400 = 30 minutes
3. Average Treatment Cost
The average treatment cost is one of the most common KPIs for medical clinics. Treatment costs are critical variables to monitor since they significantly impact the business’s bottom line and profits.
This KPI displays the average cost a clinic charges for service delivery. Costs include the medical staff salaries, medical supplies and other consumables that are used to provide treatment as well as hospital stay (bedding, etc.).
It best measures the effectiveness and efficiency of the clinic’s treatments. This measure can be divided into treatment types and even treatment categories for more accurate insights.
Use the following formula to calculate how much a patient costs your clinic:
Average Treatment Cost = Total Treatment Costs / # of Treatments
So, if a clinic treated 400 patients in a given week and the total treatment costs amounted to $25,000, then the average treatment cost is:
Average Treatment Cost = $45,000 / 400 = $112 per treatment
4. Staff-to-Patient Ratio
This is another crucial KPI for clinics that want better quality and satisfy patients.
It may come across as a trivial metric. Yet the staff-to-patient ratio is the one of the most important KPIs medical clinics should track and improve to achieve best-in-class patient satisfaction whilst maintaining profitability.
The KPI can be calculated as follows:
Staff-to-patient ratio = # staff / # patients
For example, if your clinic has 50 staff and serves 400 patients per week on average, the ratio is:
Staff-to-patient ratio = 50 / 400 = 8 patients for each staff
5. Readmission Rate
Readmission rate is another typical KPI for healthcare businesses. It tracks the percentage of patients readmitted to the hospital for the same complication or disease they were initially admitted.
Higher hospital readmission rates may suggest that the clinic’s staff is not providing adequate treatment to patients. Contrarily, lower hospital readmission rates may indicate that patients are receiving high-quality care.
This metric, together with the training per department and the medical error rate, should be utilized to assist the clinic get to the root of readmission cases. It can be calculated as follows:
Readmission Rate = (# of Readmissions / # of Discharges)
Suppose the clinic records five readmissions in a given week, during which 50 patients were discharged. The readmission rate would be:
Readmission Rate = (5 / 10) = 10%
6. Insurance Claim Denial Rate
Insurance companies typically cover most healthcare costs. However, the insurers fail to remit funds to medical clinics for specific reasons. The clinic may lose business and potentially operate at a loss if it treats a patient, discharged her/him yet the insurance company ends up failing to pay for the service.
The claims denial rate reflects the number of times an insurance company refuses to pay for medical expenses. The industry standard for claim denial rate is roughly 5%, although this number may rise during health crises.
Tracking the claims denial rate is crucial to ensure medical costs are sufficiently covered. The goal is to keep the number as low as possible. It can be calculated as follows:
Claims Denial Rate = # of Denied Claims / Total # of Claims
For example, if the number of denied claims in a month is 200 against the total number of claims of 2,500, the claims denial rate would be:
Claims Denial Rate = 200 / 2,500 = 8%
7. Medical Error Rate
The medical clinic is a high-pressure environment but intolerant to errors – any error could end a patient’s life. Still, errors happen, although on various levels of severity. The medical error rate measures the number of mistakes the clinic’s staff make when providing care for a patient.
The medical error rate (or “misdiagnosis rate”) is another of the most important KPIs for medical clinics. Tracking the metric enables businesses to understand whether the senior medical staff (anyone who diagnose patients) are qualified and knowledgeable.
According to DocPanel, the average misdiagnosis rate in the US was 5%.
Medical Error Rate = # of Treatment Errors / Total Treatments
For example, if the clinic records 80 errors in a given week during which 1,200 patients were treated, the medical error rate would be:
Medical Error Rate = 40 / 1,200 = 3.3%
8. Medical Equipment Utilization
Management and users should work hard to maximize equipment utilization in order to get the best return on investment. In an era of high-cost medical treatment, every piece of equipment in healthcare facilities should be used optimally.
Medical equipment utilization is a modern healthcare metric that evaluates how the clinic uses advanced equipment. For example, an MRI machine is costly, meaning a business that purchases it must put it to optimum use.
On the other hand, the medical equipment might break down if overutilized. For example, the MRI machine designed to scan 5 patients per day should not scan 10 patients daily. Tracking the medical equipment utilization KPI enables the clinic to prevent unexpected breakdowns, which increase maintenance expenditures.
Download the Medical Clinic financial model template
- Lender & investor-friendly
- Easy-to-use Excel template
- CPA-developed financials
- 30+ charts and metrics