Evidence Based Business – Operating Metrics vs. Clinical Metrics

We're continuing our month of Evidence Based Business by focusing on the metrics. And to do this, we're bringing in an expert. Dr. Troy Bage, PT, DPT is the Executive Director at the Alliance for Physical Therapy Quality and Innovation. Previously serving as COO at Upstream Rehabilitation, and President of Benchmark PT, Troy brings a ton of experience in metrics, outcomes tracking, and the business side of physical therapy (Full disclosure, Troy is also a member of the Strive Labs Advisory Board). Thanks Troy!

When you are a practice owner, the bottom line is usually the profit that your particular business is able to generate. That profit allows you to reap the rewards for the risk and hard work you have put into your business. It also allows you to reinvest in your business, your staff, and in potential growth opportunities. Because of the importance of profit in so many practices, the owners and managers are overly focused on the financials of the business and not focused enough on the factors that drive those financials. In the field of outpatient rehabilitation, there are two primary types of metrics – operating metrics and clinical metrics. Both are incredibly valuable to the business and in most cases, they are interdependent.

Operating Metrics

First, let’s define clinical and operating metrics. Operating metrics are any measurement of performance of the business that is not directly related to measuring patient outcomes. We can start with the big ones – units per visit, visits per referral, cancellation rate, visits per FTE (full time equivalent). These are all pretty specific to outpatient rehabilitation and are “must measures” in just about any physical therapy business. They also come in more financial flavors like net rate per visit, co-pay collection percentage, and even profit margin. All of these operating metrics drive your financial performance.

For instance, if your visits per FTE are higher, your cost per visit is usually lower per patient. If units per visit are lower, this usually has an impact on the amount of revenue you generate per patient. If your key operating metrics are good, then the chance of your business succeeding from a financial standpoint is greater. However, too many practices stop there and do not measure clinical metrics.

Clinical Metrics

Clinical metrics are measurements of the clinical outcomes that are achieved with patients and what their perception is of the care and service they received. Clinically, there are many different opinions on which are the “right” patient outcome measures. Patient reported outcome measures (PROMs) are currently the most popular and most accessible measure used in outpatient rehabilitation. The PROMs are also getting a lot of attention with payers.

Groups like Priority Health in Michigan have incentive programs set up for outpatient clinics who measure and report outcomes. Because of this perceived importance, Health actually paid for the outcomes system for the clinics that participated. Blue Cross Blue Shield of Louisiana developed its ‘Quality Blue’ program to “help physical and occupational therapists identify best practices and promote high-value healthcare for patients.” Through this program, BCBS worked with therapists to help them effectively boost their patients’ health outcomes and satisfaction.

More on PROMs

The “big four” most commonly used PROMs in clinics today include the modified Oswestry, Quick DASH, Lower Extremity Functional Scale (LEFS), and the Neck Disability Index (NDI). There are countless other tools that provide their own specific value in assessing a patient’s functional improvement, and clinicians treating specific patient populations may choose other, more relevant tools.

But measuring PROMs for clinical outcomes only tells half of the story.

It is vitally important to measure the patient’s perception of their care.

The most popular and well-researched tool is the Net Promoter® Score (NPS®). The NPS® asks the question, “How likely would you be to refer a friend or family member to this practice?” The great value of the NPS® is in its ability to identify your loyal customers (your Promoters).

Just as important, is constantly gauging the patient’s perception of functional improvement and goals met. All of these measures give a practice owner or manager the tools to better understand how patients perceive the care they are given. The Disney Institute recommends satisfaction as a key measurement tool. They measured the difference between customers who rated businesses a 4 (satisfied) and a 5 (very satisfied). Amazingly, customers who rated their experience a 4 were seven times more likely to use a different business the next time they needed a particular product or service. The power of very satisfied customers is vital to long-term success of a business.

Collecting both operational and clinical metrics paints a fuller picture for a practice owner or manager. The two types of measures are strongly correlated. In one practice that measured this statistic with over one million annual visits, there was an 81% correlation between clinical and operating metrics demonstrating that, if the operating metrics were strong, the clinical metrics were also performing at a high level. It also indicated the opposite – if operating metrics were weak, the results the patients perceived were also below average. The above results were independent of the particular practice and could vary depending on the type of metrics you measure on each side (Data collected from over 200 clinics for the calendar year 2014).

Measuring the right metrics can have a significant impact on the financial and clinical health of your practice. Understanding how to choose the metrics that best fit your practice goals and culture is both an art and science; however, utilizing the right measures can help your business run more efficiently and greatly improve your clinical and financial results.

If you want to hear more from Troy, check out his and WebPT's Heidi Jannenga's session at Ascend 2016: "Tracking for Success: Why Outcome Measures are Essential to Your Practice."

If you want to read more about Evidence Based Business, click here!

Adrienne Sliz

Ambivert. Lover of coffee, fonts, grammar, and Oxford commas. Director of Customer Success at Strive Labs.