Measurements in the Healthcare Industry

Like any business, hospitals must collect and analyze data about their processes and procedures to streamline operations, improve patient care and avoid overspending. Healthcare performance metrics are essential data points that indicate how efficiently an institution is running and allow hospitals to monitor their quality of care and spending habits.

In this guide, you’ll discover the common healthcare metrics that hospitals and facilities should leverage to provide outstanding patient care and remain as efficient and profitable as possible.

Metric #1: Length of Stay

The average length of stay measures the duration of a patient’s hospital stay from their admittance to discharge. According to the Centers for Disease Control and Prevention (CDC), the average hospital stay in the United States lasts 5.4 days.

Hospitals can track and segment this metric by hours, days, weeks, months or quarters. If desired, they can further categorize length of stay metrics by diagnosis or department. However, most hospitals typically track their average stay length using months or annual quarters as units of measurement.

Stakeholders can use this metric to measure efficiency and financial performance. The longer a patient stays in the hospital, the more their care costs, meaning shorter stays reduce a hospital’s cost per discharge. Post-acute care is also generally less expensive than inpatient care.

Metric #2: Readmission Rates

Patient readmission rate refers to the number of patients readmitted to the same hospital for the same condition after being discharged for less than 30 days. The most recent data from the Healthcare Cost and Utilization Project (HCUP) indicates the average 30-day hospital readmission rate for Medicare patients was 16.9% in 2018.

This metric fluctuates depending on the type of patient and condition. For example, the average 30-day readmission rate for Medicare patients with heart failure in 2018 was 22.9%.

Readmission rates demonstrate a hospital’s quality of care, as a higher hospital readmission rate indicates that care providers likely overlooked complications and prematurely discharged patients.

Hospitals also use readmission rates to measure financial performance, as hospitals with higher readmission rates might not receive full reimbursements from Medicare.

Metric #3: Bed Occupancy Rate

Bed occupancy or bed utilization rate measures the number of occupied hospital beds at any time. This healthcare performance metric helps providers to see the ratio of available beds to those awaiting care. Current data indicates the average national bed occupancy rate in the U.S. was 64.4% in 2019.

Much like a hospital’s readmission rates, bed occupancy rate helps hospitals evaluate their quality of care and financial performance. The higher the bed occupancy rate, the more staff is needed to care for patients. Adequate staffing is paramount, as quality of care could suffer if a hospital is understaffed.

Conversely, if a hospital’s bed occupancy rate is too low, the facility might lose money due to overstaffing and maintenance costs.

Metric #4: Incident Rate

A hospital’s incident rate measures the occurrence of care complications, including issues such as bed sores, infections, reactions or postoperative respiratory failure, hemorrhages, sepsis and pulmonary embolism.

According to a 2018 report by the U.S. Department of Health and Human Services Office of Inspector General (OIG), 25% of Medicare patients experienced harm during a hospital stay. These adverse events included pressure injuries, intraoperative hypotension and respiratory infections, resulting in the need for life-sustaining measures and prolonged hospital stays.

Having a lower incident rate indicates a hospital’s ability to provide high-quality curative care without adverse reactions. Better care also reduces a hospital’s financial losses because it minimizes the need for additional treatment, meaning that this specific performance metric has a substantial impact on other areas of operation.

Metric #5: Average Cost Per Discharge

The average cost per discharge is the median cost per hospital visit for each discharged patient. As with average length of stay, hospitals can segment the average cost per discharge based on diagnosis or department.

Current data indicates that the average cost per discharge for Veterans Affairs Hospitals was $40,763 in 2020. According to the HCUP, the average cost of a common hospital stay in the U.S. in 2017 was $12,100, compared to $11,700 in 2016. Septicemia, osteoarthritis and heart failure were among the most expensive inpatient conditions in the U.S. in 2017.

Hospitalization continues to be one of the most expensive aspects of medical treatment. Tracking the average cost per discharge helps hospitals measure inpatient costs to assess their spending efficiency and monitor areas of overspending. The average cost per discharge metric also showcases where hospitals routinely profit.

Metric #6: Operating Margin

A hospital’s operating margin is its net revenue minus its operating costs. Operating costs include but are not limited to staff salaries, medical equipment, supplies, utilities, liability insurance, treatments, medications, meals and marketing expenses.

According to the American Hospital Association, one report indicates the average operating margin for over 900 U.S. hospitals at the beginning of 2022 was -3.45%, meaning that many U.S. hospitals did not turn a profit early in 2022.

A hospital’s operating margin is an essential healthcare performance metric that demonstrates the institution’s financial health, as a higher operating margin translates to greater profit for the hospital. Higher operating margins also indicate excellent management revenue cycle and patient care.

Metric #7: Inpatient Mortality Rate

Inpatient mortality rate refers to the percentage of patients who die in a hospital’s care. Mortality rates differ based on patient demographics and diagnoses.

For example, a National Health Statistics Report from the CDC asserted that 35% of patients hospitalized for pneumonia in 2016 died during their hospital stay. Other serious conditions, such as congestive heart failure, will naturally involve a higher mortality rate, while more minor issues and illnesses are less likely to result in a patient’s death while under care.

This metric is especially important for informing stakeholders of an institution’s performance because it is an Inpatient Quality Indicator (IQI) demonstrating a hospital’s ability to stabilize and adequately care for patients. Though variation is expected based on patient demographics, higher overall patient mortality rates indicate care deficiencies.

Metric #8: Asset Utilization Rate

A hospital’s asset utilization rate refers to the percentage of time its hospital equipment is in use, with a higher asset utilization rate indicating better performance. That’s because the more a piece of equipment is in use — or the higher the utilization rate — the more the hospital generates revenue from that investment.

A lower utilization rate might mean a hospital has more equipment than is reasonably necessary, hinting at overspending. Without knowing how often a hospital’s staff uses its assets, it’s challenging to budget for or justify equipment expenditures, so this metric is vital for assessing a facility’s financial status.

Metric #9: Patient Satisfaction

Patient satisfaction refers to a patient’s satisfaction with the care and service provided during their hospital stay. Factors that might influence a patient’s satisfaction include staff temperaments, wait time, visit length, technology, facility condition and diagnosis.

According to a 2019 study by the Centers for Medicare and Medicaid Services, only 8% of U.S. hospitals received a 5-star rating on patient experience. In the same study, it was found that the majority of U.S. hospitals receive 3-star ratings.

Why is measuring patient satisfaction important? Patient satisfaction provides actionable feedback and data hospitals can use to improve care and optimize services.

Patient satisfaction also affects the likelihood of a patient recommending a hospital to their loved ones, contributing to its reputation. A positive reputation can bolster a hospital’s bottom line.

Metric #10: Time to Service

Time to service refers to the time it takes a patient to receive care at a hospital, from the first arrival to when they receive healthcare services. This metric also includes the time it takes for a patient to see a physician.

Hospitals can segment time to service based on diagnosis, discipline or department, such as in the case of emergency room (ER) visits. The current time to service for U.S. emergency departments differs by state, with North Dakota having the lowest wait time at 104 minutes as of 2022.

Time to service is an important metric for hospitals to track because it provides information about their ability to provide prompt patient care. Wait times also directly impact patient satisfaction, meaning hospitals can improve their patient satisfaction rates by focusing on improving service times.

Leverage Hospital Performance Metrics With Pathstone Partners

If you’re looking for ways to leverage healthcare performance metrics data to improve your hospital’s operations and finances, consult the experts at Pathstone Partners. We’re a leading healthcare management consulting firm that assists healthcare organizations with developing streamlined operational strategies. We’ll help you identify trends that can enhance your facility’s operations to improve your quality of care and boost your bottom line.

Contact us today to learn more about improving your healthcare organization’s efficiency by analyzing healthcare performance metrics.

The Importance of Quality

For patients, quality of care is far more critical than quantitative evaluations. The outputs of services delivered return as inputs when patients leave positive reviews. Such reviews increase a practice’s reputation and can draw in more patients.

Patient Visit Lengths

Since each patient’s time is valuable, you want to respect their time. Often, knowing whether to shorten or lengthen patient visit lengths depends on patient satisfaction. If your patients are frustrated with how long appointments take, shortening them may be necessary. On the other hand, you should consider taking more time with each appointment if patients feel rushed and misunderstood.

The traditional productivity metric with patient visit lengths is to keep them as short as possible so you can see the most patients per day. While brevity still matters, patients appreciate feeling understood and heard rather than rushed and dismissed.

Spending an extra couple of minutes with patients may seem counterintuitive from a productivity standpoint. Yet, it involves making the most of each appointment. Patients will feel that your clinic and staff do the utmost to care for patient health.

Either way, ensure each physician at your medical facility records patient visit lengths. Doing so helps determine whether you should shorten or lengthen appointments to enhance productivity.

Patient Wait Times

For patients, brevity matters most in the waiting room. Still, it’s better to shorten patient wait times through greater administrative efficiency than rushing appointments.

Making checking in and seeing a provider as efficient as possible for patients may be the best option. Focusing on administrative factors lets you shorten wait times without harming patient outcomes. To measure this factor, have staff record check-in times and the beginning of each appointment when the provider sees the patient.

Patient Satisfaction Rates

Patient satisfaction is the ultimate metric for qualitative productivity evaluations. Unless patients provide unprompted feedback, it’s often unclear how satisfied patients are with your services. Clinics without such information interpret data such as patient retention rates, missed appointments and wait times to determine patient satisfaction.

To measure patient satisfaction accurately, ask patients to provide feedback. Such feedback may come in questionnaires, direct interviews or email and text forms. Ask detailed questions about the quality of care patients receive, and leave room for additional comments.

Patient Retention Rates

Patients who are satisfied with your clinic’s services are more likely to return for follow-up appointments. Many factors influence patient retention rates. Some are outside your control, while others, like patient satisfaction, directly relate to the quality of care. Keeping track of patient retention rates through data analytics can give you insight into the quality of care your clinic provides. If you notice low retention rates, review patient feedback to diagnose the issue. Reasons for low retention rates can include long wait times or insufficient care quality.

Improve Productivity With Pathstone

At Pathstone, our healthcare consulting experts can help you improve financial and operational performance in healthcare settings without sacrificing patient outcomes. Contact us today to learn more about how Pathstone can enhance your productivity.

Measuring Productivity

Measuring productivity is vital to optimizing economic outputs in the healthcare industry with low productivity impacting a healthcare facility’s ability to function and support the economy in meaningful ways. Keep reading to learn more about how to improve productivity in your facility.

Healthcare is a main pillar of the U.S. economy, accounting for 19.7% of the national gross domestic product (GDP) in 2020. Nonetheless, healthcare does not always have a significant contribution to national economic growth with many factors playing a role in this discrepancy. Some of these factors include market irregularities, U.S. healthcare infrastructure peculiarities and regulatory requirements. Despite this, one factor a healthcare practice can control is its productivity measures.

The Importance of Measuring Productivity

Measuring productivity allows you to find the areas of your facility that are operating smoothly and efficiently and those that could use improvement. Doing so helps you:

• Focus on long-term growth rather than short-term productivity gains that may undermine operations.
• Identify specific opportunities to control healthcare spending growth in ways that support the economy and patient outcomes.
• Deliver higher quality services while spending less on non-essential expenses.

In short, measuring productivity enables you to increase productivity to achieve positive outcomes. In healthcare settings, positive outcomes may involve continued medical advances, staying on top of service demands and improving affordability for patients.

However, measuring productivity is not as straightforward as it may seem, as the methods you use to measure productivity also matter.

Traditional Measurement Methods

Traditional productivity measuring methods focus on hard metrics like time and financials. These hard metrics emphasize human capital and labor production rather than the services delivered. When seen through these measures, solid productivity in a healthcare setting is a matter of lower costs and quicker services.

Time metrics evaluate such factors as the following

• The time needed to care for patients and complete each case
• The number of patients doctors treat per day
• The time healthcare employees spend with each patient

The financial healthcare productivity metrics look at

• Employee labor costs: Financial metrics assess positions essential to patient care and those that provide supplemental benefits. Maximizing productivity in this area may involve redistributing wages, culling staff or exploring casual and temporary hires.
• Amount of overtime pay given: Sometimes overtime hours are necessary, such as when treating a patient in an emergency takes providers past closing hours. Other times, overtime hours are less critical, such as staying after hours to complete paperwork or spending too much time with each patient.
• Supply and equipment costs: Financial metrics weigh the benefit and expense of each medical device the clinic or hospital uses. State-of-the-art devices may be expensive, but their benefit may provide a worthwhile return on the investment. Conversely, a clinic or hospital may opt for the bare essentials to cut expenses. Other considerations include keeping enough medications on hand to meet patient demand.
• Other expenses: Electrical, heating, water and other utility bills are necessary to provide adequate patient care. Still, finding ways to cut back on these expenses increases financial productivity.

The traditional methods of measuring healthcare productivity are quantitative rather than qualitative. A clinic may reduce open hours or hire only essential staff to maximize productivity. Doctors may also prioritize brevity when seeing patients, making quick decisions and only pushing for more details when significant concerns arise.

By focusing on time and financials, traditional methods focus on patient volume rather than the patients themselves, their needs and satisfaction with their care. Likewise, by disregarding patient satisfaction, these methods answer only half of the question of productivity. Decreased patient satisfaction can undermine such productivity methods.

Take Action

Measuring productivity is vital to your organization on a high level, get in touch with Pathstone today to start monitoring your overall productivity and explore how we can increase your bottom line.