Applying Moneyball to Your ASC

Applying Moneyball to Your ASC

Use meaningful KPIs to help drive your business forward

Going . . . going . . . gone! Everyone wants the homerun hitting hero on their team. And, for many years, professional baseball teams paid big money to sign up the likes of Barry Bonds, Hank Aaron, Alex Rodriguez and Sammy Sosa.

Michael Lewis’ 2003 book, Moneyball, however, explains how Oakland Athletics General Manager, Billy Beane, did not buy into the typical baseball mindset. Indeed, Beane went beyond common metrics such as home runs to predict which players were most valuable in terms of actually helping the team win games. In essence, Beane zeroed in on metrics that really mattered—not what most people thought counted—and from this was empowered to make better decisions about where to direct his limited resources. More specifically, Beane turned away from conventionally accepted activity-focused metrics such as RBIs, stolen bases and batting average and turned toward achievement-focused metrics such as on-base percentage and slugging—a true measure of the batting productivity of a player.

As such, Beane signed up players that could make his team extraordinarily competitive at a fraction of the cost required to pull in the traditional heavy hitters. This approach enabled the Oakland Athletics, with a payroll of just $41 million, to compete with the likes of the New York Yankees, a team that had $125 million to cover payroll expenses.

My presentation at ASCA 2018, April 11-14, in Boston, Massachusetts, discusses how the Moneyball approach provides a practical lesson not only to baseball teams but to other sports teams and many other businesses as well. That being: Commonly accepted key performance indicators (KPIs) are not always the ones that lead to success, rather, there are other less commonly known KPIs that are ultimately more accurate in tracking true success for your organization and at a fraction of the cost.

Moneyball in Your ASC

What does this all mean for your ASC? While some might argue that there is a big difference between managing a baseball team and a surgery center, you would probably do very well to take the Moneyball lesson into account. As such, your ASC should go beyond using only common KPIs to assess progress and start leveraging more meaningful KPIs that will genuinely help drive your business forward.

To get started, you need to focus keenly on your organization’s overall objectives, thoroughly describe your desired results and then zero in on the KPIs that will get you there. More specifically, you need to develop and implement KPIs that:

  • help your organization define and track progress toward its end goals;
  • are measurable; and
  • serve as the critical factors driving the success of your operation.

To truly get to Moneyball-type metrics, though, you need to take your KPI development a step further, focusing on metrics that will help you rapidly grow your revenue, minimize your costs and ensure that you are maximizing your cash flow while remaining highly compliant.

One of the most commonly discussed metrics in board meetings and with accountants is “days in accounts receivable (AR).” Days in AR is used to track the average number of days it takes to collect payments. So, on its face, it makes great sense that it would be a critical financial metric. That said, days in AR can be manipulated easily, thus making it a dangerous KPI to rely on too heavily. For example, if your payment posters are posting strictly according to the explanation of benefits (EOB), rather than analyzing the managed care contracts and appealing any and all underpayments, including implants, then your days in AR will reduce, but it is highly likely that your all-important cash collections and cash-per-case metrics also will shrink. Thus, organizations that rely too heavily on days in AR might accomplish this goal at the cost of leaving money on the table.

Similarly, another heavily used metric is “days to bill.” This metric tracks the average number of days from date of service of the procedure to the actual bill date, thus attempting to track the efficiency of the front and middle parts of your revenue cycle. While important, again, certain detrimental steps can be taken that reduce this metric to an attractive number but simultaneously harm the quality of your revenue cycle. For example, accepting what the surgeon coded rather than having a certified coder take the time to review the operative note and ask questions of the surgeon if needed to obtain clarifications, will certainly reduce the days to bill, but will also likely lead to a higher percentage of denials, takebacks and noncompliant claims. Tracking the accuracy of coding and the resulting denials, when combined with days to bill, is ideal.

There are numerous other KPIs that are useful, such as productivity metrics for each of your revenue cycle departments, including coding, AR, claims, payment posting, appeals and patient accounts, but such KPIs need to be used carefully so as not to incentivize behavior that inadvertently harms your ASC’s ability to grow profitably and compliantly. As you continue to gain a stronger grasp of the few critical metrics that truly drive your business to success, new and advanced technologies such as machine learning, predictive analytics and artificial intelligence can be leveraged to help you take the necessary steps to always remain ahead of your competition while providing unparalleled service to your patients.

By going beyond the KPIs that have been commonly used for years and leveraging deeper and more meaningful Moneyball-like KPIs, you can ultimately get exactly what Beane got out of his team: championship worthy performance at a reduced cost; the true holy grail of business.

“Your ASC should go beyond using only common KPIs to assess progress and start leveraging more meaningful KPIs that will genuinely help drive your business forward.Nader Samii, National Medical Billing Services” – Nader Samii

Nader Samii is the chief executive officer of National Medical Billing Services in St. Louis, Missouri. Write him at nader.samii@nationalascbilling.com.

Source: ASCA Focus May 2018 – Applying Moneyball to Your ASC

Nader Samii, revenue cycle KPIs, Ambulator Surgery Center Association

SUBSCRIBE TO NATIONAL MEDICAL UPDATES

OUR AWARDS