What is Benchmarking?

Benchmarking is the process of identifying specific reference points for your business to measure performance, efficiency and quality. It can be used in many different ways, though it ultimately comes down to seeing how you stack up against your peers and against your own past performance. It is through benchmarking that practices can also better understand areas for improvement and find ways to offer a wider range of services, as well as improve profitability.

Internal vs. External

Benchmarking comes in two forms: internal and external. Internal benchmarking is the process of comparing the current state of your practice against historical performance. Internal benchmarking can also help create progressive goals towards longer term objectives as you define bottlenecks, unnecessary expenses, etc.

External benchmarking compares your practice against the performance of others in your industry and/or specialty. External benchmarking can offer a window into general competitor performance as a way of seeing how effectively others perform similar tasks. Through external benchmarking, practices can see not only how they stack up, but also where they specifically fall short.

Information is Critical

Information is critical to benchmarking but what information? And how much of it do you need? Information lacking depth and definition will only yield vague results; too much can overwhelm and confuse analysis. Youll almost always want to start off on the side of caution and collect as much as possible about the aspects of your practice you think require the most consideration. Then, adjust your collection processes as you begin to identify what areas will provide the most benefit. You might even find that you already have more than enough data to analyze certain facets of your practice- for example, if youve contracted with a good medical billing company youll have a wealth of information on medical claim billing and patient accounting.

To streamline the process of collecting information, remember that internal and external benchmarking are driven by the same data sets. Many practices might start off by contacting trade organizations or specialty associations (i.e. the American Medical Association) for existing benchmark data by region, specialty, practice size, etc. There is, in fact, so much information available from these types of industry groups for just a few hundred dollars that most of the work will already be done for you. Simply take a look at what others are measuring, how they are doing so, how they formulate their results, and work out from there. A few hours setting up a basic spreadsheet will help you maintain clean records and manage effective, albeit simple, comparisons. This will at least get you started and identify target areas where you might need to become more aggressive over time.

An additional thought on purchasing existing data: Industry-wide benchmarking is based on median figures and industry averages. Make sure you understand what type of information you are buying whether its industry-wide, or industry leaders. If your goal is to become a top performing practice and your objective is to meet industry-wide benchmarks, you are only setting your sights on mediocrity.

Openness to Change

As you move through the benchmarking process dont lose sight of the ultimate goal- affecting a positive change on your medical practice to improve your services and your practices profitability. Benchmarking is not just about identifying where you currently stand, but finding ways in which you can do better. Its about evolution, growth, and change. Keep an open mind and be flexible when your results suggest that something youve done for years might just be the reason youre not performing well.