Benchmarking A diagnostic tool for practice management

by David Orenstein free-lance writer

One “off-the-charts” lipid panel result can convince a superficially healthy patient that although he may not feel badly now, he’d better change his ways soon. This same idea can apply to practice management. While a practice is still in business and ostensibly healthy, benchmarking can show how out of whack it actually is. Benchmarking is data-driven, so computers can make it easier.

Benchmarking is not new, but there are always new ways to do it and, over time, the practice management data available for comparisons only gets richer. Indeed, the bandwagon is still rolling: This summer the American Academy of Family Physicians selected the young company Physcape, Inc, to offer benchmarking services to its 94,000 members. AAFP followed other physician groups such as the American College of Physicians, which has encouraged benchmarking for years. In fact, ACP offers a free benchmarking tool to its members called the Practice Management Checkup.

That’s pretty much what benchmarking is—a checkup for a practice. In general, it involves comparing your practice’s statistics, such as coding levels per patient visit, RVUs (relative value units, which are a measure of procedure complexity), fee schedules, billing collections, or staff salaries, with comparable statistics of similar practices. Benchmarking allows you to tell a male patient who is 5’5” and 200 pounds that he shouldn’t weigh more than 150 pounds. Similarly, it can point you toward a pattern of missed revenue opportunities or inefficient procedures.

Physcape is a for-profit subsidiary of the not-for-profit Medical Group Management Association. Founded in January 2001, Physcape allows subscribers to send in data from their practice management software and, every quarter, peruse benchmarking reports for their practices on the Web. Fees are based on the practice size. A practice of 1 to 10 providers would pay $875 a quarter, says Physcape CEO Luke McCaine.

Physcape’s database includes about 100 million procedures. It strives to offer meaningful comparisons to practices in the same specialty, of the same size, and in the same region of the country (it currently breaks the country into nine regions).

For example, say you’re running a family practice with obstetrics. A week or so after sending in your data, you would log in and see a pie chart showing the kinds of diagnoses for which your practice seems to be missing out on the most revenue. By clicking on the diagnosis (ie, pregnancy), you can see the list of procedure codes involved (ie, 59410 Obstetrical Care). Follow those links and you can see each provider in the practice, assuming you have supplied this data. You might see that a particular physician is performing a procedure only twice every 100 visits, and physicians in comparable practices perform it six times in every 100 visits. The discrepancy may be for a good reason, but at least now you are aware of it.

Benchmarking is not meant to steer physicians away from their own medical judgment in the name of better profits through conformity.

“It doesn’t tell them how to practice medicine, but it does tell them what others are doing,” Mr McCaine says. “How you use the information is up to you.”

Of course, there is the risk that your practice might shell out hundreds or thousands of dollars to Physcape or some other service only to find out that your practice is doing exactly what everyone else is doing or, even better, is doing what makes you and your patients happy. The prospect that you might not learn much, even after expending considerable technical effort to get your data into an analyzable format (you might need to call a consultant or your practice management software reseller), might seem too daunting.

Perhaps the best way to decide whether benchmarking would be a useful practice management technology tool is to benchmark the concept itself. In other words, ask around.


David Orenstein is a technology and business writer in Silicon Valley. To learn more about a technology topic in Computing Care, e-mail him at davealli@comcast.net.