Hospitals are cost intensive
business, both in capital as well as operational expenditure. The article ‘How
much does it cost to run a hospital?’ gives a detailed understanding of different
cost heads with their proportion. In addition, rising competition and increasing
regulations are just making the hospital business even more difficult. For a
hospital business manager, it is crucial to closely monitor the business performance
of the hospital. Following are the list and description of some key measures
that gives a good understanding of hospital’s business performance.
BED OCCUPANCY RATE (BOR)
This is by far the most commonly
quoted measure to describe how well a hospital is doing. BOR gives a gross idea
about how well the hospital’s bed capacity is being utilized. BOR is the
percentage of available beds that is occupied by admitted patients at a given
point of time. BOR can also be calculated for a period (like for a month), in
which case, it is average BOR for that period
Formula for calculating BOR for
a given point of time:
Total number of admitted patients at a given point of
time x 100
Total functional beds available at that point of time
Functional beds are the beds on which a patient can be
admitted. Beds of emergency ward, day care ward and beds currently not in a
condition to admit patient should not be counted in the functional beds.
Point of time can be current time or any date and time on
which BOR is being calculated.
Formula for calculating BOR for
a period:
Total patient days in a period x100
Total available bed days in the same period
Total patient days can be calculated by adding the length
of stay of all patients during the period under calculation. Patient days that
were spent outside the period under calculation should not be counted. Alternatively,
sum of daily census of hospital (total number of admitted patients on a given
day) for each day in the period can be done to arrive at total patient days.
Total available bed days can be calculated by multiplying
the number of functional beds in the hospital with the total days in the
period. Adjustment should be made for beds that were added/removed during the
period.
Interpretation: A higher BOR reflects good performance and vice-versa.
However, very high BOR (close to 100%) may not be good, as it indicates that
hospital is overcrowded and over utilized, which may eventually lead to poor maintenance
of facility and poor patient experience.
To get a better understanding of bed utilization, BOR should
also be calculated separately for various categories of beds; some important
break-ups of BOR are as given below
·
BOR of various categories of beds (general ward
beds, single room, twin sharing, deluxe etc.) - helps in understanding utilization
pattern of various kinds of beds
·
BOR of ICU (also called as ICU occupancy rate) –
ICU beds being much more costlier to build and operate compared to general
beds, it is essential that ICU occupancy are measured and monitored separately
·
Speciality-wise BOR – In hospitals where the bed
strengths are divided amongst various specialities, specilaity-wise BOR must be
measured
BED TURN-OVER RATE (BTR)
BTR is a measure of how many
times there is change of patient per bed. It indicates how well the hospital
beds are utilized. Formula for calculating BTR is
BTR = Number of discharges and deaths in a given period
Number
of functional beds during that period
BTR of hospital is affected by average
length of stay (ALOS). If ALOS is high, BTR will be low and vice-versa. Hence,
comparison of BTR can be made between hospitals having similar ALOS.
Interpretation – High BTR
generally indicates better utilization. It means patient turn-over is high and
hospital is treating more number of patient in a given period of time. BTR
along-with BOR gives a very good understanding of how well hospital’s beds are
being utilized.
BED TURN-OVER INTERVAL (BTI)
BTI is a measure of average length
of time that elapse between discharge of one patient and admission of next
patient on the same bed, over a period of time. BTI is an efficiency parameter,
that indicates how quickly the bed is ready to admit next patient.
Formula for calculating BTI
BTI = Available functional bed days in a given period – Occupied bed
days in the same period
Total
patient discharged during the same period
The formula basically calculates
vacant bed days and divide it equally amongst total number of patient. An
example for calculating BTI is given below.
A hospital has 100 functional
beds. In last one month total patient days (i.e. sum of admitted patient in
each day for last one month) has been 2235. Also, a total of 340 patients were
discharged during last one month. Based on this BTI for last 1 month can be
calculated as
Available functional bed days in
last one month = 100 x 30 = 3000
Therefore BTI = (3000 – 2235) /
340 = 2.25 days. This means on an average each bed has received next patient
after 2.25 days post discharge of the previous patient.
Interpretation – At a given
BOR, the BTI indicates how efficient hospital’s system is in readying the bed
for next patient. A short BTI indicates better efficiency. However, very short
BTI should be looked at cautiously as studies has shown that short BTI is
linked to increase in hospital acquired infections such as MRSA.
AVERAGE LENGTH OF STAY (ALOS)
ALOS is a very common performance
measure which is used not only for business performance but also for clinical
quality and infection control. ALOS is average duration for which a patient remains
hospitalized.
Formula for calculating ALOS
ALOS = Sum of Length of stay (LOS) of all discharged (including
death) patient during a period
Total number of
discharges plus deaths
The LOS of each patient should be
calculated from day of admission till day of discharge. Day care patient or
patient getting admitted and discharged on same day should be excluded.
Condition specific ALOS –
As LOS of a patient heavily depends upon the disease condition, calculating
condition specific ALOS has much more significance instead of calculating gross
ALOS. Condition specific ALOS can be calculated by adding the LOS of all
patient with similar condition and dividing the sum by number of deaths and discharge
of patient with that condition. Some examples of conditions for which ALOS should
be measured are
·
ICU specific ALOS
·
ALOS of patients with a specific diagnosis
·
ALOS of paediatric patients
·
ALOS of obstetric patients
·
ALOS of a particular speciality
Interpretation – For ALOS to make sense, it must be compared with
some benchmark ALOS of that condition. Comparison can be made through
historical ALOS or with other hospital’s ALOS. Generally a reducing ALOS
indicates better performance as it indicates that beds get free sooner and
become available for admitting next patient.
OPERATION THEATRE (OT) UTILIZATION RATE
OT perhaps is the most expensive
facility in a hospital. It is also highly costly to operate. Hence, if OT
are not utilized for surgeries, hospital may find it extremely difficult to
manage the expenses. OT utilization rate should therefore be an important
measure for monitoring hospital’s business performance.
Formula for calculating OT utilization rate
OT utilization rate = Sum of length of time (in hours) of all
surgeries performed during a period x 100
Total OT time
available during that period
Length of time of a surgery
should be calculated as the difference between the time patient was wheeled in
the operation room and the time when patient was wheeled out
Total OT time should be calculated
as the product of number of operation room, number of working days in the
period and total working hours for the OT in a day.
Example – A hospital performed 100 surgeries in one month and the sum
of length of all 100 surgeries was 280 hours. The hospital has 4 operation room
which remains functional from 9:00 am to 4:00 pm every day. Also, total working
days in the month were 22 days
Total OT time can be calculated
as 4 x 7 x 22 = 616 hours
Thus OT utilization rate will be
280/616 x 100 = 45.45%
Interpretation: Higher OT utilization rate indicates better
performance. However, very high rate should be taken cautiously, as it may lead
to effects such as higher infection rate. Low OT utilization rate may be either
due to less number of patient for surgeries or because of inefficient system in
OT.
EQUIPMENT UTILIZATION RATE
Like OT, there are some equipment
that are of high cost and needs to be utilized for achieving break-even. These
equipment include machines, like CT scan, MRI scan, PET scan etc. Utilization
rate of each of these equipment must be measured separately.
Formula for calculating utilization
rate of equipment such as CT-scan and MRI
Utilization rate = Total number of tests performed in a particular
period x 100
Maximum
number of test that can be performed in that period
Maximum number of test that can
be performed should be estimated for each equipment separately. This can be
done by dividing total functional time available for the equipment with the average
time for performing one test.
Example: A MRI scan machine at one hospital can perform one scan in
30 minutes. It remains functional for 8 hours in a day. Thus in one day the MRI
machine can perform 16 scans. If the hospital has perfomed, lets say, 185 scans
in last 22 working days. MRI scan utilization rate can be calculated as 185/(16
x 22) x 100 = 52.5%
Interpretation: While high utilization indicates good performance,
this measure should be seen in light of other measures such as BOR and daily
OPD workload. The utilization rate must increase with increase in workload data.
OPD TO IPD CONVERSION RATE
OPD is generally considered as
shop window of the hospital and is not a major revenue generating department.
OPD however functions as a feeder to IPD. Hence, to monitor how much of OPD patients are converting into IPD, this
measure should be used.
Formula: Number of patient
admitted through OPD in a period x
100
Total number of OPD patients
Patients admitted through OPD are
those who were examined in the hospital’s OPD and were subsequently admitted.
Interpretation: While a higher rate is a good performance, it is
better to track the trend of OPD to IPD conversion. The rate is generally
affected by poor patient satisfaction, high cost of IPD or low motivation of
doctor’s to admit OPD patient.
OPD FOLLOW UP TURNOVER RATE
This is a measure of patient
satisfaction and patient loyalty which is one of the key determinants of a
hospital business. A high follow up turnover rate indicates that patients are
satisfied and are willing to continue their treatment in the hospital. It can
be calculated as
Number of patients who came back for follow up in OPD in a
particular period x 100
Number of patients who were called
for a follow up in OPD
To calculate this indicator, it
is necessary that hospital has a system of recording who have been called for a
follow up and on what date. The system should also be able to identify and
count those patients who came for follow-up. You may also like to read the post
of ‘Making
of a loyal customer’
PROPORTION OF NEW PATIENTS REFERRED BY EXISTING PATIENTS
Hospital’s business thrives on
word of mouth publicity. If an existing patient do not recommend the hospital,
it is very unlikely for the hospital business to succeed. Hence, hospital’s
management must keep a track of how much do their patients recommend the
hospital to their known ones. One measure for this can be proportion of new
patients referred by existing patients. To calculate, this measure, hospital
must have a system to collect data on who recommended the hospital to a new
patient. The formula to calculate this measure is
Number of new patients registered who were recommended by an
existing patient x 100
Total number of new patients
registered in the period
The word of mouth in today’s
context is getting replaced by online rating and reviews. It is becoming
increasingly necessary for hospital’s to manage their online image. The post on
‘Avoiding
poor online rating of your hospital’ describes what factors leads to lower
rating by patients.
PROPORTION OF WALK-IN TO REFERRED PATIENT
This measure describe from where
the patient comes from. There are basically two major source for a hospital to
get patient. Patient can either be a walk-in or is referred by a general practitioner/other
doctors.
Formula for calculating: Number of patients referred by other
doctor in a period
Number
of walk-in patient in the same period
To get data for this measure,
hospital must collect data on referred/walk-in for every new patient coming to the
hospital. This registration
form may be used for collecting such data
Interpretation: Depending upon the marketing strategy of the
hospital, this indicator will have different meaning to different hospital. For
tertiary care hospitals such as Cardiac, cancer, Neuro, referral patients are
the most important source and hence the proportion should be higher. For a
general hospital providing secondary care services, dependence on referral may
not be good for business. They should try to get more walk-in patients. Hence
the a low proportion in this case would be beneficial.
DAMA is an important indicator of
whether or not patients are accepting the hospital for treatment. DAMA can
happen largely due to patient dissatisfaction or higher cost. There could be
few DAMA that can happen due to patient’s personal reasons, but monitoring DAMA
rate can give an idea about how patients are finding the hospital. DAMA rate
can be calculated as,
DAMA rate = Number of patient who went DAMA in a period x 100
Total
number of discharges in the same period
Interpretation: Some patients will go DAMA despite best efforts of
the hospital, but it should be monitored that the rate is not showing an
increasing trend. Collecting additional data on reasons of DAMA from the
patients may help in taking corrective measures
PATIENT SATISFACTION RATE
Patient satisfaction is not only
a quality measure but also an important business measures. Satisfied patients
are more likely to create a positive word of mouth publicity, which helps the
hospital in attracting more new patients. There are various methods of
estimating patient satisfaction rate, and each has its own merits and
limitations. Most common method of getting patient satisfaction rate is through
structured feedback from patient at the time of discharge. It is essential to obtain
feedback through right patient
feedback form and using right method.
COST PER PATIENT DAY (CPPD)
Monitoring cost is essential to
hospital business, as explained in the post ‘How
much does it cost to run a hospital?’. Cost of running a hospital is
affected by how many patients days has been catered by the hospital. Hence,
finding out per patient day cost helps hospital management to understand, if
they are expenditure are in line with the workload.
Formula: CPPD = Total expenditure of the hospital in a year
Total patient days in that year
As many cost occurs on annual
basis, this measure should better be calculated on an annual basis. Total
patient day can be calculated by sum of LOS of all patients or by multiplying
the number of patients by ALOS of the hospital.
Interpretation: A lower CPPS, indicates good efficiency. For a better
understanding, fixed costs such as staff salary, insurance premium, AMC/CMS fee
etc. can be excluded, as they are not affected by patient days.
REVENUE PER PATIENT DAY (RPPD)
Similar to CPPD, it is also
necessary to monitor if adequate revenue is being generated for each patient
day. This can be calculated by the formula,
RPPD = Total revenue of the hospital in a year
Total
patient day in that year
As some payments may come late
due to insurance or third party payment, calculating this indicator in a
broader time-frame, such as annually, will give more accurate result.
Interpretation: RPPD along with CPPD gives a good understanding of
profitability. A rising CPPD and falling RPPD is generally not a healthy sign.
For better assessment of RPPD, non-patient revenue, should be excluded.
While the above measure are
directly business performance measures, quality and operational excellence are
also an important determinant of hospital business. List
of quality indicators suggested by NABH can be a good reference for
monitoring quality of hospital services
