“Key Types of Metrics Medical Organizations Should Track”

4 Key Types of Metrics Medical Organizations Should Track

Medical organizations must be improvement-oriented to provide exceptional clinical care and patient experiences. The key to making impactful improvements that make a difference for your operations is data and analytics.

Every business identifies and tracks key performance indicators (KPIs) to measure how successful they are. The insights they glean from these metrics tell them what they’re doing right and where they can improve.

By tracking the right metrics, you can make smarter operational decisions and ultimately deliver more effective patient care. Let’s examine the most important categories of metrics that medical organizations should track and why they matter.

Clinical Quality Metrics

Clinical quality metrics help you measure whether your medical organization provides excellent clinical care. Metrics you might track that fall into this category may include:

  • Preventive care compliance: Measures the extent to which patients take preventive health measures by receiving the recommended screenings and vaccinations on schedule.
  • Average length of stay (ALOS): Assesses organization efficiency and care effectiveness, especially for inpatient services.
  • Readmission rates: Evaluates the percentage of patients who return to the hospital within a given period.
  • Medication error rates: Measures the percentage of patients who receive medications that are not in accordance with the prescriber’s order or the manufacturer’s specifications about medication use.
  • Hospital-acquired infection (HAI) rates: Tracks infections that occur during hospital stays, helping to improve infection control and sanitation practices.
  • Clinical documentation accuracy: Measures how well patient records reflect care provided, whether for one-time visits or chronic care.

These metrics help medical organizations meet regulatory and accreditation requirements and make internal improvements in care delivery. By monitoring these trends, you can make targeted changes to your organization’s infrastructure and processes that reduce complications and provide better care.

Plus, these metrics are a great way to demonstrate your accountability to patients and stakeholders. As UpMetrics explains, strong impact reports are built around both quantitative and qualitative data, so your organization may also consider conducting patient interviews or sending surveys to receive their feedback.

Patient Experience and Satisfaction Metrics

While clinical care effectiveness is essential, patients’ feelings about their care are just as important. If a patient is treated successfully but has a terrible experience with your staff members, this can greatly damage their trust in your healthcare organization.

To measure patient experience, track the following metrics:

  • Net promoter score (NPS): Measures how likely patients are to recommend your practice to others, giving you a precise gauge of their overall satisfaction with their experience and your care.
  • Patient retention rate: Tracks how often patients return to your practice, indicating loyalty and long-term satisfaction. This metric most applies to preventive healthcare appointments and measures, as these are expected to occur regularly.
  • Average wait time and time to appointment: Refers to the amount of time until your next available appointment and the amount of time patients must wait after checking in before the appointment to be seen. On average, it takes patients 31 days to schedule doctors’ appointments, and 40% of patients say healthcare wait times are unreasonable.
  • Online review scores: Refers to aggregated ratings from Google, Healthgrades, and other platforms that provide insight into public perception. Since the reviews are on a third-party site, thoughts and opinions here may be more honest.
  • Complaints and resolution metrics: Measures the number of patient complaints and how quickly your organization addresses them, providing a view into patient concerns and responsiveness.

In addition to tracking these metrics, you can measure patient experience through patient surveys. One or two days after a patient visits your medical organization, send them a survey through email or text message with a mix of short answer and multiple-choice questions they can answer about their experience. Surveys help patients feel heard and respected while enabling you to make data-driven decisions that improve their overall experience.

Operational Efficiency Metrics

Running a smooth operation doesn’t just result in happier patients—it also makes life easier for your staff members. In a recent study, over 45% of physicians reported at least one symptom of burnout. As burnout leads to lower productivity and work dissatisfaction, lightening the workload on medical staff and boosting operational efficiency is key to providing a better workplace.

Operational metrics highlight inefficiencies that you can target for improvement. Here are a few examples:

  • Patient throughput rate: Assesses how efficiently patients move through intake, diagnosis, treatment, and discharge.
  • Appointment no-show rate: Measures the percentage of appointments patients fail to attend.
  • Staff utilization: Tracks whether team members are overburdened or underused, enabling smarter workload distribution.
  • Schedule density: Evaluates how fully booked providers are, providing insight into capacity planning and appointment availability.
  • Room utilization rate: Measures how often exam or procedure rooms are in use, identifying opportunities to better manage physical resources.
  • Average patient visit duration: Helps analyze provider efficiency and pinpoint areas where your organization can streamline appointments.

When you monitor these metrics with a robust practice management software solution, you can make better decisions for resource allocation, staff time management, and patient flow. Look for a comprehensive solution with features that increase operational efficiency, such as appointment scheduling tools and functionalities for managing and cleansing your data.

Financial Metrics

Financial metrics help medical organizations manage their finances and resources effectively and plan strategically for future growth and expansion. These indicators reveal how well your organization generates revenue, manages costs, and sustains profitability:

  • Operating margin: Reflects the percentage of revenue remaining after operating expenses, giving a snapshot of overall profitability.
  • Revenue per encounter: Measures the average revenue generated for each patient visit, helping assess billing efficiency.
  • Cost per encounter: Calculates how much is spent per patient visit, allowing organizations to identify inefficiencies and areas for cost reduction.
  • Patient payment rate: Measures how often and quickly patients pay their bills, helping identify barriers to collections.
  • Accounts receivable days: Tracks how long it takes to collect payments, which affects cash flow and operational stability.
  • First pass resolution rate: Measures the percentage of insurance claims that are successfully processed without the need for rework.
  • Claim denial rate: Indicates the percentage of submitted insurance claims that are denied, highlighting potential coding or documentation issues.
  • Appeals success rate: Tracks how often denied claims are successfully appealed, offering insight into payer relationship management.
  • Average reimbursement rate by payer: Assesses the financial impact of working with different insurers, which supports contract negotiation decisions.

Streamlining financial management and billing operations is often challenging, and many medical organizations don’t know where to begin. These metrics will give you a good starting point for optimizing your process.

For instance, if you’re running into issues with insurance billing, your solution may be to outsource this work to a medical billing service to free up your time to focus on other revenue leaks. Or, you may take PracticeSuite’s recommendation and invest in medical billing software that streamlines the process and makes it easier for your staff members to handle.

Tracking the right metrics helps your organization run more smoothly and empowers you to deliver high-quality care. Whether you’re just beginning your data analytics journey or looking to refine your approach, focusing on key indicators in each area can provide the clarity you need to drive meaningful change. Determine your current priorities, whether that’s hiring, finances, or patient care, and set metrics for them that you can assess to shape a stronger future strategy.

The title of the post: “How to Prepare for a Nonprofit Audit: Essential Steps.”

How to Prepare for a Nonprofit Audit: 4 Essential Steps

If your nonprofit is considering conducting an audit, you might feel intimidated or worried, especially if it’s your first time. However, audits are a crucial part of effectively managing your organization’s finances, ensuring proper governance, and maintaining transparency with stakeholders. And once you understand the process, it isn’t nearly as scary as it may seem!

Most nonprofits hire external professionals to conduct audits, but that doesn’t mean your team should contact the first auditor you find and leave everything in their hands. Rather, proper internal preparation helps ensure your audit is accurate, timely, and useful for shaping your organization’s financial practices going forward.

In this guide, we’ll walk through four steps your nonprofit should take to get ready for its audit and lay the foundation for receiving thorough, actionable results. Let’s dive in!

1. Decide What Type of Audit You Need to Conduct

While the term “audit” is most often used in financial contexts, not every nonprofit audit focuses on finances. Different types of audits serve different purposes, and the right one for your nonprofit depends on your unique needs, goals, and priorities.

According to Jitasa’s nonprofit audit guide, the most common audit categories are as follows:

  • Independent financial audit. This type of audit occurs when a third-party auditor reviews your financial data, documentation, policies, and procedures to provide an expert, objective perspective on your nonprofit’s health and compliance.
  • Internal financial audit. This audit is similar to the independent financial type, except your nonprofit’s employees are the ones reviewing its financial information. Although these audits can’t be completely objective, they give your team a chance to think critically about your organization’s financial situation.
  • IRS financial audit. The IRS doesn’t audit tax-exempt organizations often, but if your nonprofit fails to file its annual tax return or a discrepancy is discovered, a government agent may come calling.
  • Compliance audit. These audits assess your organization’s adherence to internal (i.e., bylaws and policies) and external guidelines (i.e., federal, state, and local government regulations). Financial compliance is part of this audit, but it also touches other areas of your organization, such as fundraising and administrative compliance.
  • Operational audit. This category of audits involves analyzing processes and systems to identify ways to improve efficiency and effectiveness. They can be general or focused on one area of your operations like technology or human resources.

For the purposes of this article, we’ll focus primarily on independent financial audits since they’re the most common type of nonprofit audit. They’re also the most likely type of audit to be required for your organization, whether because of a stipulation in your bylaws, a federal or state government regulation, or a request from the funder of a grant you’re pursuing.

2. Lay out Your Auditing Timeline

The entire independent financial audit process takes several months to complete. If you have a deadline to submit your audit report to a grantmaker or government agency, note that date and work backward to figure out when you need to begin, building in some wiggle room to ensure you finish in time.

Here is a quick breakdown of the phases of the audit process and how long each one typically takes:

  • Selecting an auditor: 4-12 weeks
  • Preparing for the audit: 2-4 weeks
  • Conducting the audit: 2-4 weeks
  • Implementing audit recommendations: No specific timeline, but the sooner you can start, the better!

If your nonprofit doesn’t have an external deadline for your audit, try to conduct it and begin implementing the recommendations before completing your annual tax return. This way, you can let the IRS know that you’re actively improving your processes, and your team won’t have to work on two major financial projects at the same time.

The Form 990 filing deadline is the 15th day of the fifth month after the end of your nonprofit’s fiscal year (May 15 for organizations whose fiscal year follows the calendar year). You can extend the due date by up to six months if needed to conduct your audit—you’ll just have to file Form 8868 and get approval from the IRS to make the extension official.

3. Select a Nonprofit Auditor

Choosing your auditor typically takes longer than any other step in the independent auditing process. It’s important to select an individual or firm that can meet your needs and goals while working within your budget and timeline. 

Here is a basic overview of how to find the right auditor for your nonprofit:

  • Conduct online research, making sure to read reviews from each candidate’s past clients and noting their pricing structure. 
  • Ask for recommendations from other nonprofits in your network that have undergone financial audits and from your organization’s accountant (who typically won’t conduct your audit to avoid a conflict of interest, but likely knows of auditors who can).
  • Issue a Request for Proposals (RFP), which Cornershop Creative describes as “a formal document that outlines the requirements, specifications, and criteria of a project or service [and] serves as an invitation for qualified vendors or partners to submit bids.”
  • Meet with your top candidates after reviewing their proposals to compare costs, timelines, and scope of work so you can make an informed final decision and send your chosen auditor an accurate contract.

Just like with hiring financial team members for your organization, look for auditors who specialize in working with nonprofits. When searching online, use keywords like “nonprofit auditing firms near me” or “nonprofit auditors in [city name]” to narrow your results. Additionally, make sure their past clients include nonprofits of approximately the same size as yours to ensure they’re familiar with similar financial situations.

4. Organize Your Financial Records & Reports

After signing your contract and scheduling your audit, your auditor will send over a Provided by Client (PBC) list. This list details all of the documents they’ll need to complete their review, which can range from your fiscal policy handbook to financial statements to board meeting minutes. Compile these resources in a digital folder that you can share with your auditor for easy access.

However, pulling together everything on the PBC list is only part of the audit prep equation. You also have to clean up your accounting system—not only to help your auditor find the information they need in it, but also to demonstrate that you’re practicing good financial data hygiene, which the auditor will be looking for as they assess your procedures.

Before your audit, make sure to:

  • Reconcile all bank and investment accounts
  • Ensure restricted funds and assets are properly tracked
  • Resolve any uncategorized or uncleared transactions
  • Deposit any undeposited funds
  • Review receivables and payables
  • Identify and fix coding errors (e.g., duplicated or inconsistent entries)

If you need help with these tasks, your bookkeeper or accountant can help you identify and resolve any issues in your accounting system before the audit begins and pull any reports you might still need for your PBC folder.

Even if you prepare thoroughly for your audit, your report might not be perfect, which is completely fine! Remember that your auditor isn’t just there to check boxes. They can be a valuable partner in helping your organization develop sustainable practices for long-term financial success. 

When you get your report, take some time to review the recommendations with your team and determine the best ways to incorporate them into your financial management activities. Then, hopefully, your next audit can go even more smoothly!