Important healthcare KPIs: Using key performance indicators to achieve your goals

To stay ahead in the rapidly evolving healthcare sector, measuring business performance is essential.

Your task: to deliver high-quality care while maintaining operational efficiency.

Healthcare organizations, whether hospitals, clinics, or public health agencies, rely on a wide range of Key Performance Indicators (KPIs) and other metrics to gauge the effectiveness of their services, streamline operations, and ensure sustainability.

By systematically measuring and analyzing KPIs, healthcare providers can make data-driven decisions that improve patient outcomes, optimize resource allocation, and drive continuous improvement across all facets of care.

Here’s what we’ll cover:

What are KPIs in healthcare and why are they important?

Key performance indicators are measurable values that demonstrate how effectively an organization or system is achieving a specific objective.

In healthcare, KPIs are used to assess the performance of various processes, departments, and systems, from patient care to financial operations.

Examples of healthcare KPIs range from average treatment charge and patient wait time to overall patient satisfaction and public health metrics.

These indicators provide valuable insights that allow you to identify areas for improvement, optimize processes, and ensure that you are delivering high-quality care to patients.

Healthcare KPIs can be categorized into several broad categories, including operational efficiency, financial health, quality of care, patient safety, and public health outcomes.

They are vital to help you:

Improve patient outcomes

KPIs help track the quality of care, patient satisfaction, and safety, ensuring that patients receive the best possible treatment.

Enhance operational efficiency

By measuring metrics like patient wait times and resource utilization, you can streamline operations, reduce costs, and improve service delivery.

Financial sustainability

KPIs related to revenue cycle management, such as insurance claim processing and cost per discharge, help your organization manage its finances effectively.

Compliance and standards

KPIs also help your organization to ensure that it meets regulatory standards and provides care that aligns with best practices.

Operational key performance indicators in healthcare

Operational KPIs are metrics that help your healthcare organization measure and improve the performance of the day-to-day functioning of its services.

These indicators often focus on patient flow, resource utilization, and operational efficiency.

The following are some of the most important operational KPIs in healthcare:

1. Patient wait times

(total wait time / number of patients)

Patient wait times are a critical metric for patient satisfaction and operational flow.

Long wait times can have a negative impact on your patients’ experiences and lead to inefficiencies in the system.

Monitoring wait times at various stages of care, such as emergency room check-in, specialist consultations, and surgical procedures, helps you identify bottlenecks and take action to reduce delays, for example by addressing scheduling and staffing issues.

2. Bed or room turnover

(number of discharges, including deaths / number of beds)

The rate at which beds or rooms are vacated and made ready for new patients is another essential operational KPI.

A reasonably high room turnover rate can imply good use of resources, whereby hospitals and clinics are able to accommodate new patients effectively.

Low turnover rates could indicate inefficiencies in room cleaning, patient discharge processes, or a mismatch between capacity and demand.

Though a higher turnover might indicate effective management, this metric should be analyzed alongside readmission rates to make sure patients aren’t sent home too soon only to be readmitted.

3. Number of patients per room

(total number of patients / total number of rooms)

This metric measures the average number of patients assigned to a room.

While some facilities may operate under a one-patient-per-room policy for privacy and safety reasons, others, such as emergency departments, may see higher patient loads.

Monitoring this KPI can help you determine if you’re using your space well while offering patients the appropriate level of care and comfort.

4. Average hospital stay

(total stay duration / total number of stays)

The average Length Of Stay (LOS) is an operational KPI that measures the average time a patient spends in the hospital or facility.

This should be considered within the context of the type of treatment the patient is receiving, as some conditions and treatments will need more time than others.

A longer-than-necessary LOS can be a sign of inefficiencies, such as delays in treatment or discharge processes.

Reducing LOS without compromising patient care can help cut your costs, increase bed availability, and improve patient flow.

5. Medical equipment utilization

Monitoring the utilization rates of critical medical equipment (e.g. MRI machines, ventilators, and diagnostic tools) is essential to make sure that you have the resources available when needed, and they’re used effectively.

High utilization rates may point to overburdened resources, where equipment is overused.

This in turn could lead to disruptions, delays, and added spend if unexpected maintenance or equipment replacement is needed.

6. Communication with patients

Effective communication between your organization and its patients is crucial for improving patient satisfaction and reducing the risk of medical errors.

KPIs related to communication can include metrics such as the time taken for nurses or doctors to respond to patient requests, the clarity of information provided, and the frequency of patient updates regarding their condition.

Financial KPIs for the healthcare industry

Financial KPIs help your organization monitor its financial health and include:

1. Insurance claim processing time

The time it takes to process an insurance claim is an important financial KPI.

Delays in claim processing can lead to cash flow problems and increased administrative costs.

By monitoring this metric, your organization can identify inefficiencies in its billing system and work to streamline claim submissions and approvals.

2. Claim denial rate

((number of denied claims / total number of claims) x 100)

The claim denial rate measures the percentage of insurance claims that insurers reject.

High denial rates can indicate problems such as incomplete documentation or issues with insurance policies.

Monitoring this KPI allows your organization to address root causes and reduce the likelihood of denied claims.

A lower claim denial rate (ideally less than 5%) means costs are covered in a timely manner, and it frees up your time to focus on patient care rather than financial paperwork.

3. Patient drug cost per stay

(total drug cost / number of stays)

This KPI measures the average cost of medications prescribed to a patient during their hospital stay.

High drug costs can significantly impact a hospital’s budget and write-down, for example if your staff is administering expensive drugs that patients can’t afford, or that isn’t covered by their insurance.

By analyzing this metric, healthcare you can identify cost-saving opportunities, negotiate better pricing with pharmaceutical suppliers, and optimize your medication management practices.

4. Average treatment charge

(total treatment charges / number of treatments)

The average treatment charge is the total cost of treatment for a patient, including diagnostic tests, procedures, medications, and room charges.

This KPI helps your organization assess whether its pricing structure is competitive while ensuring that it is not underpricing services or overcharging patients.

5. Cost per discharge

(total cost of discharges / number of discharges)

The cost per discharge measures the total cost of a patient’s stay divided by the number of patients discharged.

By tracking this KPI, you can better understand your organization’s cost structure, identify areas where costs can be reduced (e.g. by improving bed turnover or reducing readmissions), and optimize resource allocation.

6. Operating cash flow

(EBIT + depreciation – taxes – change in working capital)

Operating cash flow represents the cash generated or consumed by the core activities of your healthcare organization.

Positive cash flow is essential for maintaining operations, paying staff, and investing in infrastructure.

Monitoring this KPI allows your organization to make sure it has enough cash flow to meet operational needs.

7. AR turnover (Accounts Receivable turnover)

(net credit sales / average AR)

This metric measures how quickly your healthcare organization collects payments from patients, insurance companies, and other payers.

A high AR turnover indicates efficient revenue cycle and accounts receivable management, while a low turnover suggests delays in billing or collection processes.

8. Permanent employee wages

The cost of wages for permanent staff is a significant financial KPI. While healthcare organizations must maintain a skilled workforce, it’s important to ensure that staffing levels align with patient demand and organizational needs.

Overstaffing can lead to excessive labor costs, while understaffing may negatively impact your organization’s patient care.

9. Net profit margin

(net income / net sales)

The net profit margin measures the percentage of revenue that remains after all expenses have been deducted.

This is a crucial financial KPI for assessing the overall profitability of your healthcare organization.

A healthy net profit margin indicates good financial management and the ability to reinvest in services and infrastructure.

Healthcare facility KPIs

Healthcare facility KPIs focus on the performance and quality of care provided by the healthcare institution as a whole.

These indicators are essential for maintaining high standards of patient care and at the same time making sure that your facility operates efficiently.

1. Error rate

((number of treatment errors / total treatments) x 100)

The error rate refers to the frequency of medical errors, including medication errors, surgical mistakes, and diagnostic errors.

Minimizing errors is crucial for ensuring patient safety and achieving high-quality care outcomes.

Your healthcare organization can track error rates to assess the effectiveness of staff, identify any potential patterns and implement strategies to reduce incidents.

2. Training per department

Your organization needs to continuously train staff to maintain skills and stay up-to-date with best practices.

Monitoring the amount of training provided to staff in each department ensures that employees are well-prepared to deliver high-quality care and follow the latest clinical guidelines.

3. Cancellation rate

((number of missed appointments / total number of appointments) * 100)

The cancellation rate measures the percentage of scheduled procedures, surgeries, and appointments that are canceled.

High cancellation rates can indicate problems with scheduling, patient readiness, or internal processes.

Reducing cancellations improves patient satisfaction and optimizes resource utilization.

4. Readmission rate

((number of readmissions / number of discharges) * 100)

The readmission rate measures the percentage of patients who are readmitted within a certain period after discharge, or for issues related to the same condition they were originially treated for.

High readmission rates may indicate issues with discharge planning, patient education, or the quality of care provided during the initial stay.

Reducing readmissions is a key focus for improving both patient outcomes and hospital efficiency.

5. Patient safety

Patient safety is a critical KPI that encompasses a wide range of metrics, from infection rates and post-operation complications to falls and injuries during hospitalization.

Keeping on top of patient safety involves creating effective protocols as well as a culture of safety, training staff in best practices, and implementing systems for reporting and addressing any safety concerns.

Public health metrics and assessment

Public health KPIs move beyond your organization to assess the overall health of a population, tracking key factors that influence the well-being of communities.

These indicators help governments and public health agencies monitor and improve the health of populations on a broader scale.

1. Childhood immunizations

((number of children immunized / total number of children) x 100)

This metric tracks childhood immunization, which is important for preventing the spread of infectious diseases.

High vaccination rates are associated with lower disease prevalence and fewer outbreaks, making this KPI essential for monitoring public health and the effectiveness of immunization programs.

The childhood immunizations rate can also be used to assess the general populous herd immunity, which impacts care providers as a higher herd immunity will generally means less strain on your facility and resources.

2. Number of educational programs

The number of educational programs offered to the public, such as awareness campaigns for smoking cessation or healthy eating, is an important public health KPI.

These programs help raise awareness of health risks and encourage healthier lifestyles, contributing to the overall improvement of public health.

3. Number of preterm births

This KPI measures the number of preterm births (under 37 weeks) in a given region.

The rate of preterm births reflects the health of mothers and newborns.

Reducing preterm births involves addressing factors such as prenatal care, maternal health, and access to medical services.

Emergency department KPIs and measurement

Emergency Departments (EDs) face unique challenges due to the high volume of patients and the often critical nature of their conditions.

If your facility has an ED, then monitoring ED KPIs is essential for improving patient care and operational efficiency in these high-pressure environments.

1. Time between symptom and hospitalization

This measures the time between when a patient first exhibits symptoms and when they are admitted for care, and should be reviewed alongside the number of educational programs KPI.

Reducing the time between symptoms and hospitalization can improve patient outcomes, particularly in cases involving acute medical events like heart attacks or strokes.

2. Patient mortality rate

((number of patients deaths / total number of patients) x 100)

This KPI measures the number of patients that pass away before they can be discharged.

The patient mortality rate allows organizations to assess the effectiveness of care provided during critical situations.

Monitoring this KPI helps you identify areas for improvement in treatment protocols and response times.

3. Emergency room wait times

(total wait time / number of patients)

This metric measures the amount of time an Emergency Room (ER) patient has to wait, from arriving in the ER until they are seen by a nurse or doctor.

Wait time in ERs is a critical factor in patient satisfaction and care outcomes, as long wait times can lead to worsened health conditions and unhappy patients.

Tracking and reducing ER wait times helps make sure your patients receive timely care.

Assessing quality of care

Quality of care KPIs are metrics that help you measure how effectively your organization is delivering care to patients.

These indicators focus on patient outcomes, safety, and satisfaction.

1. Staff-to-patient ratio

(number of staff : number of patients)

The staff-to-patient ratio is an important indicator of the quality of care your patients receive.

A lower ratio generally means that patients get more personalized attention and better care.

Track this KPI to make sure your organization has enough staff to produce optimal patient outcomes.

This ratio is calculated by comparing the number of staff with the number of patients.

For example, if you have 20 staff and 60 patients, your staff-to-patient ratio would usually be expressed as 1:3 (meaning one member of staff per three patients).

2. Patient follow-up rate

((number of follow-ups / total number of patients) x 100)

The patient follow-up rate measures the percentage of patients who receive appropriate follow-up care after discharge.

This KPI helps make sure that patients continue to receive the care they need post-discharge, from a physician, nurse or other staff member, reducing the risk of complications and readmissions.

You should look at this metric in conjunction with your readmissions rate, as a higher follow-up rate typically translates to less readmissions.

3. Medication errors

Medication errors, such as incorrect dosages or wrong prescriptions, are a serious concern in healthcare.

Tracking medication errors helps your organization identify systemic issues in prescribing practices and so it can take steps to improve patient safety.

It should measure mistakes made in relation to medication, patient, or dosage, for inpatient as well as outpatient services.

4. Overall patient satisfaction

Your patient satisfaction is a key indicator of the quality of care provided.

Use patient surveys to gather feedback on a wide range of factors, including the quality of communication, the comfort of facilities, and the professionalism of staff.

A good patient satisfaction rate can be a great promotional tool for your facility or service.

Internal healthcare KPIs

Internal KPIs focus on the performance of healthcare staff and internal operational systems.

These metrics are crucial in helping your organization run efficiently and maintain high standards of care.

1. Level of staff training

This assesses how well your healthcare workers are prepared to deliver quality care.

Continuous training is essential for maintaining skills, particularly in a rapidly evolving medical environment.

2. Number of mistake events

The number of mistake events, including errors in treatment, patient identification, or documentation, is an internal KPI used to assess the quality of internal processes and staff performance.

Tracking and reducing mistake events will facilitate patient safety as well as operational efficiency, and help protect your organization’s reputation.

3. Patient confidentiality

Needless to say, patient confidentiality is vitally important to healthcare organizations.

This internal KPI focuses on your ability and track record in relation to safeguarding sensitive patient data, and compliance with regulations like HIPAA.

Measure KPIs and boost reporting with smart healthcare software

Smart healthcare software can significantly enhance your ability to measure, track, and report on KPIs.

It can create an effective healthcare management system integrating various KPIs into an intuitive dashboard that provides real-time insights into operational processes, financial health, patient care quality, and more.

When researching effective healthcare accounting and management software for your organization, consider the following features:

Data integration and security

you’ll want a solution capable of HIPAA-compliant EMR (Electronic Medical Records) integration, combining your billing systems and financial data with sensitive clinical information securely.

Real-time analytics

the best tools should be able to track KPIs and other metrics in real-time, allowing you to make data-driven decisions quickly and easily.

Automation and revenue

Think about whether or not the software you’re considering will help you streamline and automate processes to boost your efficiency, reduce cost, and drive revenue.

Customizable reporting

Can your system offer in-depth analysis with easily customizable reports and dashboards that meet the unique needs of different departments?

By adopting advanced healthcare software, organizations can streamline operations, improve reporting accuracy, and enhance overall strategic planning.

Final thoughts

Healthcare KPIs are essential tools for your organization.

They help it deliver high-quality care, optimize operations, and maintain financial sustainability.

From tracking patient satisfaction to improving operational efficiency and care provision, key performance indicators in healthcare provide the insights necessary to make informed decisions and drive continuous improvement.

By monitoring the most important KPIs—whether operational, financial, or focused on quality of care—your organization can navigate the complexities of the industry, improve patient outcomes, and achieve its strategic goals.

Combining financial, clinical, and operational data all in one place lets you move away from simply reporting on the events of the past and shift gears to strategically predicting the future of your practice.

Embracing technology such as smart healthcare software can further boost your ability to measure and report on KPIs, making sure that your healthcare organization stays responsive and proactive.