Featured Articles: Business Model

The Importance of Benchmarking

Friday, April 20, 2012   (0 Comments)
Posted by: Joy Ingram
Share |
by Paul Bailey, Partner, CliftonLarsonAllen

Over the past several years, I have often discussed the importance of benchmarking and the need for Federally Qualified Health Centers to consistently measure and analyze their operations in a quantitative manner, to measure themselves against their peers and industry standards in an effort to identify areas within the organization in need of operational improvement. Within the non-profit community, there is often a sentiment that “we don’t need to make a profit” or that “we shouldn’t make a profit.” While it is true that you are a non-profit and are exempt from federal taxes under Section 501(c)3 of the Internal Revenue Code, allowing you to be mission-focused, there are ample reasons that you need to perform in the most profitable manner possible.  Benchmarking is a tool to focus your organization in the most efficient and cost-effective way possible.

One of the primary reasons for continually focusing on organizational efficiency is to enable the organization to reach the long-term strategic goals determined by management and the board. I have never consulted with an FQHC whose management or board said they were formed for the purpose of serving the community for only a few years.  I also have never reviewed a strategic plan that noted that, in year three, operations would cease, the doors would close, and the underserved population in the service area would need to find alternatives for their healthcare needs because the FQHC planned on exhausting all funds.

With the current federal and state deficits, more FQHCs are now utilizing their reserves to fund operations. How long can this last before there are simply no reserves to supplement the operating budget?  How will you fund the ongoing need to invest in capital assets such as buildings and equipment? While comparing yourself to a benchmark of your peers is not in itself going to improve your financial situation, it can help you understand where improvements can or should be made. An analysis of your organization’s results to an industry benchmark can compel management to ask questions such as: Why aren’t we performing as well as others? Where can we make improvements? What is unique about our situation that prevents us from performing to the state or regional average? The answers to these questions then become a catalyst for change.

As a HRSA region, we took the first step toward benchmarking this past fall.  With the help of NWRPCA, we gathered financial statements, tax returns and UDS reports, and asked members to answer a short questionnaire. This data was accumulated throughout Region X and was analyzed and summarized to provide a benchmark measurement for some of the key aspects of an FQHC, including both financial and operational metrics. The final results of the initial benchmarking study are beginning to be released; at the Spring Conference we will have plenty of time to answer questions and discuss the project in a special benchmarking session.  In addition to that discussion, I look forward to member input regarding other areas of benchmarking members would like to see in the future.

I encourage each of FQHC leader to make  a few phone calls and talk to your peers.  Discussions among yourselves should help generate ideas on how and where improvements could be made and move the benchmarking project from generic to dynamic. There are many innovative and qualified leaders within the industry who continue to impress me, and I am honored to be in a small way a partner in the quality service you provide to your community daily.

See you at the upcoming Spring Conference in Portland!

NWRPCA welcomes and regularly publishes white papers and articles submitted by members, partners and associates with subject matter expertise. The appearance of any guest publication in our Health Center News database represents the views of the author and does not constitute endorsement by NWRPCA of the stated opinions or perspectives, nor does it suggest endorsement of the contributor's products or services.

Membership Software Powered by YourMembership  ::  Legal