We learned last time why Gross Production is the most useless KPI, but that doesn’t mean that all production isn’t important. Net Production is your Gross production, but minus all the adjustments, write-offs, and discounts. In essence, it’s your maximum collectible amount, and that’s a KPI you must pay attention to, because the more of it you collect, the better off you’ll be. In fact, you should always aim to collect 100% of your net collection; after all, it’s money that is owed to you.
To get the most value out of this KPI, evaluate the dollar value of the gap between your Gross Production and your Net Production. You want to decrease that gap, because it means more money collected, so it’s important that your Net Production increases faster than your Gross Production. If your PPO reimbursements are decreasing or your adjustments and discounts are increasing, then your Gross Production is going to increase while your Net Production stays flat. That’s an indicator that it’s time to implement some countermeasures. Every improvement you make to your Net Production is another dollar that reaches your bottom line, and it’s a dollar that doesn’t require any extra work from you.
For almost 20 years I watched myself and others set Gross Production goals, telling ourselves we were going to be doing so much better next year. But now, in hindsight, I can say that we should have been setting Net Production goals instead. It’s an incredibly valuable number—more so than Gross Production—because it’s the true starting point for your profitability story.
