Measuring the success of revenue cycle management isn’t always easy. But it’s important to know where you stand and what you need to do to improve your revenue cycle management program if you want to drive greater efficiency and quality of care at your hospital or practice. Read on to find out what key performance indicators (KPIs) can tell you about your revenue cycle management efforts and how they can help you make smarter decisions in order to maximize return on investment (ROI).
One of the favorite metrics is Days in A/R, because it can be used to show how effective your revenue cycle management efforts are. The fewer days in accounts receivable, or A/R, you have for your customers, who are waiting for their money from you (credit sales), or accounts payable (payable), where a business is waiting on another company’s goods or services (payables), the better off you’ll be. It means that there’s less cash tied up in those two areas, and that translates into a stronger cash flow. That money can then be reinvested back into your business or spent to grow it.
Once you’ve chosen which revenue cycle management solutions to use, you should monitor how quickly these solutions pay off. A top KPI is 0-60, meaning that when a new revenue cycle management solution goes live, that percentage of your payers who are paying 60 days or less should jump up significantly. This is a great way to see whether or not your vendors are worth their monthly fees. It also helps ensure you aren’t spending money on solutions without knowing what they can do for you and your practice.
A gross collection rate is a useful KPI to track because it shows how effectively your efforts are collecting payments on time. If you’re going through all of your trouble to gain new clients, you want to make sure they don’t come with a high risk of non-payment. This KPI will tell you whether or not that’s happening so you can adjust accordingly. And if there’s one thing we know about healthcare revenue cycle management, success is that it takes constant adjustment and self-improvement—so make sure your gross collection rate is higher than 90 percent.
The net collections ratio is several key performance indicators that help give a complete picture of revenue cycle management success. This ratio measures total revenue collected from patients as a percentage of total patient service costs. In other words, it shows how effective your hospital is at collecting money from insured and self-pay patients.
If you’re measuring CCR, it means you’re tracking claims that have been denied by your payer (usually because of either medical necessity or coverage issues) and claims that your practice has reprocessed. CCR is expressed as a percentage and can help you find out where changes could be made to keep high-risk claims from slipping through undetected in your workflow. A healthy CCR usually falls between 80-and 85%. This metric also helps practices determine if a more significant issue, such as coding challenges or non-clean claim denials, may be present in their billing process.
The claims denial rate measures how often your practice’s insurance claims were denied. One thing to note is that every plan has a different rate of denials; one with a low rate may not necessarily be better than one with a high rate. So, why does it matter? Because higher denial rates can increase costs for both you and your patients—if patients need to resubmit claims again and again because yours are always getting denied, then your employees will have to work longer hours processing claims and more patients will ultimately decide to go somewhere else.