How well is your healthcare practice’s revenue cycle doing?
No matter where you stand now, there’s always room to improve and iron out inefficiencies. To get a complete view of your facility’s cash flow, you need to keep track of a revenue cycle KPI dashboard and its metrics.
But which KPIs should you pay attention to?
This article explores 12 crucial indicators that can help you achieve strong financial standing.
Why Revenue Cycle KPIs Matter?
You need to track various metrics to run a successful medical practice or healthcare business. Revenue cycle KPIs are especially important because they help you keep an eye on crucial financial measures and assess the overall health of your operations. They also highlight areas where you can improve processes.
A strong revenue cycle ensures your business remains stable and maintains a steady cash flow. With this stability, you can allocate resources more effectively and grow your team strategically. This allows you to care for more patients or expand your practice.
Challenges and Pain Points in Revenue Cycle Management
Choosing the right KPIs for a revenue cycle management dashboard starts with understanding the major hurdles that might be causing revenue loss. Here’s a look at some of the biggest obstacles in RCM and how you can track improvements:
1. Inefficient Patient Access for Scheduling and Registration
The revenue cycle begins with patient access, and this is where many problems start. Inefficient or confusing scheduling systems can lead to missed appointments and lower service utilization, and they often don’t meet today’s expectations for easy online booking.
Implementing online self-scheduling can help patients book their own appointments, reducing no-shows and making better use of clinician time. Key metrics to watch are the percentage of unfilled appointments, which indicate easier booking and better use of doctors’ time. Additionally, track online registration usage, registration errors, and patient satisfaction.
2. Manual Claims and Denial Management
Handling claims often involves a lot of manual work, from checking payer updates to sorting through billing codes. This not only adds stress for staff but also increases the chances of errors and denials, which can slow down cash flow. To improve, keep an eye on the rate of clean claims and the frequency of denials. Using cloud-based EHR to automate the claims process can reduce denials by predicting and preventing issues. This makes your team’s job easier.
3. Inconsistent Patient Collections
As patients are expected to cover more of their healthcare costs, having clear and effective billing practices becomes crucial.
Simplifying bills and offering convenient payment options are key to improving collections. Here’s what you can do:
- Use data analytics to identify trends and patterns in billing and collections to better understand and address issues.
- Offer patients an estimate of their out-of-pocket costs before their visit. This helps set expectations and reduces surprises.
- Accept various forms of payment, including credit/debit cards, online payments, and mobile wallets.
- Send reminders for upcoming payments and overdue balances through multiple channels (email, text, phone calls).
4. Getting Actionable Insights
Many RCM analysts are overwhelmed by disparate systems and outdated processes. This complexity makes it difficult to connect the dots across different areas such as patient access, collections, claims management, and payer contracts. To make sense of your data, use revenue cycle analytics tools that consolidate information and provide real-time insights. A well-designed dashboard can help you track important KPIs and see trends over time, turning complex data into actionable information.
What is a KPI Dashboard?
A revenue cycle KPI dashboard is a valuable tool for healthcare organizations, offering real-time insights into billing and revenue metrics. Integrated into a revenue cycle management (RCM) platform, it can be customized to highlight the key performance indicators that matter most to your organization. With this dashboard, healthcare administrators can keep a close watch on crucial financial operations. This enables them to make informed decisions that improve overall performance.
A revenue cycle KPI dashboard can help with the following:
- Improving cash flow
- Reducing bad debt
- Improving overall financial performance
- Determining if revenue is sufficient to support the practice
- Spotting operational inefficiencies
- Forecasting for the future
- Increasing patient satisfaction
1. Days in Accounts Receivable
This metric tells you how long it typically takes to get paid by patients and insurance companies. Ideally, you’d want this number to be low because it means your cash flow is in good shape. If you are waiting 50 days or more, it could signal trouble with your cash flow and meeting expenses. To shorten this time, consider tightening up your payment policies or offering incentives for early payment.
To figure out your days in accounts receivable, use this formula:
Days in accounts receivable = (Total accounts receivable / Average daily revenue)
2. Aged Accounts Receivable Rate
This metric helps you understand how long unpaid claims have been hanging around. It breaks down claims into time categories like 0-30 days, 31-60 days, 61-90 days, and more than 90 days. If a lot of your claims are overdue by more than 90 days, it’s time to rethink your collection strategy to get payments in the first category (0-30 days).
You can calculate it with this formula:
Aged accounts receivable rate = (Outstanding claims in a timeframe / Total outstanding claims) * 100%
3. Clean Claim Rate
This tracks the percentage of claims that go through without any issues—no rejections, missing information, or mistakes. A higher rate means your billing and administrative processes are on point. A lower rate could mean you need to up your game to avoid payment problems.
To improve your clean claim rate, try these tips:
- Invest in good EMR software that handles billing and coding
- Train your team thoroughly on medical billing practices
- Set up and follow clear procedures for consistency
Calculate your clean claim rate with the following formula:
Clean claims rate = (Number of clean claims / Total number of claims) * 100%
4. Claim Denial Rate
This metric shows the percentage of claims that get denied by insurers or patients. A high denial rate can mess up your revenue cycle and overall operations. Common reasons for denials include coding errors or incomplete information. Keeping an eye on this rate helps you tackle issues before they escalate.
Use this formula to find out your claim denial rate:
Claim denial rate = (Number of denied claims / Total number of claims) * 100%
5. Claim Appeal Rate
If a claim is denied, you can appeal it to try and get it approved. The claim appeal rate tells you the percentage of denied claims that you’ve contested. Deciding whether to appeal every claim or just the high-value ones depends on your practice’s approach.
To calculate the appeal rate, use:
Claim appeal rate = (Number of claims appealed / Total number of denied claims) * 100%
6. Bad Debt Rate
This metric shows the portion of receivables that are uncollectible and need to be written off. A high bad debt rate suggests that you might need to improve your collection processes. While some bad debts are inevitable, understanding why they occur and adjusting your strategies can help reduce them.
Find your bad debt rate with this formula:
Bad debt rate = (Total write-offs / Total accounts receivable) * 100%
7. Gross Collection Rate
This shows the total amount collected compared to the total charges billed. It’s a straightforward way to gauge how well you are collecting payments, though it doesn’t factor in write-offs or discounts.
To calculate it, use:
Gross collection rate = (Total payments received / Total charges) * 100%
8. Net Collection Rate
This metric provides a clearer picture of how much money you actually collect from what is owed after accounting for write-offs and discounts. It helps you see the true effectiveness of your revenue cycle management.
Use this formula to find the net collection rate:
Net collection rate = (Total payments received / Total allowed amount) * 100%
9. POS Collection Rate
This tracks the percentage of payments collected directly from patients at the time of service. Collecting payments upfront can reduce bad debts and save you from the hassle of chasing payments later. Ensure your staff is trained to handle these transactions and uses good software to manage them.
Calculate it with:
POS collection rate = Total POS payments / Total self-pay cash collected
10. Charge Lag
Charge lag measures how long it takes to bill for a service after it’s been provided. While some delay is normal, shorter charge lags help improve cash flow. Aim to document charges as quickly as possible to avoid delays.
You might assume that charges are recorded within the first 24 hours, but this is not always true. In fact, only 32% of healthcare providers manage to capture charges within that timeframe.
Find the charge lag using:
Charge lag = Date of charges billed – Date of service
11.Cost to Collect
This metric shows how much it costs to collect payment for your services. Monitoring this can help you identify inefficiencies and reduce costs related to staff, administration, and technology.
Calculate your cost to collect with:
Cost to Collect = Total costs / Total payment collected
12. Revenue per Patient Visit
This tracks the average revenue you make from each patient visit. It’s useful for forecasting and analyzing your financial performance throughout the year. By understanding this metric, you can better manage your cash flow and plan for both high and low revenue periods.
To find this metric, use:
Revenue per patient = Total revenue generated per patient visit / Total number of patients
Additional KPIs to Monitor in the RCM
| Name | Description | Calculation | Benchmark |
| Cash Collections as a Percentage of Net Patient Service Revenue | This measures how effectively a practice collects payments from patients compared to the total revenue from services provided. | Divide the total cash collected from patient services by the average monthly net patient service revenue. | Aim for close to 100% for effective collection. HFMA’s MAP Key Connect provides industry benchmarks. |
| Discharged Not Final Billed (DNFB) Rate | Measures the instances where a patient has been discharged but the final bill has not yet been issued. | Divide the amount in DNFB by the average daily revenue. | The acceptable range is five to seven days. |
| Discharged Not Submitted to Payer (DNSP) | Tracks cases where a claim has not been submitted after a patient has been discharged. | Divide total DNSP gross revenue by average daily gross revenue. | The industry standard is two days. |
| First Pass Yield | Measures the percentage of claims paid correctly on the first submission. | Divide the number of claims paid on the first submission by the total number of claims submitted. | Aim for a first-pass yield of 95% or higher. |
| Payment Accuracy | Evaluates whether payments received match the amounts due, factoring in both underpayments and overpayments. | Divide the number of accurately paid claims by the total number of claims. | Aim for a payment accuracy rate of 95%-97%. |
| Patient Payment Collection Rate | Measures the percentage of out-of-pocket charges collected from patients. | Divide total patient collections by total patient charges. | Crowe RCA reports show a decrease in self-pay collection rates from 76% in 2020 to 54.8% in 2021. |
| Patient Schedule Occupied Rate | Assesses how much of a provider’s appointment schedule is filled. | Divide the number of patient appointments by the total number of available hours. | This varies by practice type. |
Resolve Rate | Indicates the effectiveness of the revenue cycle management (RCM) process, including eligibility, coding, and billing accuracy. | Divide the total number of resolved claims by the total number of claims. | MGMA suggests a resolution rate of 96% or higher. |
| Revenue Realization Rate (RRR) | Measures the percentage of charges that are adjusted or collected. | Add total payments and adjustments, then divide by total charges. | Aim for a revenue realization rate of 94% or higher. |
Get a Free, Customized Revenue Cycle Dashboard for Your Healthcare Practice
Keeping track of key performance indicators in your revenue cycle is crucial for your practice’s financial health. But to truly benefit from these metrics, you need to see them all on one screen to quickly spot any issues. An effective way to achieve this is through a well-designed revenue cycle KPI dashboard.
Many dashboard tools out there have outdated templates, are hard to customize, and don’t update in real time. MedCare MSO stands out from the rest.
With MedCare MSO, you can easily customize pre-designed dashboards with a simple drag-and-drop interface or build one from scratch to fit your exact needs. Plus, you can track and monitor hundreds of metrics in real time.
If you are a busy hospital manager or new to tracking revenue cycles, our team at MedCare MSO can create a free, personalized dashboard just for you. Let us know what you need to track, and we will have a powerful dashboard ready for you within 24 hours.
Curious to see how it works? Sign up for our free dashboard setup service today.
