How well is your medical practice’s revenue cycle going?
No matter where you are currently, there’s always room for improvement and eliminating inefficiencies.
But which KPIs should you pay attention to?
In this article, we’ll look at 12 key metrics that can help you achieve a strong financial position.
Why are revenue cycle KPIs important?
Running a successful medical practice or healthcare business requires tracking a variety of metrics. Revenue cycle KPIs are especially important because they help you track essential financial indicators and assess the overall health of your operations. They also reveal areas where you can improve your processes.
A strong revenue cycle keeps your business stable and maintains a steady cash flow. This stability allows you to allocate resources more effectively and strategically scale your team, so you can care for more patients or expand your scope of practice.
Revenue Cycle Management Challenges and Pain Points
- Inefficient patient access for appointments and registrations
The revenue cycle starts with patient access, and this is where many problems begin.Inefficient or confusing scheduling systems can lead to missed appointments and low utilization of services, and often fail to meet today’s expectations for easy online booking.
Implementing online self-scheduling empowers patients to book their appointments, reducing no-shows and making better use of physician time.Key metrics to look at include missed appointment rate, which indicates ease of appointment availability and better use of physician time; and tracking online registration usage, registration errors, and patient satisfaction.
- Manual management of claims and denials
Processing claims often requires a lot of manual work, from checking payer updates to classifying billing codes. Not only is this stressful for staff, but it also increases the chance of errors and denials, which can slow down cash flow. To improve this, focus on good claim rates and frequency of denials. Automating the claims process with a cloud-based EHR can help reduce denials by predicting and preventing issues, making your team’s work easier.
- Inconsistent Patient Intake
As patients are expected to pay more of their medical costs, a clear and effective billing approach is important.
Simplifying billing and offering convenient payment options is key to improving collection rates. Here’s what you can do:
- Use data analytics to identify trends and patterns in billing and collections to better understand and solve problems.
- Provide patients with out-of-pocket estimates before their visit. This helps set expectations and avoid surprises.
- Accept a variety of payment methods, including credit/debit cards, online payments, and mobile wallets.
- Send reminders about upcoming payments and past due amounts via multiple channels (email, SMS, phone).
- Get actionable insights
This complexity makes it difficult to understand the connections between different areas like patient access, collections, claims management, and payer contracts.To make sense of the 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 identify trends over time, turning complex data into actionable information.
What is a KPI Dashboard?
Revenue cycle KPI dashboards are valuable tools for healthcare organizations that provide real-time insight into billing and revenue metrics.Because it is integrated into your Revenue Cycle Management (RCM) platform, it can be customized to highlight the key performance indicators that matter most to your business.This dashboard allows practice managers to closely monitor important financial transactions, which in turn allows for more informed decisions and improved overall performance.
Revenue Cycle KPI Dashboard helps to:
- Improve cash flow
- Reduce bad debt â¢
- Improve overall financial performance
- Identify operational inefficiencies
- Predict the future
- Improve patient satisfaction
- Days Receivable
Ideally, this number should be low, as it means your cash flow is in good shape.If you wait more than 50 days, it could be an indication that you have issues with cash flow and covering expenses.To reduce this time, consider tightening your payment policies or offering early payment incentives.
To determine your days receivable, use this formula:
Days receivable = (Total accounts receivable / Average daily sales)
- Accounts receivable past due rate
This metric helps you understand how long your unpaid invoices have been past due.Split your accounts receivable into time categories such as 0-30 days, 31-60 days, 61-90 days, and over 90 days.If many of your accounts receivable are over 90 days past due, it’s time to rethink your collection strategy to get paid in the first category (0-30 days).
This can be calculated using the following formula:
Receivables by Due Date Ratio = (Number of Open Receivables in Time / Total Number of Open Receivables) * 100%
- Perfect Claims Allocation
This tracks the percentage of claims that were processed without issues, such as rejections, missing information, and errors.A higher ratio means that your billing and management processes are up to date.A lower rate can mean you have to work harder to avoid payment issues.
To improve your clean claims set, try these tips:
- Train your team thoroughly in medical billing practices
- Establish and follow clear procedures to ensure consistency
Use the following formula to calculate your clean claims rate:
Unconfirmed claims rate = (Unconfirmed claims / Total claims) * 100%
- Claim denial rate
This metric indicates the percentage of claims that are denied by the insurance company or the patient.A high denial rate can wreak havoc on your revenue cycle and overall operations.Common reasons for denials include coding errors and incomplete information.Keeping an eye on this rate can help you address issues before they escalate.
Denial rate = (number of claims denied / total number of claims) * 100%
- Appeal rate
Your appeal rate indicates the percentage of denied claims that you appeal.The decision to appeal all claims or only high-value claims depends on your practice’s approach.
To calculate your appeal rate, use:
Appeal rate = (number of claims disputed / total number of claims denied) * 100%
- Bad Debt Ratio
This key figure tells you the percentage of accounts receivable that are uncollectible and need to be written off.A high bad debt ratio indicates that you need to improve your debt collection process.Some bad debts are inevitable, but you can reduce them by understanding why they arise and adjusting your strategy.
Calculate your bad debt ratio using the following formula:
Bad Debt Ratio = (Total Written Off / Total Receivables) * 100%
- Total Collection Ratio
This is a simple way to measure how well you are collecting payments, even though it doesn’t take into account depreciation or discounts.
To calculate them, use:
Gross Collection Rate = (Total Received / Total Fees) * 100%
- Net Collection Rate
This metric gives a clearer picture of how much you are collecting from the amount owed after accounting for amortization and discounts.This helps you see the true effectiveness of your revenue cycle management.
Use the following formula to determine your net collection rate:
Net Collection Rate = (Total Received / Total Allowed) * 100%
- POS Collection Rate
Collecting payments up front reduces bad debts and eliminates the hassle of chasing payments later.Make sure your staff is trained to handle these transactions and that you use the right software to manage them.
Calculate this as follows:
- Billing Lateness
Billing lateness measures the amount of time it takes between when a service is provided and when it is billed.Some delay is normal, but shorter billing delays help improve cash flow.To avoid delays, try to document your statements as soon as possible.
You might think that claims are recorded within the first 24 hours, but that’s not always the case.Only 32% of healthcare providers can capture claims within this time frame.
Use the following to determine billing delays:
Billing Delay = Billing Date – Service Date
- Cost to Collect
This metric shows how much it costs to collect payment for services.Monitoring helps you identify inefficiencies and reduce personnel, administrative, and technology costs.
Calculate your debt collection costs as follows:
Collection Costs = Total Costs / Total Paid
- Revenue per Patient Visit
The average revenue generated from each patient visit is recorded here.This helps you forecast and analyze financial performance throughout the year.Understanding this metric can help you better manage your cash flow and plan for both high and low turnover periods.
To determine this metric, use: Revenue per patient = Total revenue per patient visit / Total number of patients.
Get a free custom revenue cycle dashboard for your medical practice
Tracking key performance indicators in your revenue cycle is critical to the financial health of your practice.But to truly benefit from these metrics, you need to see them all on one screen and quickly identify issues.An effective way to achieve this is with a well-designed revenue cycle KPI dashboard.
Many dashboard tools on the market have outdated templates, are difficult to customize, and don’t update in real time.
MedEx MBS stands out from the crowd.
With MedEx MBS, you can easily customize pre-built dashboards with a simple drag-and-drop interface or create one from scratch to fit your exact needs.You can also track and monitor hundreds of metrics in real time.
If you’re a busy hospital administrator or are new to revenue cycle tracking, the team at MedEx MBS can build a free personalized dashboard just for you. Just let us know what you need to track, and we’ll provide you with a powerful dashboard within 24 hours. Want to know how it works?
