It’s no secret that healthcare professionals have multiple responsibilities to handle. Apart from administering treatment to patients, doctors and physicians need to address administrative requirements, process insurance claims, and manage through other essential documents for proper billing.
Shouldering several tasks can make the reimbursement process difficult. This is why clinics need an efficient revenue cycle management (RCM) process.
Tracking metrics is a must for any business, and companies in the healthcare industry are no exception. Taking note of key performance indicators will make it easier for you to identify gaps in your RCM processes that may be draining your profits.
To help you improve business sustainability, this guide will list down eight important metrics that your company should track.
Net Collection Rate shows how much money you have collected with regards to the charges you’ve made. It should be one of the first indicators to take note of since it shows how much profit you’re making. A high net collection rate means that you’re billing your clients correctly, while a low one should serve as a call for adjustments.
In addition to your net collection rate, being aware of your gross collection rate will also be useful. This indicator will give you a better idea of the total amount of money you’ve generated, helping you set benchmarks for your cash flow. Ultimately, this metric will let you know if your company is still within normal profit fluctuations.
Keeping track of billed claims should help you verify if your RCM systems are working efficiently. Falling into billing errors will make it difficult for all parties (your employees, patients, and insurance companies) to settle balances.
With that said, investing in the right software or outsourcing to a partner agency will ensure that your invoices have no discrepancies.
Days in Accounts Receivable (AR) shows how long it takes for your company to collect payments. Clients that don’t pay on time can cause cash flow issues, so taking note of this metric will show you if you need to revisit your collection procedures.
Days in AR are calculated by dividing your ending AR by your average daily charge (ADC). To acquire your ADC, add all the charges you’ve made in the past three months and divide it by 90 days.
It’s also important to take note of claims that are denied due to errors in patient data. A high or increasing denial rate may indicate that your billing department cannot encode client information properly. While many factors can contribute to this metric, having a good overview of your denial rate can help you identify areas for improvement.
As previously stated, inconsistencies with client information are one of the common pain points of RCM. Database errors can significantly delay the billing process and will pave the way for cash flow issues.
Along with your RCM system’s denial rate, taking note of your clean claim rates will benefit you greatly. It will give you more insights into your data encoding or billing procedures, optimizing your collection process along the way.
Bad debt rate indicates the amount of money your clients owe you that is being turned over to a collection agency. Since healthcare centers extend credit to patients, there’s always the risk that a client will not be able to pay you off. Taking note of this benchmark can help you decide if you need to adjust your company’s payment terms.
To put it simply, a fast turnaround time means that your RCM system is performing well. Billing procedures involve multiple processes, and being able to file claims and make collections quickly indicates that your business is working at optimal levels.
Lastly, you should look to measure your company’s operating margin. Similar to how businesses in the manufacturing sector take materials, professional fees, and other important factors when billing, your healthcare company should also factor in all operational costs.
Other than giving you a better overview of your profitability, this statistic will provide you with a better understanding of your company’s overall stability.
Running a healthcare business is no easy feat. Catering to hundreds of patients, managing through huge loads of data, and working with multiple parties can make daily operations challenging.
If you want to optimize your company’s productivity, taking note of key performance metrics is essential. Doing so will give you an easy time making adjustments and ensure business sustainability over the years.
If you’re looking to cut costs or ease your company’s load, outsourcing your RCM processes to the right partner will do wonders. Investing in our revenue cycle management services will give you a seamless time acquiring data that will be useful in improving your RCM systems.
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This guide will discuss important RCM metrics that your healthcare business should track. Scale your business with our revenue cycle management services.
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