Are you using revenue cycle Key Performance Indicators (KPIs) to track and measure your RCM efforts? If not, you really should be.
Employing Revenue Cycle Management strategies in your healthcare facility is more important than ever. But, it’s also important to make sure your RCM efforts are successful. Tracking revenue cycle Key Performance Indicators is the perfect way to monitor your Revenue Cycle Management efforts.
The Healthcare Financial Management Association (HFMA) came up with 29 different industry-standard metrics, often referred to as MAP Keys or KPIs, healthcare organizations can use to gauge the effectiveness of their RCM efforts. And, while the KPIs each organization employs will vary depending on the facility's needs and goals, there are 5 RCM Key Performance Indicators that all healthcare facilities should be leveraging to monitor how well their RCM efforts are working.
The 5 Revenue Cycle KPIs Every Healthcare Facility Should Be Using
- Point-of-Service (POS) Cash Collections
- Days in Accounts Receivable
- Days in Total Discharged Not Billed
- Clean Claim Rate
- Bad Debt
Calculating and tracking these revenue cycle KPIs will help ensure that your RCM efforts are successful by allowing you to better allocate resources and improve RCM efficiency.
1. Point-of-Service (POS) Cash Collections
POS Cash Collections is essentially a cash ratio measurement because it shows the cash you have collected before services rendered, and up to seven days after, as a percentage of your facility’s revenue. It’s a great way to monitor the success of your Revenue Cycle Management efforts because it allows you to determine the effectiveness of your POS systems and the competence of the employees operating these systems. You essentially can see your facility’s ability to transfer net patient services revenue to cash. Rev Cycle Intelligence explains that your organization can calculate your POS KPI by dividing the total collected patient service cash by the average monthly net patient service revenue.
2. Days in Accounts Receivable (A/R)
Knowing the net days your patients’ accounts are in A/R allows you to see how efficient your revenue cycle is because it shows on average how long it takes to get paid for services. This allows you to see if your healthcare organization is having success with getting payments for services rendered as well as how well your Accounts Receivable department is functioning.
According to the REV Cycle Intelligence, you can determine the Days in Accounts Receivable KPI by dividing the net A/R by the average daily net patient service revenue.
3. Days in Total Discharged Not Final Billed (DNFB)
DNFB is a healthcare facility revenue cycle KPI that evaluates the effectiveness of the
To calculate DNFB you divide the gross dollars in DNFB by the average daily gross patient service revenue.
4. Clean Claim Rate
According to HFMA, the Clean Claim rate indicates the quality of data collected and reported by showing you the average number of claims that are resolved the first time they are submitted. It also reveals your claim denial rate and lets you assess if there are problems lurking in your healthcare organization’s claims submission and processing processes or your billing team. And, as you know, the longer it takes for a claim to process due to errors, the longer it takes for your organization to get paid.
If you can’t determine your Clean Claim Rate using your organization’s claims Management System, you can hire a third party RCM company to help.
5. Bad Debt
According to HFMA, Bad Debt is a “trending indicator of the effectiveness of collection efforts and financial counseling.” It allows you to determine how effective your healthcare organization is at collecting on your patients’ past due accounts as well as how effective your pre-service financial counseling services are. The higher your facility’s Bad Debt, the more you need to take a step back and evaluate other areas of your revenue cycle for inefficiencies. For instance, a high Bad Debt could indicate that your healthcare facility needs to work on improving your Clean Claim Rate or POS Cash Collections.
To calculate your facility’s Bad Debt, divide it from the income statement by gross patient service revenue over a set period.
Find The Right Person Today!
If you need assistance measuring these 5 KPIs for your facility’s RCM efforts, Nearterm can help. To learn more about our RCM services, give us a call at (281) 646-1330 or take our Interactive Survey.