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Top 5 KPI’s Physicians need to track while managing their revenue cycle.

Revenue cycle management (RCM) is essentially the management of financial transactions that transpire between a patient and the healthcare provider. In healthcare, physicians or practices take advantage of an efficient RCM system to ensure they get accurately reimbursed for the services they provide. Suffice to say, Hospital revenue cycle management is an integral part of any healthcare provider’s financial health.

A healthy RCM strategy is a must to ensure consistent cash flow and substantial profitability. An inefficient RCM process can result in massive losses for the provider. Today, many provider groups choose to outsource physician billing services to ensure their revenue cycle functions are managed efficiently.

But, how do you know whether your RCM process is running perfectly or not? In this article, we will be looking at 5 key performance indicators (KPIs) that can help you keep an eye on your practice’s financial health. 

Top 5 KPIs to Track for Efficient RCM

Clean Claim Ratio

The Clean Claim Ratio (CCR) indicates the percentage of claims that were cleared during first submissions. For a claim to be considered clean, it should have never been rejected, should not have been filed more than once, does not harbor any preventable denial, and most importantly, does not contain any errors.

Clean claims indicate that your practice is being paid on time. So, it is imperative to analyze your CCR, check on time spent rectifying denied claims and find reasons for claim denials. Having a CCR that is greater than 95% indicates that you have a strong RCM strategy.

Accounts Receivable (A/R) Days

Days in A/R represent the average duration of time a claim takes to be cleared or paid. A practice should strive to lower this duration as much as possible.  Ideally, the goal should be to be 40-50 days in A/R. Anything above 50 can indicate poor performance.

To calculate days in A/R, consider the duration of time you seek to measure. It can be days, months, or a whole year. Later, estimate the daily average charges by adding posted charges for the chosen time period, deducting received credits, and dividing the sum by the number of days in that period. Ultimately, divide the total AR by average daily charges. 

Bad Debt Rate

A practice’s bad debt rate can also be fundamental in determining the health of your revenue cycle. The bad debt rate can help gauge the extent to which your practice’s potential collections have been reduced in value. To calculate a bad debt rate, simply divide written-off monetary amounts by allowed charges.

Denial Rate

Monitoring a practice’s denial rate is essential to determine how many of the organization’s claims have been denied. A practice should always aim for a low claims denial rate. The denial rate can be calculated by dividing the number of claims denied by the number of claims that were billed. A denial rate can also be calculated by dividing the amount billed by the monetary amount.

Net Collection Ratio

The net collection ratio is considered to be the ultimate indicator of a collection’s success as it determines the overall efficiency the revenue cycle. Net collections represent the reimbursement one’s practice can realistically hope to receive. It indicates how denial rates, unreimbursed visits, and other similar factors eventually affect a practice’s revenue.

The Bottom Line

Physicians and other healthcare providers need a strong RCM strategy to ensure consistent cash flow. It is imperative to quickly determine whether an implemented RCM strategy is working or not. As such, immediate tweaks and modifications to the strategy can be made before revenues are affected.

The above KPIs work hand-in-hand to determine whether your practice’s revenue cycle is efficient and if it will help your practice earn desirable profits. However, managing your revenue cycle can be challenging, which is why many opt to outsource their physician billing services to ensure a robust RCM process.

3Gen Consulting is one such medical billing company that can help you efficiently manage your revenue cycle to ensure you get accurate and timely reimbursements. Contact us to learn more about how we can simplify this process for you.


Published by 1healthcare

Medical Billing, Medical Coding, Hospital Revenue Cycle management.

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