Nowadays, the problem of managing the healthcare organisation’s revenue cycle (RCM) is one of the critical aspects of operation and sustainable functioning. KPIs are fundamental in the understanding of healthcare organizations’ financial status as well as the improvement of general operation and, consequently, patient care.
This article will describe the key revenue cycle metrics that have to be tracked, the ways to apply and the importance of those metrics.
Revenue Cycle KPIs
Developing revenue cycle KPIs is critical to healthcare organizations as they can outline both, the financial performance and the efficiency of organizational processes. They help administrators to analyse the trends, understand where exactly they should focus and make changes. These indicators should be monitored continuously to enable healthcare providers to enhance their revenue generation efficiency while at the same time satisfying the patient and delivering accurate and timely bills.
Here are six key performance indicators that touch all aspects of a revenue cycle.
1. Days Sales Outstanding Receivable (DSO)
This metric gives the ability to determine the average time it will take to be paid after providing the services. Organisations are therefore able to detail out and eliminate certain bottleneck within the chain of payment collection by focusing on this KPI.
2. First Pass Claims Payment (FPCP)
FPCP stands for the first claim paid that contains the percentage of the claims which have been paid at a hundred percent of the expected rate and was paid on the first instance. A comparatively new measure that indicates the efficiency of the submissions of claims is provided by this metric. A high FPCP rate shows that claims being handled in the correct and effective manner freeing time for submission of new claims and enhancing cash flows.
3. Clean Claim Rate (CCR)
The implementation of the CCR aims at determining the quality of the pass through by measuring how many of the claims go through all the edits without any need for the intervention of the human-workforce. This particular KPI specifically concerns the effectiveness of an organisation’s billing operations. Higher CCR means less mistakes with filing of claims that make payments faster and with less extra expenses. This can be computed as clean claim percentage which is arrived at by dividing the number of clean claims by the total number of claims made.
4. Denial Rate
This KPI refers to the level of claim denial by payers that exists in a given health facility. A high denial rate may indicate that there are problems with the claims process perhaps as a result of coding errors or poor documentation. With these data, the healthcare providers will better understand the trends in denials and positively amend the actions that need to be taken to improve the I Governors Health Plans submission.
5. Cost to Collect
This measurement evaluates all the expenditures related to the processes of claiming payments from patients as well as insurance organizations, as well as billing and collection expenses. When it comes to the cost of collecting a dollar, a well-managed and an effective revenue cycle means the cost is low. Non-interest expenses should be kept at the lowest if some collection practices are to be effective and thus increase general profitability.
6. Net Collection Rate
This KPI has been established to ascertain the efficiency of cash collection from the collectible revenue. It is derived from the ratio of total amount of cash collected to total amount of billing done, a higher net collection rate means better billing and collection. On the other hand, a low rates may be indicative of some problems such as the loss of revenue or issues with the revenue cycle.
Implementing and Monitoring KPIs
Healthcare organizations should adopt a systematic approach to data collection and analysis in order to maximize the benefits of these KPIs:
1. Select Relevant Metrics
It is important to select specific KPIs that would be relevant to the particular goals of your organization and its working environment. The choice of metrics has to be informed by factors such as the size of the practice, the payer model as well as other performance histories.
2. Establish Benchmarks and Targets
With help of various industry benchmarks it is possible to set highly realistic performance expectations. These targets should be revisited and updated from time to time in order to reflect the dynamic state of your organization.
3. Leverage Technology
It is also important to have sound practice management software solutions which should be compatible with the EHRs. Real-time tracking on these KPIs should be made possible by this technology with corrective measures instituted where there is a performance outside set standards.
4. Foster a Data-Driven Culture
Stimulate and promote information sharing among the staff concerning the KPIs achievement. Create easy to grasp, neat and attractive reports which present the trends of data in a way that is more easily understandable by mis or low-level employees.
Conclusion
Today the healthcare industry is witnessing growing financial pressures and changing regulations, and efficient RCM is more important than ever. Healthcare institutions also use other measures like the net days in A/R, FPCP, CCR, the denial rate, cost to collect as well as the net collection rate to understand the efficiency and productivity of the organization’s financial status.
Through these performance indicators with the backing of modern technology and culture of checking on the data acquired, it is possible to pinpoint issues that require enhancement in the revenue cycle and provide solutions to enhance its operation. By refinements and monitoring of such indices, organisations can alter the existing conditions in order to facilitate stronger financial positions and, therefore, enhance the quality of treating patients.
