There are two kinds of provider organizations: The ones that are profitable and the ones that aren’t. And to belong to the former category it is essential to track key performance indicators. What is not measured cannot be managed.
Tracking key performance indicators is crucial to maintaining a successful medical practice. But most healthcare organizations struggle with data overload. There are just too many metrics and reports!
Knowing which KPIs to track and what target numbers to strive for is essential.
A low denial rate is indicative of healthy cash flow and optimal revenue cycle management. Most denials are preventable through the elimination of error-prone manual processes. The industry average denial rate is 5-10%. Best practice denial rate for optimal performance is less than 5%. The minimum days in Accounts Receivable (A/R) should be less than 50, optimal days in A/R should be 30-40, and self-pay A/R over 90 days should be 85%. The ideal denial resolution rate within 30 days should be less than 10%.
Missing or incorrect eligibility information is one of the leading causes of denied claims. Automation technology can streamline and improve the accuracy of coverage verification and flag potential claim issues, leading to reduced rejections and denials. The insurance verification rate should be 98% for all registered patients, and the clean claims rate should be 98%, which is standard within the industry.
Automating the billing process and implementing more strategic collection goals can reduce staff workload, lower costs to collect, and improve cash flow for the practice. The minimum days in A/R should be less than 50, the service-to-bill rate days should be less than 7, and the optimal days in A/R should be 30-40. Self-pay A/R over 90 days should be 85%, and the ideal denial resolution rate within 30 days should be less than 10%. The A/R over 90 days should be less than 1%, and the credit balance days should be 12.
Collecting from patients and payers has become increasingly challenging. Practices can keep payer fee and reimbursement schedules on hand to better understand what should have been paid, preventing unnecessary write-offs. Offering patient responsibility estimations prior to the time of service can help patients plan for their care and give staff the opportunity to ask for payment up front. The net collection rate should be a minimum of 95%, and the bad debt rate (unnecessary write-offs) should be less than 3% of total expected collections.
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