by Craig Bridge, COO, Navicure. Inc

Bridge Craig - cropped


In the past several years, care models have evolved to include more preventive care. Both insurers and government agencies are requiring proactive measures to identify patient health issues earlier or even prevent them altogether.

This same philosophy can also apply to the revenue cycle. Proactively monitoring multiple key metrics will yield a better picture of overall financial performance and reveal areas that need improvement.

While cash flow generally receives the most attention, this figure only shows part of the big picture. By tracking additional metrics such as the four listed below, you can identify ways to optimize both claims management and patient collections – ultimately improving your practice’s overall financial health.
1) Days in Accounts Receivable – Simply put, days in A/R measures how long it typically takes for a service to be paid by all responsible parties. It is one of the most important metrics for a practice to track because it shows the number of days that payments owed to the practice remain unpaid. The best performers keep A/R days less than 35.
2) Percentage of A/R Greater than 120 Days – This metric reveals the percent of receivables older than 120 days and points to a practice’s ability to get services paid in a timely manner. It is critical to base your calculations on the actual age of the claim, i.e. the date of service. It’s important to remember, however, that a favorable figure can hide areas of underperformance. As with any billing indicator, results are influenced by payer mix and specialty as well as level of automation and may require closer analysis to uncover potential issues.
3) Adjusted Collection Rate – A measure of a practice’s effectiveness in collecting all legitimate reimbursement, this metric shows the percentage of collected reimbursement in comparison to the allowed amount based on contractual obligations. On average, most practices have an adjusted collection rate between 95 and 99 percent.
4) Denial Rate – The lower the number of denied claims by payers, the better a practice’s cash flow – and the less staff intervention that’s needed to maintain this cash flow. Automating processes can lower this ratio dramatically, and the best performers have a denial rate less than five percent.
For more in-depth information on establishing these key metrics, avoiding common problems and measuring success, download the resource guide.