Running the clinical side of a healthcare practice isn’t as easy as it may seem. Clinical laboratory practitioners spend a major part of their day taking care of patients. But here’s a question that arises: does your hard work pay off in the end? Have you ever tried to get the answer to this question?
The answers may be different. But one can’t deny the fact that the majority of the clinical practitioners are underpaid_despite meeting all the parameters of health care. According to the healthcare revenue leaders: the major reason behind partial, delayed or denied reimbursements is the failure to spend time in analysing the success of the revenue cycle management. Without having a successful RCM process, a practitioner cannot keep his/her healthcare business running smoothly. Moreover, without achieving financial stability and sustainability, you cannot survive in the highly competitive healthcare market.
However, in order to measure the success of the practice. Clinical lab practitioners should identify and track the key performance indicators (KPIs). For this purpose, they should gain actionable insights from RCM data. Diving deeply into such data enables providers to identify the areas of improvement. And implement the smart solutions that best suit their billing and coding needs.
No doubt, tracking KPIs may seem difficult and time-consuming. But its successful execution can actually make a huge difference in your profitability. Unfortunately, the majority of clinical practitioners don’t pay attention to know the variables that create fluctuation in the revenue cycle. It has been estimated that approximately fifteen cents of every U.S. healthcare dollar lost_just because of the potential inefficiencies in the clinical billing and coding process. Such RCM inefficiencies result in claim denials, slower payments, excessive administrative as well as financial strain.
So, in order to save a healthcare practice from further financial loss. Healthcare practitioners must have a complete understanding of their RCM KPIs. Key performance indicators are the unique factors that are being used to measure the success of an organization. The same is true for healthcare practices. Having a successful procedure of analysing and tracking KPIs can help providers to lower the compliance risk, enhance accuracy and elevate their profit margin in a seamless manner.
Essential RCM KPIs For Financial Growth
Are you still confused about which metrics and KPIs are essential for your clinical practice? Don’t know where to get started? Don’t worry! Analysing and tracking key metrics can be a daunting task. However, for the convenience of the healthcare providers. I have broken down the three most important KPIs that you should consistently track to assess your RCM effectiveness.
- Days in Accounts Receivable
This particular KPI is designed to get a better idea about the efficiency of the revenue cycle management. Accounts receivable days is the number of days of time to get paid for the clinical services provided to the patients. The analysis of this aspect will help providers to know: how effectively they are getting payments and managing their accounts receivable. The days in A/R can be calculated as;
- Divide total A/R by the average daily net patient service revenue.
- Divide the providers’ total annual sales by 365.
The industry average for the days in accounts receivable is 35 days. However, if your A/R days are higher than 40. Then it’s a clear indication that your RCM process isn’t efficient enough and you need to reevaluate the clinical billing strategies.
- Clean Claim Rate
As we all know the fact that maximum reimbursements from insurance companies are highly dependent on error-free medical claims. The clean claims, as well as the first-pass acceptance rate, determine your financial viability. The high clean medical claims rate implies that you are getting timely reimbursement. And there are no flaws in the revenue collections management. In order to calculate the rate of error-free claims, clinical practitioners can utilize the following equation:
- Number of claims that pass edits requiring no manual intervention/Number of claims accepted into claims processing tool for billing = Claims processing tool
The industry average for this key performance indicator ranges between 75% – 85%. However, according to the opinion of the revenue leader, healthcare providers should make sure that their clean claims rate remains 95% or higher. Because it eventually results in maximum billing collections and streamlined cash flow. The key components of clean medical claims are:
- Accurate patients’ demographic information.
- Valid insurance information.
- Precise medical codes.
- Accurate modifiers.
- Proper documentation that supports the medical necessity.
- No duplicate billing.
- Timely submission of claims, according to the given time window of the payers.
- Net Collection Percentage
This KPI shows the clinical practitioner’s ability to convert patients’ services into cash. By analysing this metric, healthcare providers become able to know whether or not they collect what actually they’re owed. Because sometimes, insurance companies pay less than the actual reimbursements.
Failure to capture such inefficiencies lead to cash flow disruption. And healthcare providers may continue to lose their hard-earned revenue. However, the collection goal of the providers must be 100%. Because nobody wants to stay underpaid despite keeping the patients satisfied with exceptional healthcare services. The net collection percentage can be calculated as follows;
- Total patient service cash collected /Average monthly net patient service revenue = General ledger/Income statement
Final Verdict
By analysing the above mentioned KPIs, clinical lab practitioners can easily measure the success of their revenue cycle management. It is the most frequently asked question; how can medical practitioners ensure the success of the key metrics? If you are falling behind your revenue goals, then start with the re-evaluation. You should review the entire clinical billing process i.e. from patients scheduling to payment posting and all in between.
In this way, practitioners can easily find the red flags and implement the appropriate clinical medical billing solutions. But the majority of the clinical practitioner’s find it immensely challenging to analyse and track the key performance indicators, along with tight schedules. Due to the increasing patient care responsibilities, practitioners are running short of time and can’t invest time and money on the high expenses of in-house billing teams.
While keeping in mind all these factors, they are shifting towards hiring professional billing collection agencies. Because outsourced billing and coding experts take the pain out of your RCM process and ensure the maximum return on investment. Moreover, off-shore clinical billing companies also provide actionable financial insights to the providers. And help them in monitoring the key performance indicators for the financial success of the practice.
Do you want to maximize productivity without excessive financial and administrative burdens? Then joining hands with a trusted partner like LaboratoryBillings is the perfect solution to all your RCM challenges. Our dedicated team of industry experts understand the nuances of clinical billing and provide transparent solutions to take the profitability level of clients to the highest levels. Contact us today to acquire our reliable RCM services.
