Hospitals are under constant pressure to maintain revenue cycle integrity and deliver great patient care. It is crucial to monitor important revenue cycle metrics to stay ahead of the curve. It helps in maximizing efficiency gains and uncovering hidden pockets of revenue.
With many hospitals adopting multiple systems to handle everyday operations there is no shortage of metrics. There is access to hundreds of data points and metrics but how many of them can truly make a difference? Data overload is real. Cut back on overwhelm by tracking these 5 important revenue cycle metrics.
Aged accounts receivable is the number of days payable claims take to get reimbursed. They are outstanding bill payments and are categorized into different buckets. It is best practice to keep AR below 30-40 days. This important revenue cycle metric is reflective of the efficiency of revenue cycle operations.
Outstanding accounts receivable/ Average daily patient service charges.
Charge lag days is the number of days it takes to enter charges after DOS ( Date of service). It is an important metric to track as delays in entering charges can have ramifications across the revenue cycle.
Date of service/ Date of charge entered
Calculating gross collection ratio is important to understand if patient services are being translated into payments for hospitals. It indicates the financial health of the hospital.
GCR= Total patient service cash collected/ Average monthly patient service charges.
According to the center of Medicare and Medicaid close to 30% of medical claims are denied. The average denial rate in the healthcare industry is 6 to 13%. Around 60% of denied claims go unresolved. This results in huge sums of money left on the table. Calculating the denial rate will enable hospitals to focus on managing denials and understand how many claim denials go unresolved. Denial rate upon first submission is also a vital metric to track. A good denial rate is less than 4%.
Total number of claims submitted/ Total number of claims denied
Net collection rate is how much revenue is collected against how much money is eligible for collection. Calculating this metric provides insights into bad debt and the efficacy of collection practices.
Amount of money collected/ Number of payable claims