Smaller health organizations are not only looking out for the health of their patients, but they are also paying close attention to their financial health. Compared to their larger counterparts, these facilities experience higher operating costs per patient on average, and therefore depend more on every dollar earned to continue providing life-saving care to their patients. So how do healthcare organizations track their financial performance? Let’s look at some of the key performance indicators (KPIs) utilized to monitor their revenue cycle efficiency.
Some of the most valuable KPIs in revenue cycle management involve performance metrics related to accounts receivable (AR).
AR Balance: When considering the financial health of an organization, the accounts receivable balance is a key indicator of how much revenue is owed to an organization from patients, insurance companies, and other payers. A lower balance is ideal as it shows that the organization is receiving the compensation that it is entitled to. By not having outstanding accounts, this is indicative of a better cash flow.
AR Age: In addition to examining the balance of accounts receivable, it is important to note the timeliness of payment. In other words, this indicator examines how long it takes for organizations to get paid. Ideally, less days in accounts receivable is better, as this indicates that the organization is being paid in a timelier manner. This helps ensure steady cash flow, which is crucial to organizational success. A good benchmark for account age is collecting payment in the first 90 days after services are provided. Accounts are more likely to be paid in the first 90 days; after that point, the likelihood of payment decreases significantly.
Medical Coding and Denials
Medical coding accuracy is another KPI that can indicate the likelihood of claim denials. When claims are coded incorrectly, payers may deny payment which can cause costly delays. The process of reviewing, re-coding, and appealing a denied claim can mean extra expenditures for the health organization. Ensuring proper initial coding reduces the likelihood of these time and resource-consuming delays. The industry standard for coding accuracy is at least 95% of all claims are accurately coded. Being at or above this benchmark indicates a high-performing coding staff who makes fewer coding errors. Revenue cycle professionals always aim to minimize denial rates.
Clean Claim Acceptance Rate
Healthcare organizations receive payment for their claims sooner when they are processed without any errors, rejections, or denials. The Clean Claim Acceptance Rate KPI is a metric that indicates what percent of claims submitted are accepted and processed. The industry standard for this KPI is having 90% or greater of claims accepted upon initial submission. This ensures that an organization’s revenue cycle management processes are working efficiently and minimal errors are being made.
Signature forms meaningful partnerships with our health system clients to help them achieve their financial goals. We carefully monitor an organization's KPIs to maximize revenue cycle success and capacities and to identify quality improvement opportunities. Christina Frye, Senior Director of Revenue Cycle Management, shared the importance of tracking these benchmarks:
“Meeting and exceeding benchmarks indicates high functioning performance and compliance to ensure appropriateness of documentation and charge capture. These components can provide added confidence for maximized recoveries and stronger financial health.”
Our dedicated Associates are extensively trained in quality assurance and take the time to understand each organization’s unique needs. This combination of industry knowledge, data-driven tactics, and a personalized approach helps healthcare organizations improve financial performance. When Signature Performance partners with a rural healthcare organization, on average we reduce the AR balance by nearly 50%, decrease AR days by 54%, and increase the clean claims acceptance by 39% - all while consistently meeting and exceeding standards for coding accuracy and and denial rates.
Signature Performance is on a mission to reduce administrative burden in healthcare and help organizations, including critical access facilities, reshape the landscape of healthcare. Our team of subject-matter experts will help you leverage the latest technology to optimize your revenue cycle processes. If you are ready to take the next step towards increasing your organization’s financial stability, contact us today for more information about our solutions.