While providing the best possible treatment for patients should be your primary aim, it is also critical to monitor your practice’s financial performance. Examining Key Performance Indicators (KPIs) on a monthly, quarterly, and annual basis can help you discover trends in how effectively your practice is fulfilling various business and financial goals. A thorough assessment of the current state of the practice is the best place to start. This gives you an overview of your financial situation, operational efficiency, and patient management.
Choosing the right KPIs for your practice
Your KPIs should be linked with your key goals and strategic priorities. Whatever your practice area, there are a few KPIs that every medical practice should be monitoring.
#1 Days in Accounts Receivable (A/R)
The accounts receivable (A/R) of practice reflects how many payments have yet to be received, whether for insurance reimbursements or out-of-pocket expenses. The average duration a bill spends in A/R should be around 30-40 days in good practice. The goal here is to streamline your operations in order to get your practice reimbursed faster, which may entail reducing billing and coding errors or improving the claim follow-up.
#2 Point-of-Service (POS) Cash Collections
This KPI also monitors point-of-sale (POS) collection, which refers to payments made before services are rendered and up to seven days afterward. To calculate the value of this KPI, multiply the POS payments by the total self-pay cash collected.
#3 Percentage of A/R Over 90 Days
Outstanding bills and claims become much more difficult to collect after 90 days, and anything over 120 days is unlikely to be collected. If more than 15% of claims are in A/R for more than 90 days, there is likely some serious inefficiency in your processes that need to be addressed.
#4 Net Collection Ratio
The net collection ratio of your practice indicates how much potential revenue you collect after insurance adjustments have been made. Keeping track of this KPI allows you to assess the overall health of your billing and collection process. If it ever falls below 90% over a period of time, you’ll know that something is out of whack and needs to be addressed right away.
#5 Non-Contractual Write-Off Percentages
Any bill that goes unpaid is considered a write-off. It may be classified as “bad debt” by your practice. In many cases, it is the result of denied insurance claims and may indicate your office staff’s inability to follow up on denials. Patients are more likely to let bills go unpaid in specialty practices because they may not need medical services again. In any case, the total percentage of uncollected payments should not be more than 5%.
#6 New Patient Ratio
This KPI tracks what percentage of your patients are first-time visits. The ratio, when measured over time, can help you determine whether your practice provides a good balance of services. New patients account for approximately 25% of visits in primary care practices, while specialty care practices may see up to 50% of new patients each month.
#7 Clean Claims Ratio (CCR)
The clean claim rate reveals any inefficiencies or problems with claim submission and processing. Since clean claims mean you’ll get paid faster, you’ll want to identify your CCR, track the time you spend reworking denied claims, and identify the reasons for claim denials. The CCR of the majority of practices ranges from 70% to 85%. A CCR of more than 90% or 95% indicates a successful RCM strategy.
In conclusion
KPIs are complex and a huge topic in their own right. When you work with Revenant Care, you get a dedicated team of revenue experts who are experts in their fields. This team will handle delinquent claims, track down denials, and assist you in adhering to best practices. With our commitment to exceeding medical practice management benchmarks, we can help your practice achieve KPIs above industry standards. Get a FREE Consultation with our Medical Practice Management Consultant