Knowing which data to analyze when measuring your organization’s profitability is just as important as having the right tools to do it. Sure, you can measure your profits and losses while balancing sheets for a good overview. However, drilling down the components of your revenue cycle means discovery of exactly where the practice excels and where it struggles. The measures not only your collections department, but also within clinical delivery and EHR compliance.
Can better analytics result in better processes, fewer denials, and greater profits? Absolutely.
It’s not enough that your practice makes payroll and operates in the black. Having a clear idea of the revenue goals will help establish benchmarks by which to ascertain where you stand on the continuum. Whether the goal is to achieve profits comparable to similar-sized ventures or simply to achieve a certain percentage over operating costs, developing useful metrics will help you evaluate your business.
Determining Your Metrics
Since modern healthcare revenue mostly comes from payer contracts or the government over direct patient pay, knowing the outcomes of your billing department’s efforts per claim or patient bill is critical. In order to gauge progress from information taken from the collected data, your reporting system must focus on these important KPIs:
- Claim denial rate — Do you know how often payers deny claims? What is the denial rate as a percentage of claims submitted? Which payer claims are typically denied?
- Percentage of accounts 90 days past due — How many accounts sit unresolved on your A/R aging report? What’s the percentage of accounts older than 60 days? 90 days?
- Bad debt rate — How many of those superannuating accounts are patient self-pay and deductibles? How do they figure as a percentage of your collections?
- Net collection rate — What does the data say about your collection ratio as a whole? Do they reflect common industry problems or are they extraordinary?
By generating useful reports on your key performance indicators and reviewing them on a regular basis, you’ll soon discover where the weaknesses lie in your processes. It could be that the staff suffers from too little training on proper submissions of claims or choice of the correct codes. Perhaps the problem lies in disorganization resulting in untimely claims, a lack of follow-up on unpaid claims and outstanding invoices, or any number of other critical billing issues.
You may also discover that the clinicians have yet to master the EHR software and payer mandates. They may need more education of their own.
Once you’ve identified where the billing cycle tends to weaken, you have the blueprint for building better systems. You’ll discover whether you need to institute a better training program, resolutions to staff churn (which will certainly assist the expense side of the ledger), a modification of internal software functionality or even explore the benefits of outsourcing your billing department.
Considering a Partner
A worthy medical billing partner can help you keep track of your key metrics in every aspect of the organization. With scalable and customizable plans, health care IT companies have come a long way towards integrating workflows and bringing data and analytics to organizations with turn-key SaaS. As a business manager, once you know the practice’s goals and have the data at your fingertips, you’ll have the clarity to develop any necessary initiatives to arrive at the established financial destination.
With so much uncertainty in the health care universe, it pays to precisely measure your practice’s current performance with up-to-date metrics and data analysis. By strengthening your billing cycle and keeping your business performing at its highest potential, it is easier to prepare for the changes and challenges that lie ahead.