Most medical practices analyze their financial health with a simple analysis of cash flow when it represents only the one aspect of the revenue cycle. Revenue cycle management for practices is a complete process that starts from charge capture, claims submission, accounts receivables, collections and ends up on the analysis of the financial data. It allows practices to track all the cash points and ensuring a steady flow of revenue streams. When practices fail to track these revenue cycle metrics, there is a chance of losing money and sometimes without knowing about it.
Practices must track key revenue cycle metrics to stay better in control of the finances and should devise a process that can regularly check these indicators.
Track Gross Collections
Practices should keep track of their gross collections and should calculate the ratio for paid and unpaid claims. A collection ratio of 95% is considered normal and if your practice is not achieving that percentage and have more than 5% unpaid claims, it reflects that your practice needs to recheck the collection cycle and identify the reasons which are causing delay. Your practice should also identify if there is a specific insurance company that is not reimbursing or due to a certain fault in your billing the collections remain low.
Days in Accounts Receivable
Tracking this metric requires an analysis of a total number of days that on average insurance companies and other payers are taking to reimburse the claims. This can be calculated by dividing total current receivables with average daily charge. More than 95% of your accounts receivables should be paid in less than 50 days. If more than 5% of your accounts receivables stay unpaid then there is room for improvement. The A/R aging representsthat for how long on average the claims remain unpaid. Practices should also keep track of A/R aging on annual basis. By tracking this metric, practices can analyze any timeframe of the year and incur the reasons for delayed payments.
Metric of the Month
You should track your collections on monthly basis. This analysis would make you understand the ratio of average collections you make every month. Sybrid MD updates its client practices with a monthly collection report. Through this report, they can compare their collections with the previous month or can compare it with other offices. The monthly metric would only be satisfactory if there is a consistency in the ratio of your monthly collections.
Metric of Patient’s Deductibles and Copay
Practices should regularly check if they are collecting a maximum of patient’s deductibles and co-payments. Practices should target 100% collections from the patients on deductibles and copay. Tracking it every month or for 90 days would help you understand the situation.
Successful Claim Submission Rate
Your practice should be successful in submitting more than 95% of the claims without any objection from the insurance company. Submitting a clean claim is essential to achieve your revenue targets. Submitting clean and accurate claims is an integral factor of a smooth revenue cycle. Any problem at this point can disturb the revenue cycle and your practice can miss the revenue targets. Practices should keep the claim rejection rate less than 5% and only then the collections targets can be met.
Physician’s Individual Productivity
When operating under one office, practices should also look into the productivity of each physician, separating it from the total collections of the practice. This metric would help to understand the individual performance and would push the physicians at the bottom of the list to contribute more.
These are some of the key revenue cycle metrics, tracking which can paint a clear picture of your practice’s financial health. Without analyzing this crucial data of your practice, it would be very difficult to analyze results and judging the profitability of your practice. With the help of these revenue cycle metrics, practices can improve the processes in many areas. An effective revenue cycle management is only possible if you know how to handle the financial data of your practice.
Sybrid MD can help you understand these revenue cycle metrics. Our billing professionals and financial analysts keep the clients updated with weekly and monthly reports. We believe that physicians should understand the financial indicators of their practice and should take informed decisions in the light of it.