Executive Summary
- Monitoring key performance indicators (KPIs) in your revenue cycle dashboard is crucial for healthcare executives to identify areas for improvement and optimize the revenue cycle.
- Nine vital KPIs to track include: Average Payment Rate, Denial Rate, First Pass Yield, Cash Trends, Charge Volume, Claim Volume, Denial Resolution Rate, Late Charges, and Total Charge Lag Days.
- Regularly reviewing these KPIs, customizing your dashboard, and implementing data-driven strategies can help improve your organization's cash flow and overall financial success.
What are the Most Important KPIs in Revenue Cycle Management?
As a healthcare executive, you're well aware that managing your organization's revenue cycle is crucial for financial success. However, with so many moving parts, it's easy to lose sight of the most important metrics. But by monitoring the right key performance indicators (KPIs) on your revenue cycle dashboard, you can quickly identify areas for improvement and make data-driven decisions to optimize your revenue cycle.
In this post, we'll explore nine vital KPIs that every healthcare executive should be watching across three areas: Accuracy, Efficiency, and Capacity.
Accuracy KPIs
Average Payment Rate
A healthy revenue cycle begins with keeping a close watch on your average payment rate. This KPI offers insights into how much you're receiving from payers compared to what you're billing. A high average payment rate is a good sign, while a decrease may signal issues with payer behavior or billing processes.
Average payment rate is calculated using the amount paid by payers in the selected time period divided by the sum of the payer-billed charge amounts associated with those paid or otherwise adjudicated charges. Adjudicated charges are defined here as those charges that were submitted to a payer and then responded to by a payer (Based on charges with remittance date of payment).
Denial Rate
No one enjoys dealing with denied claims, but tracking your denial rate on your revenue cycle dashboard can help you spot potential problems before they escalate. A high denial rate could indicate a change in payer behavior or a billing issue that needs to be addressed. Keeping this number in check will help prevent decreased payment rates and increased accounts receivable.
This KPI shows how often charges are denied by payers at first submission. Denial Rate is calculated as the count of charges classified as denied (rejected by the payer) for the first time over the count of charges adjudicated for the first time.
- The dates used are the remittance dates
- Charges are classified as denied based on Gistia’s system of classifying payer remittance advice lists per charge
- Note that although most payer advice lists are classified, not all are classified, meaning some advice lists that could be classified as denials may fall into an “unknown” bucket and are not counted here
- Increased Denial Rate may indicate a significant change in payer behavior, for example, after a payer has changed their contract
- An increase may also indicate a significant billing change or issue, and it may lead to decreased payment rates, increased AR, or increased billing costs
First Pass Yield
Efficient billing processes are essential for a smooth revenue cycle. By monitoring your first pass yield on your revenue cycle management dashboard, you can see how often charges are paid or processed upon first submission. A high first-pass yield is a sign of efficiency, while a low yield may warrant a closer look at your billing processes.
First pass yield shows how often charges are paid or processed upon first submission. is calculated as the count of charges classified as processed (based on advice lists from payers) including charges that are paid without advice codes upon first submission divided by the count of charges adjudicated for the first time.
- The dates used are the remittance dates
- Charges are classified as processed based on Gistia’s system of classifying payer remittance advice lists per charge
- Note that although most payer advice lists are classified, not all are classified, meaning some advice lists that could be classified as processed may fall into an “unknown” bucket and are not counted here
Capacity KPIs
Cash Trends
Cash is king, and tracking your cash trends on your revenue cycle dashboard can help you spot potential issues before they become major problems. A decrease in cash may signal a problem with payment rates, leading to increased AR, stunted company growth, or operational issues. Keep a close eye on this KPI to maintain a healthy cash flow.
Represents the total amount of money flowing into the business based on all available billing system data. It is calculated as the sum of payments from payers, accounts, clients, bad debt, unapplied cash, and interest.
- A decrease in Cash may signal a problem with payment rates and result in increased AR. It can stunt company growth, force use of costly lines of credit, or cause operational issues
- Dates are based on posting taken from the billing system
Charge Volume
Charge volume is a leading indicator of your organization's financial health. Monitoring the total number of charges billed to payers and other accounts on your revenue cycle management dashboard can help you spot trends and potential problems. A decrease in charge volume may precede worsening performance in other KPIs, so it's essential to keep track of this metric.
Represents the total amount of money flowing into the business based on all available billing system data. It is calculated as the sum of payments from payers, accounts, clients, bad debt, unapplied cash, and interest.
- A decrease in Cash may signal a problem with payment rates and result in increased AR. It can stunt company growth, force use of costly lines of credit, or cause operational issues
- Dates are based on posting taken from the billing system
Claim Volume
Tracking claim volume on your revenue cycle dashboard gives you insight into the number of claims being submitted to payers. This KPI can help you identify trends and potential bottlenecks in your revenue cycle, allowing you to address issues before they impact your bottom line.
- Represents the total number of claims submitted based on the date submitted
- Indicates the volume of claims going to payers
Efficiency KPIs
Denial Resolution Rate
Resolving denied claims is an essential part of revenue cycle management. Monitoring your denial resolution rate on your revenue cycle KPI dashboard can help you identify changes in payer tactics or process inefficiencies that may be causing an increase in denials. Addressing these issues quickly can help you maintain a healthy revenue cycle.
Shows the rate at which charges are successfully processed upon resubmission. It is calculated as the number of charges that were initially denied by payers, then resubmitted and processed or paid, over the number of initially denied charges.
- The dates used are remittance dates of the charges’ initial denial
- Charges are classified as denied or processed based on Gistia’s system of classifying payer remittance advice lists per charge
- Note that although most payer advice lists are classified as either denied or processed, not all are classified, meaning some advice lists may fall into an “unknown” bucket and are not counted here
- A decrease in Denial Resolution Rate may indicate changing payer tactics, increased denials, or process inefficiencies
Late Charges
Late charges can be a significant drain on your organization's revenue. By tracking the percentage of charges submitted more than three days after the service date on your revenue cycle management dashboard, you can identify opportunities to improve revenue capture, reduce unnecessary costs, and accelerate cash flow.
Measure of revenue capture efficiency. Calculated as the percentage of charge amount initially submitted more than three days after the service date divided by the total charge amount submitted.
- Only first charges are counted
- Post date to billing system is used to plot and assign the values for this KPI
- This KPI helps to identify opportunities to improve revenue capture, to reduce unnecessary costs, and to accelerate cash flow
Total Charge Lag Days
Charge lag days can impact your organization's cash flow and overall efficiency. Monitoring the average number of days between the date of service and the submit date on your revenue cycle dashboard can help you identify areas for improvement in your charge capture workflow.
Charge lag days are calculated as the sum of the number of days from date of service to submit date divided by the number of charges.
- Post date to billing system is used to assign these values of this KPI
- Only first charges are counted (if a charge is resubmitted it is not counted here)
- We are only including payer billing
- Indicates charge capture workflow efficiency and impacts cash flow
Tracking Revenue Cycle KPIs is Critical to Your Financial Success
By keeping a close eye on these nine vital KPIs on your revenue cycle management dashboard, you can ensure that your healthcare organization stays on track and maintains a healthy revenue cycle. Remember, collecting payments efficiently, monitoring claims paid, managing bad debt, and tracking cash collections as a percentage of net patient revenue are all crucial aspects of a successful revenue cycle.
Don't overlook the importance of monitoring denial rates, average daily POS payments, point of service collections, total charges, and cycle dashboards. These metrics can provide valuable insights into your organization's financial performance and help you identify areas for improvement.
Furthermore, keep an eye on the clean claim rate, net patient service revenue, discharged not final billed (DNFB) metrics, and cash flow. These KPIs can help you identify potential issues and address them proactively, ensuring the smooth operation of your healthcare organization.
Days in accounts receivable, POS collection rates, the total number of claims, and cost to collect are also essential KPIs to monitor. By keeping track of these metrics, you can optimize your revenue cycle and ensure that your healthcare organization remains financially stable.
Healthcare organizations must stay vigilant in monitoring their revenue cycle KPI dashboard to maintain financial stability and growth. By focusing on these nine vital KPIs, you can make data-driven decisions, address potential issues, and optimize your revenue cycle for long-term success.
Frequently Asked Questions about Revenue Cycle KPIs
How often should I review my revenue cycle dashboard?
It's recommended to review your revenue cycle dashboard regularly, at least on a weekly or monthly basis, depending on the size and complexity of your organization. This will help you stay informed about the current state of your revenue cycle and make timely, data-driven decisions.
Can I customize my revenue cycle dashboard to focus on specific KPIs?
Yes, most revenue cycle management software allows you to customize your dashboard to focus on the KPIs most relevant to your organization's needs. This way, you can prioritize the metrics that matter most to your healthcare organization's financial success.
How can I improve my organization's denial rate?
To improve your denial rate, start by analyzing the root causes of denied claims. This may include issues with payer behavior, billing processes, or coding errors. Once you've identified the underlying issues, take corrective action to address them, such as staff training, process improvements, or technology upgrades.
What are some strategies to increase my organization's first pass yield?
Some strategies to increase first pass yield include:
- Ensuring accurate and complete patient registration and insurance information
- Implementing robust coding and billing processes
- Regularly updating payer rules and requirements
- Investing in staff training and development
- Leveraging technology to automate and streamline the revenue cycle
How can I use the KPIs mentioned in this article to improve my organization's cash flow?
By monitoring and acting on these KPIs, you can identify areas for improvement in your revenue cycle, such as reducing denials, improving charge capture, and streamlining billing processes. Addressing these issues will help you optimize your revenue cycle, resulting in improved cash flow and overall financial success for your healthcare organization.
If you have any more questions or need further clarification, don't hesitate to ask. We're here to help you navigate the complexities of revenue cycle management and achieve financial success in your healthcare organization.