Proven Metrics to Monitor RCM Effectiveness for Physician Medical Groups

At a glance

• The main takeaway: Consistent measuring of revenue cycle metrics provide valuable insights into the financial health and efficiency of a medical practice. 
• Impact on your business: Careful monitoring of key revenue cycle metrics is crucial to identify issues and trends before they become crippling problems. 
• Next steps: How does your medical practice measure up? Aprio’s Healthcare Advisors can help you achieve your financial goals while thriving in a competitive market.  

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The full story:

In our last article, “Know Your Numbers: Improving Financial Health through Revenue Cycle Management,” we defined what “revenue cycle” means in the medical industry, and its impact on your business. Here in part two, we dive into the metrics used to measure the financial health of your practice.  

Revenue cycle metrics are crucial for physician medical groups as they provide insights into the financial health and efficiency of the organization. Below, we discuss key performance indicators (KPIs) at different stages, what they mean, and why they are important for physician medical groups. 

Front end KPIs

• No-show rate – This rate monitors patient cancellations and no-shows compared to total appointments. Due to the way patient visits are scheduled, no-shows can be extremely costly in the healthcare field. This rate can vary drastically by specialty, and it is important to monitor this closely. 
• Insurance verification accuracy – This rate tells us what percentage of patients have confirmed insurance prior to the appointment. Prior confirmation of insurance can greatly reduce claim denials and speed up the reimbursement and/or collections cycle. 
• Provider productivity – There are several ways to measure how efficiently a provider sees patients throughout the day. Number of patients seen, patient visit time, billed care hours, and relative value units are some of the most common methods used to measure provider productivity. These values can help determine which providers are the most profitable and which providers need to increase their efficiencies to increase net profit.  
• Patient satisfaction (wait times, communication, etc.) – Patient surveys at the conclusion of each visit can be insightful and allow practices to adopt a patient-centric approach. 
• Room occupancy rate – It’s important to know the occupancy rate of an office so practices can schedule patients accordingly and plan for any additional space or downsizing needed. The more efficient a practice can be regarding room occupancy; the more patients they have space to see during the course of a day. 

Middle KPIs

• Denied claims rate – Depending on the type of claim, this rate can tell us how accurately claims were filed. Denied claims equal missed collections. 
• Clean claims rate – This rate measures submitted claims and the completeness and accuracy of these claims. When this rate is higher, we can expect less delays in payments and less denials of claims.  
• Coding accuracy rate – This rate shows how well codes are assigned to diagnosis and procedures performed on a patient. Accurate coding allows for prompt payment and ensures that the patient is being billed fairly. 
• Payment accuracy rate – The percentage of the payments that are made accurately in accordance with agreed-upon terms. 
• Charge lag time – Measure of time, usually days, from the date of service to the date that the charges are entered into PMS. A high charge lag time can lead to a delayed claim submission and claim denial.  

Back end KPIs

• Gross (GCP) and Adjusted Collection Rates (ACP) – Collection percentages are key indicators to show how well you are collecting your charges. GCP is your total collections divided by your total revenue. Generally speaking, this percentage is the 50% range as contracting with insurance companies will prevent you from collecting all of your charges. Due to adjustments mandated by your insurance contracts, the ACP is the MVP in KPIs. This rate is calculated by taking total charges less insurance adjustments (i.e., the money you were never going to collect anyway) divided by total collections. An acceptable target for ACP would be 95% and above, depending on your specialty. Normally this amount should be in the 98-99% range. If your ACP is not in the high 90’s, this may indicate an issue in billing and collections. 
• Days in account receivable (AR) – This KPI tells you how long it takes you to collect your accounts receivable. In the EMR world, most practices are collecting their receivables much faster than in the paper filing days. To calculate this KPI, take your total AR divided by an average of the last three months charges. This will tell you if you are collecting in less than a month or over a month. Depending on your specialty, this KPI should yield a multiple of less than one, meaning you are collecting your AR in less than a month. For example, a ratio of .75 would mean you are collecting your AR within three weeks.   
• Accounts receivable aging – Keeping your AR young will result in higher revenue. Most medical billing software will break up the aging in 30-day buckets. For example, 0-30, 31-60, 61-90, 91-120, and over 121 days. The likelihood one has of collecting anything over 121 days is extremely slim.  

The bottom line:

Careful and consistent monitoring of these key metrics within each segment will help identify issues and trends before they become crippling problems. Understanding and optimizing these metrics can lead to improved financial performance, better patient satisfaction through transparent billing, and compliance with healthcare regulations.

Aprio’s Healthcare Advisors are here to help your medical practice thrive in a competitive healthcare environment. Connect with our team of experienced advisors to learn how your measured results stack up in the industry, and begin achieving your financial goals while maintaining an efficient, future-minded medical practice.

Related Resources/Assets/Aprio.com articles/pages

Know Your Numbers: Improving Financial Health through Revenue Cycle Management 

Back Office Management in Healthcare 

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