Written by Andrew Neal on Aug 15, 2023
Five Key Metrics to Assess the Efficiency of Your Healthcare Revenue Cycle
The old saying “what gets measured gets managed” certainly holds true for healthcare revenue cycle leaders. It’s important to keep a keen eye on certain key performance indicators (KPIs) as these metrics can help to illuminate the overall health and efficiency of your revenue cycle.
In an ongoing effort to improve patient satisfaction, lower administrative burdens, and enhance financial outcomes, here are 5 key metrics revenue cycle leaders should monitor.
#1: Cost to Collect
A healthcare revenue cycle team’s cost to collect includes all costs associated with collecting payment, such as staff salaries, overhead, and technology costs. The lower this cost, the more efficient your revenue cycle. By optimizing your billing processes and leveraging automated solutions, healthcare providers can significantly reduce their cost to collect.
Additionally, providing patients with a user-friendly, self-service payment portal can help reduce the amount of manual intervention required from your teams while helping to maximize the investments in patient financial engagement technology you’ve already made.
#2: Days in Accounts Receivable (AR)
Days in AR represents the average number of days it takes for an organization to collect payment after a service has been provided. A lower number generally indicates a more efficient billing process, leading to improved cash flow. On a national scale, the percentage of AR in 0-30 days is on the rise at an average of 58%, while long term AR at 121 days or more is down to 16%.
Healthcare revenue cycle leaders often monitor Days in AR to assess if their patient engagement and collection efforts are working as they should. A strategy that focuses on proactive education and setting realistic financial expectations can help improve collections and retention. This can include giving front desk staff financial responsibility scripts to help educate patients on their deductible, co-pay, and preferred payment methods.
Utilizing self-service technology at a healthcare organization can also help to improve revenue cycle efficiency by allowing patients to complete financial transactions that would normally require the assistance of front desk staff.
#3: Denial Rate
The Denial Rate refers to the percentage of claims that are denied by payers across a hospital or health system. A high denial rate could indicate issues with a provider’s coding or claim submission processes. In an industry in which payers and providers are uniquely linked, tracking this metric can help healthcare revenue cycle leaders identify patterns and make necessary adjustments to reduce denials.
One method of decreasing your team’s overall denial rate would be to ensure that your Electronic Health Record (EHR) or Patient Accounting System (PAS) is deeply integrated with your patient billing and payments system. By ensuring that these systems are integrated through deep workflow integrations, rather than by simpler data uploads, your teams can more easily communicate with each other throughout the patient financial journey, helping to prevent coding and claim submission mistakes across the board.
#4: First Pass Resolution Rate
The First Pass Resolution Rate (FPRR) is the percentage of claims that are paid upon first submission. A high first pass resolution rate means your claims are accurate and complete, reducing the need for additional work and helping to speed up the payment process. The industry standard benchmark for FPRR is typically set at 90%. Providers should prioritize using fully integrated systems to help prevent mistakes and boost FPRR.
Patients and providers both benefit when medical costs are accurate and transparent, which can also have a profound impact on patient trust and their likelihood of a return visit to your hospital or health system.
#5: Patient Financial Responsibility
With the rise of high-deductible health plans, many patients are bearing more of the cost of their healthcare. Understanding this shift and tracking patient financial responsibility can help revenue cycle teams adjust their billing strategies accordingly, improving collections and patient satisfaction.
The Role of Technology in Improving Key Revenue Cycle Metrics
Technology is revolutionizing every aspect of healthcare, and revenue cycle management is no exception. Salucro’s solutions can help your revenue cycle teams improve on each of these key metrics.
Automating the billing process with Salucro’s solutions reduces the need for manual tasks, thereby allowing revenue cycle staff to focus on other critical patient services. Plus, the increase in efficiency can lead to higher collections at a lower cost.
With Salucro’s digital billing and payment solutions, you can speed up the billing process, reducing the time it takes to collect payment. Automated reminders can also nudge patients to pay their bills promptly, further decreasing your days in AR. Nearly 60% of patients are interested in receiving SMS text message billing notifications, with over 50% saying a reminder of this type would prompt faster bill payment.
With more accurate data input and automated processes, your denial rate can significantly decrease, boosting revenue and efficiency. Automation also means more time for revenue cycle teams to focus on accuracy and completeness to help increase first pass resolution rates.
To help patients better understand their financial responsibility, Salucro provides simple and accurate statements and offers flexible payment plans. These strategies can help to improve patient satisfaction and increase the likelihood of collection.
Salucro’s comprehensive suite of patient payment solutions is designed to address the pain points of revenue cycle management. We aim to provide a smoother, faster, and more efficient payment process, benefiting not just the healthcare providers, but the patients as well.