KPIs: Managing Your Top Revenue Cycle Metrics
By Bill Slife, Chief Operating Officer and Jessica Thurston, VP of Sales
When selecting key performance indicators (KPIs) for your surgery center, it’s important to consider specific objectives. For example, if your goal is to increase patient satisfaction, tracking patient wait time and patient feedback surveys can provide insight into the quality of care you provide.
Determining which KPIs will drive the best results is a detail-oriented process that involves many layers of analysis. In this blog, we’ll review revenue cycle metrics that drive actionable outcomes and increase profitability.
Top 3 KPIs for Tracking Profitability
Tracking the volume of cases performed by each surgeon and the variety of cases your surgery center performs and comparing the costs, charges, and collections on each case will give you insights on which cases are most profitable.
Case volume: This is the number of cases performed over a specific time. This KPI tracks the number of procedures performed at a surgery center and it can help measure the effectiveness of marketing efforts, physician referrals, and overall demand for each service.
Case mix: This KPI tracks the types of procedures performed at the ASC, as well as the mix of payers. You can adjust your case mix and patient selection to maximize profitability by increasing the percentage of high-margin procedures compared to low-margin procedures by payer.
Net revenue per case: This KPI tracks the total revenue generated per case minus the total cost. This can also be useful in measuring the average revenue generated per procedure per payer and per physician.
Accelerate Growth: Case Volume vs Cash Per Case
Case volume measures the number of cases or patients seen in each period, without considering the revenue generated by each case. This KPI is important for tracking patient flow, identifying trends, and assessing the practice’s capacity to handle patient demand.
Cash per case measures the amount of revenue generated by each case or patient seen in each period. This KPI is important for tracking the practice’s financial performance and profitability.
Managed care contracts dictate the amount each payer will reimburse and the maximum amount of cash that can be generated for each case. Since reimbursement can vary greatly by payer, determining your costs for each case upfront will help you determine if a case is profitable or not.
Once you know your most profitable cases, you can analyze your case mix and case volume. Work towards increasing the volume of your most profitable cases by marketing your value to potential patients and referring physicians.
KPI Strategies: Days in A/R vs Clean Claim Rate
Days in accounts receivable (A/R) is a revenue cycle metric that tracks the average number of days it takes to collect payments. This is one of the most popular financial metrics for surgical organizations, but it can be easily misinterpreted.
For example, if your A/R team takes the time to appeal underpayments on implants and other high dollar claims, you might see longer days in A/R, but the longer days are necessary. If your team is focused on increasing net collections, they should prioritize collections over days in A/R. The A/R team will work claims until they are resolved to recoup what you’re owed, rather than accept underpayment to move the claim along.
Conversely, if your payment posters are posting according to the explanation of benefits (EOB), this will reduce your days in A/R, but your cash collections and cash per case metrics will shrink if your team isn’t analyzing terms in managed care contracts or pursuing reimbursements.
Revenue cycle metrics that decrease days in A/R start with focusing on the accuracy of your claims in the past 90 days.
Answer two important questions:
1. What is your clean claim rate?
2. Are there common reasons why certain claims are getting “stuck” – such as a coding error?
You can improve cash flow and your days in A/R by focusing on improving your clean claim rate. For example, automated processes and an integrated revenue cycle workflow that includes front-end data entry and patient intake can decrease common manual errors. If you increase your clean claim rate, you can decrease days in A/R.
KPIs That Reduce Days to Bill
Another heavily used metric is days to bill, which tracks the average number of days from the date of service to the actual bill date. Reducing days to bill is important as it directly affects your cash flow, especially if you have timely filing deadlines to meet.
Day to bill attempts to track the efficiency of the front and middle parts of your revenue cycle, but it doesn’t always take into account the reasons why certain turnaround times exist between revenue cycle departments.
For example, consider the time it takes for operative notes to be transcribed and coded. If your team accepts the surgeon’s notes without obtaining any clarifications, they’ll certainly reduce days to bill, but you may also see a higher percentage of denials, takebacks, and noncompliant claims.
If a certified coder takes the time to verify information with the surgeon, your days to bill could be higher, but this best practice will improve coding accuracy.
Tracking a combination of the accuracy of your claims and days to bill is ideal. One way to speed up the dictation and transcription process is including a mobile or web-based transcription service that automatically notifies team members when it’s time to review or approve documentation. These real-time alerts tighten turnaround time, communication, and days to bill.
The Key to Impressive KPIs: Company Culture
Certain KPIs are going to be looked at every single day. Some can be weekly, monthly, or quarterly, but developing a rhythm and having constant meetings to discuss results will help your surgical organization stay on track and meet your goals.
When introducing KPIs to your staff, start by choosing one metric per month or per quarter to see how focusing on that one aspect ultimately improves overall quality and performance.
Since revenue cycle management metrics will ultimately improve your team’s workload, your team will be incentivized to work together to meet common goals. Offering a fun goal when a benchmark is reached such as additional time off, bonuses, or any other meaningful benefit can also motivate your team.
Final Thoughts on Managing KPIs
As you dive deeper into optimizing your business operations, you can deepen your ability to manage KPIs by utilizing analytics and business intelligence software. With efficient revenue cycle reports, you can turn the data flowing through your surgical operation into real-time insights to help you make business decisions, improve cash flow, and position your organization for long-term growth.
Are you looking for ways to improve your revenue cycle management? Take the first step towards optimizing your revenue cycle process by requesting a revenue assessment from our team of RCM experts. Request a demo.