Revenue Cycle Management (RCM) is essential to maintaining financial stability in healthcare. But how can you assess if your RCM is in good shape? Monitoring key performance indicators (KPIs) provides insights into potential revenue issues
Here are the top five KPIs that every hospital should monitor to ensure a robust revenue cycle:
1.Cash Collections as a % of Net Revenue
This KPI reveals how well you are collecting on your net revenue. As a leading indicator of potential revenue leakage, a drop in this metric may point to issues in your collection processes. Efficient cash collections help keep your revenue flow steady and minimize the risk of financial strain.
2.Denials %
Denied claims are a common pain point in healthcare revenue cycles, causing delays and lost revenue. The percentage of denials should be carefully stratified into two categories—those within your control and those outside of it. Identifying root causes, whether they’re coding errors, incorrect billing, or payer issues, can help reduce denials and improve overall revenue capture.
3.Insurance Days in A/R
This KPI measures the speed at which you receive reimbursements from insurance companies. The longer claims sit in Accounts Receivable (A/R), the slower your cash flow. A lower number of days in A/R signifies faster collection and efficient billing processes, helping you maintain liquidity and fund ongoing operations without delays.
4.Discharged, Not Final Billed – The Cash Cruncher
Often referred to as a “cash cruncher,” this KPI highlights the gap between patient discharge and the final billing. It’s important to discover the cause of this delay. Is it driven by the physician’s failure to document final details, or is it a medical records issue? Identifying and resolving this bottleneck can significantly reduce delays and improve the revenue collection timeline.
5.% Insurance A/R Greater Than 90 Days
Claims that linger in A/R for more than 90 days can be a major red flag. This KPI measures how well your billing and follow-up processes are performing. A high percentage here indicates inefficiencies that could lead to revenue loss. By focusing on reducing the amount of aging A/R, you can increase cash flow and ensure that you’re not leaving money on the table.
How Healthy is Your Revnue Cycle Management?
If your RCM is “under the weather,” Equalize RCM can help. We specialize in cash acceleration to optimize your revenue cycle and improve your financial performance.
Let us know if you need support!