Just as doctors monitor body temperature, pulse and blood sugar index to diagnose patient health and develop care plans, physician practice leaders can monitor key performance indicators (KPIs) to determine their organization’s financial health and create an action plan for realizing improvements.
Recent health leadership surveys have identified analytics as an important priority. According to PriceWaterhouseCoopers, 64 percent of healthcare leaders have changed the way they make decisions to rely more on metrics and data. Many practices, however, aren’t regularly using metrics. This could be due to budget restrictions or competing priorities such as ICD-10 readiness. If it’s the former, there’s good news: several KPIs are accessible without an analytics tool for anyone willing to put in some extra time and effort:
- Days in A/R − Represents the number of days that money owed to a practice is outstanding. It’s calculated by dividing total current receivables, net of credits, by your practice’s average daily charge amount. This metric is likely the single best indicator of your practice’s financial performance.
- Percentage of A/R greater than 90 days − A great indicator of payment timeliness. Calculate by taking the dollar amount of your receivables, net of credits, greater than 90 days and dividing this number by your total receivables, net of credits.
- Charge lag time − Shows the length of time to get your claims out the door. It’s calculated by reviewing the length of time between when a patient is seen and the charge is captured and submitted electronically. A high number of days can point to ineffective processes, both for the front and back-office, and can be quite detrimental; it can result in delayed payer remittance and even impact your ability to collect from patients.
Considering the value of these metrics, the work is definitely worth the outcome. Please see the recent MGMA Connection article, Measure, improve patient collections performance, for metrics and process improvements to increase patient collections. Navicure’s resource guide, Key Metrics in Revenue Cycle Management, identifies four critical KPIs and gives detailed instructions for calculating them. Best of luck in improving your practice’s financial health!