4 Key Performance Indicators To Track Your Facility’s Revenue Cycle
The current era of healthcare requires vigilance in managing budgets. More than ever before, facilities are running lean, focusing intently on the bottom line as expenses grow and revenues drop. The dilemma is most pronounced in rural hospitals, where populations dwindle and many are forced to travel to urban areas for elective procedures. It’s a situation that naturally puts hospital finances in a continuously precarious state.
Fortunately, as medicine has advanced, so have the healthcare information tools that can help providers keep a consistently sound balance of expenditures and revenues. By thoughtfully evaluating key performance indicators (KPIs) and putting the gathered knowledge into play, facilities can go a long way toward securing financial stability, even in volatile times.
KPIs Help the Financial Picture
KPIs across the hospital are worth studying for a variety of reasons, including for how they can advance patient care and strengthen patient and staff safety. Improving many of those measures will also contribute to an improved revenue cycle process and tighter budget. When a facility is able to meet all its goals, it is more likely to avoid pitfalls like wasted resources, time, and other costs.
Certain KPIs relate directly to a facility’s finances such as:
- Readmission Rates
- Accounts Payable/Receivable
- Average Claim Processing Time
- Claims Denial Rate
It’s important not to overlook the value of tracking these budget management metrics and studying the resulting data.
Why Track These 4 Healthcare KPIs:
- Readmission Rates. As the inevitable shift to value-based care continues, it’s imperative for providers to have a clear view of what can most often trip them up when it comes time to seek insurance reimbursement. The Centers for Medicare & Medicaid Services (CMS) has already taken aim at readmission, identifying patients returning to hospitals during extended post-surgery recovery periods as a sign of problems.Tracking the negative revenue impacts of readmission is a useful way to gain insights on existing clinical shortcomings. A closer analysis of readmission statistics and reduced reimbursements on claims can also inform preemptive strategies aimed at avoiding this common obstacle to financial success.
- Accounts Payable (AP) and Accounts Receivable (AR) Throughput. To understand an organization’s finances, it’s vital to track the flow of expense-out against the collection of revenue-in. By acutely examining the progression of fiscal throughput, trends can be spotted and shrewd forecasting can take place. This examination should include timetables in the AP and AR offices, designed to ensure one area of financial management isn’t getting too far ahead of the other. A proactive approach to identifying potentially problematic supply chain issues is another smart area to track that can have a direct impact on revenues.
- Average Claim Processing Time. On the financial side of a healthcare facility, few efforts are more important than processing insurance claims. Although recent years have seen alarming upticks in the number of self-pay patients, the vast majority of hospital revenues still come from insurance providers, including Medicaid and Medicare. It’s extremely useful to track the amount of time it takes to process insurance claims. Dramatic slowdowns during reimbursement can severely disrupt the balance between revenues and expenditures. Identifying reimbursement bottlenecks is crucial to determining where breakdowns are occurring, whether it is simply gathering documents or more intricate medical billing coding.
- Claims Denial Rate. Similar to monitoring the duration of the claims process, hospital finance offices should be tracking claims denied by insurance providers. An increase in the claims denial rate or any habitual frequency indicates there’s a problem somewhere in the system. Even if claims are accepted when they’re filed again, repeating a process creates a time vacuum. Early identification and correction of reimbursement errors can make an enormous difference for a hospital’s finances.
The Right Measures Matter
Cross analysis of key performance indicators against hospital’s historical data and established goals is vital to building repeatable success into a revenue cycle workflow. It’s also advisable to look beyond internal data as much as possible to create a more informed revenue cycle strategy. Benchmarking against other institutions can provide unique insight into potential areas for improvement.
For facilities who may need help managing various institutional operations, from business office services to contract management to statement processing, MEDHOST’s Revenue Cycle Services include a comprehensive KPI collection and analysis tool. By using built-in Reporting Services, hospitals can leverage their KPI data to chart a clearer, smoother path to financial stability.
To learn more on how to stay on track with your facility’s KPI’s contact one of our health IT experts at 1800-383-6278 or contact us.