Which Revenue Cycle Management KPIs Should You Monitor?
Numerous revenue cycle KPIs exist, but the following are some of the most important to keep a close eye on. These revenue cycle key performance indicators are described below with their benchmarks and formula you can use to calculate where you stand right now.
Average days in A/R
Your accounts receivable days, or average days A/R, is a measurement of how long it takes a healthcare practice to receive payment from payers. Ideally, lower values demonstrate better cash flow. The typical acceptable amount is below 40 days.
Formula:
Days in accounts receivable = (Total accounts receivable / Average daily revenue)
Claims denial rate
One of the most important RCM KPIs is your claims denial rate. It is a calculation of the percentage of claims a healthcare practice receives a denial for by the payer. Lower denial rates, typically under 5%, are ideal.
Formula:
Claim denial rate = (Number of denied claims / Total number of claims) * 100%
Clean claim rate
Your clean claim rate (CCR) is a measurement of how often claims are “clean.” Clean refers to a claim without errors, rejections, or any other implications that impact the claims process. They were submitted with all the necessary information. You want this number to be higher than 95%.
Formula:
Clean claims rate = (Number of clean claims / Total number of claims) * 100%
Accounts receivable rate
The accounts receivable rate refers to the number of aging unpaid claims considering various periods, such as over a period of 30 days or 90 days. Most often, you do not want there to be aging claims, though it is quite common to have them. This is one of the key performance indicators for the healthcare revenue cycle that you want to see as low as possible. Keeping most of your rate at 35 days or less is ideal.
- 0-30 Days: 50-60% of total A/R
- 31-60 Days: 15-20%
- 61-90 Days: 10-15%
- Over 90 Days: 5-10% or less
Formula:
Aged accounts receivable rate = (Outstanding claims in a timeframe / Total outstanding claims) * 100%
0-60 percentage
Payments due are often allotted based on how many days prior the service was provided. The 0 to 60 percentage is the projected cash inflow for the healthcare practice. It is the percentage of the accounts receivable in the two “youngest” age groups, 0 to 30 and 31 to 60. Ideally, you want this at 95% or higher.
Formula:
Divide the sum of A/R in the 0 to 30 group and 31 to 60 group by the total accounts receivable.
Net collection rate
The net collection rate is another of the key performance indicators revenue cycle management considers. It is a gauge of the amount of money collected relative to the total permitted amount. Set your sights on 90% or higher.
Formula:
Net collection rate = (Total payments received / Total allowed amount) * 100%
Charge lag
The charge lag is also an indication of cash flow concerns. It indicates the risk of charging delays after medical treatment is provided to the patient. You likely want the charge lag to be as low or little as possible to minimize delays. Aim for 24 to 48 hours.
Formula:
Charge lag = Date of charges billed – Date of service
Bad debt rate
Reducing your bad debt rate is an ongoing objective. This particular formula calculates the proportion of receivables that are past due and considered uncollectible for any reason. Lower is always beneficial here, with 2% to 3% expected.
Formula:
Bad debt rate = (Total write-offs / Total accounts receivable) * 100%
Cost to collect
There is a cost to collecting your debts, and the cost to collect figure represents this. Specifically, it determines how much money you are spending to get paid for the services that are provided. You certainly want to spend the least amount possible to increase profit margins. Intend to achieve between 2% to 4%.
Formula:
Cost to Collect = Total costs / Total payment collected
Per-patient visit revenue
Another valuable revenue cycle management key performance indicator focuses on what you earn from an average patient visit. The per-patient visit revenue is the average earnings from each patient visit, or what you can expect to earn for each appointment. This metric varies widely across different medical specialties and practice types.
Formula:
Revenue per patient = Total revenue generated per patient visit / Total number of patients
