7 indicators to optimize your practice's revenue

January 25, 2016

Within many physicians practices, there is a relatively untapped resource for optimizing revenue-business operations data. There has never been a better time to dive into this type of data-it can show both areas of strength and opportunities for improvement.

 

 

Within many physicians practices, there is a relatively untapped resource for optimizing revenue-business operations data. There has never been a better time to dive into this type of data-it can show both areas of strength and opportunities for improvement. 

As Practices move to value-based care, fully understanding and responding to key business data will be essential to realizing success. 

The first step is identifying the measures that most clearly demonstrate performance. These metrics should show whether a practice is getting paid in a timely fashion for all the care and services it provides. The following indicators are worth watching from a business perspective...

 

Accounts receivable

This measure reveals how quickly a practice turns receivables into cash. Ideally, organizations should be keeping this metric under 30 days to yield nimble cash flow. 

 

 

Age of receivables

This number shows how long a receivable has been outstanding. The longer a claim remains unpaid, the less likely it will be collectible. Organizations should examine those receivables past due over 90 days and determine whether there are preventable issues that can be addressed to shorten the payment time frame and prevent similar problems in the future. 

 

 

Average daily charges

Practices should track this metric over time to identify any patterns which could reveal productivity issues or patient volume fluctuations. For example, by monitoring this measure a practice can pinpoint staff members who are underperforming and provide further training. Similarly, this measure can highlight seasonal patient volume variations that may represent opportunities to temporarily augment staff to better manage cash flow. 

 

 

Collections percentage 

This statistic compares the payments a practice receives with what it is supposed to receive for the services it provides. Using this measure shows how well the practice optimizes payer contracts and collects balances due from patients.

 

 

Clean claim rate 

Using technology, this number should be high (near 100%) as claims scrubbers and other tools identify “dirty claims” prior to claims submission, allowing the organization to fix them before sending the claim to the payer. A decline may indicate the need to change payment rules and algorithms, improve workflows or train staff. 

 

 

Patient collections 

With the advent of high- deductible health plans, patients are taking on greater payment responsibility. Whereas providers used to be haphazard in collecting copayments, deductibles, and coinsurance, there is increasing pressure to fine-tune this process  to prevent large revenue shortfalls. Practices that watch patient collection rates can make sure their front line staff are asking for and collecting payments consistently and reliably. Outliers in this area can point to the need for staff training, patient education and standardized processes for soliciting payment. 

 

 

Denials 

Practices should keep a close eye on rejections and denials, because they can highlight a wide array of problems, ranging from staff errors to payer rule changes to lack of eligibly verification. Practices that watch for denial trends can catch systemic issues and prevent future rejections.