We understand that as healthcare service providers, your ultimate goal is to provide value-based care to your patients. However, it is also important to streamline revenue cycle processes to generate revenue consistently. Establishing a set of KPIs help assess organizational functions and identify gaps.
Sandra Wolfskill, Director of Healthcare, Finance Policy and Revenue Cycle MAP at the Healthcare Financial Management Association (HFMA) shares, “The value that key performance indicators bring to the table is the definition of standard and what you want from it is to be something that allows it to be comparable.”
HFMA’s industry standard revenue cycle metrics are called MAP keys KPIs allow healthcare organizations and professionals to compare their processes with competitors and evaluate performance.
Here are the top HFMA revenue cycle KPIs that you may find useful.
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We understand that as healthcare service providers, your ultimate goal is to provide value-based care to your patients. However, it is also important to streamline revenue cycle processes to generate revenue consistently. Establishing a set of KPIs help assess organizational functions and identify gaps.
Sandra Wolfskill, Director of Healthcare, Finance Policy and Revenue Cycle MAP at the Healthcare Financial Management Association (HFMA) shares, “The value that key performance indicators bring to the table is the definition of standard and what you want from it is to be something that allows it to be comparable.”
HFMA’s industry standard revenue cycle metrics are called MAP keys KPIs allow healthcare organizations and professionals to compare their processes with competitors and evaluate performance.
Here are the top HFMA revenue cycle KPIs that you may find useful.
Net Days in Accounts Receivable (A/R)
Net days in A/R is a key revenue cycle metric.
According to HFMA, net days in A/R can be calculated by dividing net A/R by daily net service revenue. You should be able to find all the necessary information to calculate net days in your balance sheet and income statements. Net patient receivable in the balance sheet represents net days in A/R. It’s the combination of net credit balance, uncollectible account allowance, charity service discounts and contractual third-party allowances.
It should exclude non-patient A/R, capitation/premium revenue, revenue from 340 Drug Purchasing Program and A/R related to third-party settlements that are not patient specific. This HFMA key revenue cycle metrics also excludes state subsidy payments, county subsidy payments, ambulance service charges, retail pharmacy charges and physician/clinic charges unless recognized by Medicare.
Cash Collection as a Percentage of Net Patient Services Revenue
This HFMA revenue cycle KPI reflects your organization’s ability to encash net patient services revenue and provides a clear picture of your business’ financial health. According to HFMA, this metric can be calculated by dividing total patient service revenue (in cash) by the average of the monthly net patient service revenue. Total patient service revenue (in cash) is the amount patients pay for medical services. It should include undistributed payments, IME payments, bad debt collections and Disproportionate Share Hospital (DSH) reimbursements from Medicare.
However, you should exclude Medicaid DSH payments, safety-net, Medicare pass-through and direct graduate medical education. Also do not take any non-patient revenue such as payment to physicians and ambulance charges, into consideration.
Cost to Collect
The third HFMA revenue cycle metrics is cost to collect. This KPI will help you determine the efficiency and productivity of your revenue cycle processes.
To calculate your cost to collect, divide total revenue cycle cost by total patient service revenue (in cash). The revenue cycle cost includes salaries, fees for outsourced services and arrangements, fringe benefits, subscription costs, IT costs for storing revenue cycle data, contingency costs and bolt-on application and support staff costs.
It should not represent hard health IT expenses such as hardware and server costs, licensing fee and third-party full-time staff for system support. You should also leave out the costs of acquiring physical spaces, lease or rent amounts and scheduling fees, if your staff take care of these costs.
The best way to optimize your revenue cycle is to identify and start with one HFMA key revenue cycle metric that is important for you and then gradually expand metrics with MAP keys. Once the KPIs and data collection processes are finalized, consider comparing your performance with your competitors. The results will help you determine if you need to take any action to upgrade or improve your performance.
With over two decades of expertise, Valerion Health is driven to help healthcare organizations strengthen their financial position. We tailor solutions to help you bridge the gap between revenue cycle management and consistent revenue generation. Get in touch today!
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