HFMA Revenue Cycle KPIs: Key Metrics Healthcare Leaders Should Track

However, the care quality of the patient must be the priority for the healthcare organization. The providers, while being providing the best care to the patients, also need a financially sustainable revenue cycle to run their business at the best.

Key performance indicators, or KPIs, provide healthcare organizations with visibility into the performance of their revenue cycle process in healthcare. They can shed light on operational deficiencies, trends and facilitate informed decision-making.

The Healthcare Financial Management Association (HFMA) developed the Revenue Cycle MAP Keys to provide a set of standardized, comparable measures of revenue cycle performance.

These are the top three HFMA revenue cycle KPIs in healthcare leaders to pay attention to:

Net Days in Accounts Receivable (A/R)

Net days in A/R Indicates the speed with which the healthcare organization can turn accounts receivable into cash.

Increased days in A/R may reflect issues in any of the following:

• Claim submission

• Coding

• Billing

• Denial resolution

• Payer follow-up

• Patient collections

Tracking this KPI can show how well the medical revenue cycle processes are performing and may be useful for revenue cycle teams to spot where payers are lagging.

Technology is available to assist with this. A single RCM platform or RCM software healthcare solution can assist departments in keeping up with their aged accounts and aged trends, as well as creating a follow-up plan.

Percent of Net Patient Services Revenue – Cash Collection

Cash collection metrics indicate how well a healthcare organization is turning earned revenue into collected cash.

This KPI is one the indicates financial stability and the success of Medical Billing Services, payer management, and collections.

Underperformance of cash collections might indicate:

• Claim denials

• Underpayments

• Delayed payer reimbursement

• Outstanding patient balances

• Incorrect billing

Ineffective follow-up

Monitoring the flow of cash collections against other revenue cycle metrics can provide healthcare executives with a more comprehensive understanding of performance.

Cost to Collect

Cost to collect is a measure of the expense an organization incurs in collecting revenue.

Expenses associated with the revenue cycle may be attributed to staffing, contracted third-party billers, billing system support, billing-related software subscriptions, etc.

This metric helps when you are measuring the overall efficiency of Healthcare Revenue Cycle Management Services.

More expensive to collect is not necessarily indicative of poorly doing a collection rate. In addition to the collection rate, healthcare organizations should evaluate payer mix, staffing mix, technology, patient complexity and scale.

But by following this metric over time, they can know whether costs of admin are rising faster than collections.

Cost-saving opportunities could also be scrutinized by review vendors and the organization, including: RCM technology, automation, workflow redesign, outsourcing and medical billing services.

Using KPIs to Improve Revenue Cycle Performance

There is no need for a health system to set a composite of every measure all at the same time.

A better practice is to select KPIs that are relevant to the real needs of the operation, always provide data in a consistent manner, and display trends over a specified time frame.

With trustworthy benchmarks in hand, leaders can leverage the data to spot process gaps and target areas for improvement.

KPIs enable good data to be turned into useful insight. With the aid of capable teams, dependable reporting and the right technology, KPIs will help create a revenue cycle that is more stable, efficient and financially healthy.