Revenue Intelligence to Keep Your Practice Vital Signs In-Check
These days, we are bombarded with data. Everything we do is tracked, analyzed, and run through a series of algorithms that anticipate our needs and predict our desires with eerie accuracy. Data may, in fact, be king. But data without insights is just noise.
When it comes to running our business, “numbers don’t lie.” But what do they really mean? What is the information that matters most? Consolidating business data and translating it into meaningful, digestible information is the core of business intelligence. Using that information to obtain a greater perspective on key operational and financial indicators and uncover key insights is where that data becomes extremely powerful, particularly when it can impact the revenue and profitability of your practice.
So, how can you use revenue intelligence to elevate your business decisions?
Understand the metrics that matter to the financial health of your practice is a good place to start. Some key things to consider include:
- Pinpointing and addressing the most common denial issues, write-offs, and collection challenges will uncover areas that will allow you to boost your financial performance.
- Analyzing your Accounts Receivable data and identifying the things that impact it the most can reduce delays and increase payment velocity.
- Assessing performance against industry standards or even within your practice provides you with insights that help you gain the edge.
- Identifying and addressing gaps in care can drive better outcomes for your patient and avenues for revenue growth for your practice.
A data-driven approach helps physician practices extend beyond billing by infusing revenue intelligence necessary to ensure revenue readiness and drive revenue enhancement.
A healthy practice requires understanding your key financial Vital Signs
Net Collection Rates
Net Collection Rate (NCR) is an excellent measure of the financial health and efficiency of the practice. Net collection rate (Payments/Charges less Contractual Adjustments) is a key performance indicator (KPI) that helps assess how effectively the practice is managing its revenue cycle and collecting payments for the services it provides. Closely monitoring it against historical performance and peer performance helps identify bottlenecks and allows the practice to take corrective actions and optimize its revenue generation process.
Understanding performance in this area allows the practice to set realistic targets, predict incoming revenue, managing expenses more effectively, and ensuring cash flow to cover operational expenses. A practice can impact its Net Collection Rate through several initiatives including capturing correct demographic information, ensuring proper eligibility verification and pre-authorization, having correct fee schedules, submitting “clean claims” that properly accounts for all charges, minimizing denials, working Accounts Receivables (AR) in a timely manner and by ensuring only the appropriate contractual discounts are applied.
Days in AR
Days in AR (DAR) measures the average length of time between the date a charge is billed and the date when the payment is received. Days in AR (DAR) is calculated by dividing the total AR by the average daily charges. Days in AR is a demonstration of the speed and efficiency of revenue realization. It is an important KPI that helps measure how a practice is managing its accounts receivable, which are the amounts owed to the practice by patients and insurance companies for services rendered. A low DAR improves cash flow while a high DAR indicates that the practice needs to improve its claims process, denial reduction and collections strategy.
Understanding trends highlights areas for improvement and long-term viability. Ways to impact DAR include understanding payor behavior and denial trends so that claims are paid more quickly.
Understanding the gap or the lag between the time of an encounter and when the bill is dropped is key to accelerating payment. Charge Lag refers to the time it takes for services provided by healthcare professionals to be documented, coded, billed, and eventually reimbursed by payers, such as insurance companies or government programs. A high Charge Lag can delay the recognition of revenue and cash flow and can result in more complicated AR follow-up and higher costs to collect and may also signal problems with timely filing denials.
By analyzing the reasons behind charge lag, the practice can implement strategies to streamline charge capture, coding, billing, and collections workflows, leading to faster reimbursement and overall financial stability, while also enhancing the patient experience and streamlining administrative processes.
Initial Denial Rate
Initial denial rates refer to the percentage of claims submitted by the practice group that are initially denied by insurance payers. By monitoring and analyzing initial denial rates, the group can identify trends and common reasons for denials. This information can help them improve their claims submission process, leading to faster reimbursement and improved cash flow.
High initial denial rates can indicate inefficiencies in the billing and coding processes. Understanding the reasons behind denials can help the practice group identify areas that need improvement and could include training staff on proper coding and documentation, ensuring accurate patient information, and adhering to payer-specific requirements. Dealing with denied claims can lead to increased administrative costs, including time spent appealing denials, resubmitting claims, and communicating with payers. Tracking Initial Denial Rates by payer/plan can shine a light on issues specific to certain plans. By reducing initial denial rates, the practice group can lower administrative costs and allocate resources more effectively.
By addressing the root causes of denials, implementing process improvements, and fostering positive relationships with payers, the group can enhance its financial stability, operational efficiency, and patient care quality.
Patient Balance Collection Rate
Patient balances continue to rise due to high-deductible plans and patients taking on more responsibility for payment. Patient collection rates refer to the percentage of payments owed by patients that are actually collected by the practice. Monitoring and understanding collection rates can help the practice identify inefficiencies in its billing and collections processes. This insight enables the practice to make necessary adjustments and streamline operations, ultimately improving the overall efficiency of the practice.
To optimize patient collection rates, a practice can implement effective billing processes, provide clear and transparent communication about costs to patients, offer various payment options, proactively collect a portion of the balance at the front desk, and even consider working with revenue cycle management experts if necessary. Regular monitoring of collection rates and analysis of trends can help the practice adjust its strategies and tactics to achieve better financial outcomes. By improving collection rates, the practice can redirect resources towards enhancing patient experiences and improving healthcare services.
Every day, your providers are monitoring the vital signs of your patients. Who is monitoring the financial vital signs of your practice? Let our RCM experts do a quick check of your Practice Vital Signs for you to see how you measure up so you can get back to doing what you do best, with the peace of mind that you are getting properly paid for it.
For a free Vitals Check, click here and answer a few questions. We will show you how you compare to industry standards and highlight a few ways you can improve performance.