The Most Important Medical Billing Metrics for Your Practice
“Good Enough” Medical Billing is Not Good Enough
Is your practice optimizing revenue collection? Or are you leaving money on the table? You likely delegate your revenue cycle management, as you should. But there is a distinction between delegating billing versus delegating oversight.
The difference between “good enough” medical billing and best-in-class is noticeable in the bottom line — tens or hundreds of thousands in revenue each year.
To keep your practice financially healthy, you can’t assume your billing team is great. You should know that they are because you know how other practices are performing.
But how can you tell if your team is doing a good job? And how do you hold them accountable?
This guide is here to help. We’ll cover:
Sandra Weitz, The Practice Building MD
The Importance of Looking at the
Right Medical Billing Metrics
Sometimes, in the world of health, it is not taken into account that measuring is managing. Taking this fact into consideration is essential for proper clinical management.
The rapid evolution that the world of health has undergone and is undergoing in all its fields becomes truly amazing and relevant, especially in terms of measurement.
It is important to remember that, to manage a clinic properly, it is essential to optimize income and expenses to obtain good profitability.
Using a good software to manage your practice, is the necessary complement for success.
Your Two Most Important Metrics
To gauge the health of your practice, start with two key metrics: your net collections rate and high-risk account receivable.
Net Collections Rate
Aim for a 95% net collections rate or higher.
High-Risk Accounts Receivable
Aim for no more than 8% AR outstanding after 90 days
Aim for no more than 5% after 120 days
If your practice is hitting these targets, congratulations! Keep an eye on them and look for ways to optimize even further. Not quite there? Then you need KPIs that can help you dig deeper and spot ways to improve.
Good Enough, or Best-in-Class? Evaluate Your Billing Support with These KPIs
Tracking key performance indicators (KPIs) for your billing team helps you understand the financial health of your practice. It’s the foundation for your revenue cycle improvements.
KPIs also serve as your early warning system: when something looks off, you can solve problems with confidence. Use KPIs to:
Here are the go-to KPIs for each stage in the revenue cycle.
KPI's for Creating Claims
Aim for 48 hours.
What % of patients were charged for some or all of their visits upfront?
A good benchmark is 90% Set a target for your practice
What % of patients had their eligibility confirmed before their visit?
100% of patients should have their eligibility confirmed before visiting
KPI's for Managing Claims
What % of claims were accepted by the payer but denied for a cause?
Aim for 5%
Look for patterns and insights. Aim for 0 denials uninvestigated.
Missed Filing Deadlines
If staff is missing due dates, why? Are you understaffed? Is something else going on?
Aim for 0. There is never a good reason for this to happen.
KPI's for Collections
Set a target for your practice.
Net Collections Rate
Aim for > 95%
Aim for < 8% over 90 days Aim for < 5% over 120 days
Digging Deeper: Using KPIs To Spot Red Flags and Opportunities.
Not hitting a KPI for a brief period of time is not the end of the world. It’s an opportunity to learn. The WHY behind the number is much more valuable information than the number itself for growing practices. But, if you’re consistently missing a benchmark, or multiple benchmarks, that is indicative of a system issue and your practice is likely leaving money on the table.
By closely tracking KPIs over time, your team gets on the same page about opportunities for growth. Here are a few scenarios.
You find out that the real problem is different: authorizations for common procedures are getting delayed. Together, you identify ways for clinicians and the billing team to streamline the authorization process.
Your revenue cycle manager has been tracking back-end edits from the clearinghouse. They noticed that your rejection rate is up. After some digging, they found that one procedure is consistently getting flagged for documentation.
The revenue cycle manager explains the issue at a weekly check-in. You decide to document medical necessity more thoroughly and submit the extra documentation upfront with the claim. (For the record, this is our go-to approach!)
Evaluating and Empowering Excellent Billing Talent
Finding the Best Talent for Your Practice
Tracking and hitting metrics is just the first step — look for team members who can be thought partners. Excellent billing partners help you with big-picture business questions facing your practice. They analyze how payer policies will impact return on investment for new products, for example. Hire revenue cycle leaders with a strategic business mindset to maximize your reimbursements and ensure a healthy revenue process.
Sandra Weitz, The Practice Building MD
Whether you’re hiring in-house or working with a billing partner, look for deep experience and certifications in your specialty and a passion for your practice. Which functions to keep in-house or outsource will depend on your practice. Either way, make your talent decisions based on talent.
While outsourcing may have a higher sticker price, there are plenty of hidden costs that come with building an in-house team. When you factor in benefits, training, and turnover, the true cost of hiring and retaining employees, the true cost of in-house and external staffing may be more similar than you think.
Costs are only half of the equation though. You should also factor in the potential to grow your revenue by hiring great talent. By increasing your revenue over time, finding truly best-in-class support—even at a slight premium—can be a worthwhile investment. At the end of the day, you shouldn’t be making decisions about your billing team based on projected cost — it should always be based on projected net income.