Revenue Cycle Management Blog | GroupOne Health Source

Is Your Practice Financially Healthy?

Written by Kaitlyn Houseman | October 1, 2014

As a medical provider your goal is to improve the health of patients. As a care provider you know how important it is to be proactive to prevent healthcare problems down the road. You are responsible for measuring and tracking their success with their healthcare.

You can also apply these methods to your revenue cycle at your practice. By being proactive in measuring key metrics and tracking the changes over time you can prevent a loss of revenue while identifying areas that need improvement.

Yes, there are many ways to improve your revenue cycle. However, these 4 metrics give providers and medical practice managers insight into claims management and patient payments. These 4 medical practice key metrics will help you measure your practice's financial health.

Days in Accounts Receivables

Accounts receivable (A/R) is a measure of how long it typically takes for a service to be paid by the responsible parties.  The calculation features the outstanding money based on the practice’s average daily charge. 

Therefore, volume is accounted for and you get the insight into how well your billing department is collecting on accounts.

Percentage of A/R Greater than 120 Days

We covered A/R earlier but what about the A/R over 120 days?  The percentage of the A/R over 120 days is a measure of the practice’s ability to get paid in a timely manner. 

It is a percentage that represents the amount of receivables older than 120 days of the total current receivables.  It isn’t the only aging category to observe, but if choosing an aging indicator to evaluate, the percentage of A/R greater than 120 days is an excellent choice.


Adjusted Collection Rate

The adjusted collection rate (also known as the net collection rate) is a measure of a practice’s effectiveness in collecting all legitimate reimbursement.  This rate shows the percentage achieved out of the reimbursement allowed based on the practice’s contractual obligations.

This figure reveals how much revenue is lost due to factors such as uncollectible bad debt, untimely filing and other non-contractual adjustments.


Denial Rate

The denial rate is the percentage of claims denied by payers.  A low number is desired as it represents a practice’s cash flow and the staff needed to maintain that cash flow.  Clean, paid claims do not require the attention that denied claims do by staff members.

Automating processes can lower the ratio dramatically.  Real-time patient eligibility tools and online claims editing tools assist practices in stream lining their processes and ultimately reduce denials.