Measuring money in your medical practice is something you should be doing on a daily basis. If you can measure the money, then you can easily get a glimpse into how well your employees are doing. As a result of measuring money, you will know how many procedures your physicians are performing, how many appointments you are scheduling, how many no-show’s there are in a week/month/year. It all comes down to measuring money. Here are some great tips for measuring money.
- Run an A/R aging report on a regular basis – This report breaks down claims based on the number of days the claims have gone unpaid. This report gives an analysis from a high level view. It generally will give your aged claim amounts in a 30/60/90/120 day summary. Ideally, your largest claim summary should appear under your 30 days or less aging group. Once claims start to age out, they will start flowing over into the other aging groups. The older the claim the more difficult it becomes to collect what is properly owed to your practice. As claims age, ask why the claims were not paid and what your staff is doing to fix them?
- Managing Denials – It is essential to track all denials received that come through from all payers. Tracking your denials helps to identify common errors to keep them from happening on future claims. Reviewing your denial and adjustment reports will also help to determine if claims are being followed up on or swept under the rug. All denials should be worked as soon as they are received. Learn from them. Remember your goal should be for clean claims, first-pass resolution.
- Collection Rate – he net collection rate is the percentage of total potential reimbursement collected out of the total allowed amount. There are varying ways to calculate your net collection rate, but the most common is (Payments-credits) / (Charges – Contractual Adjustments). Tracking the net collection rate helps measure the performance of the billing staff. The net collection rate should be above 95% otherwise collectable money is being left on the table. If the net collection rate is low, then there could be a problem with claims submitted, patient statements and/or denials management.
- Days in A/R – Days in Accounts Receivables (AR) is the average number of days it takes a practice to get paid. The lower the number the sooner claims are getting paid. Days in AR should be below the 30-40 day range. Monitoring your Days in AR will help to identify problems with a certain payer before it becomes unmanageable.
- Self Pay Patients -Of your total AR, how much of that is money owed by your patients? What are you doing to collect that money? Sending statements on a regular basis and putting a collections process in place can help collect on money that patients owe. Your practice can also implement a credit card on file policy. With the new Health Insurance Exchanges comes larger than normal deductibles. With so many high-deductible health plans in 2014, collecting patient money is going to be more important now than ever.It is hard enough to keep up with the changing industry standards. The metrics mentioned here will remain constant moving forward. Use them to measure your practice’s revenue cycle. I talk to many practices that have no idea what is taking place with their accounts. By the time they are aware of what is happening, it is too late, and they have lost too much money. These metrics will help determine the health of your practice and help you decide which areas could use improvement. Continuously weak key performance indicators could compel your practice to revamp processes, replace staff, or outsource the revenue cycle management to help increase profitability.