Revenue Cycle Key Performance Indicators Part 4

To conclude our discussion on Key Performance Indicators (KPIs) crucial for gauging the financial well-being of your medical billing revenue cycle, we'll focus on how the collection rate influences your revenue cycle.

The collection rate provides insights into the effectiveness of a healthcare practice's efforts in collecting payments for services rendered. It measures the portion of billed charges that are actually collected, giving a clear picture of how successful the practice is in turning services into revenue. A low or under performing collection rate suggests the practice is facing challenges in receiving payment, leading to potential revenue leakage.

How to calculate collection rate

Collection Rate = (Total Amount Collected / Total Amount Billed) x 100

Here are a few tips to improve the collection rate:

  • Request Patient Payment Upfront
    Based on high deductibles and total out-of-pocket costs, it is becoming more common to ask for payment of patient deductible, partial or in full – before or at the time that scheduled medical services are provided.

  • Train Staff on Effective Billing and Collection Techniques
    Educate your billing and front desk staff on effective billing and collection strategies. They should be proficient in explaining billing processes, insurance coverage and payment options to patients. Encourage them to be proactive in addressing patient queries, resolving billing disputes and following up on outstanding balances.

  • Implement Clear and Transparent Patient Billing Policies
    Plainly communicate your billing policies to patients, including details about copayments, deductibles, and any other financial responsibilities. Make sure your billing statements are easy to understand and provide clear instructions on how to make payments.

  • Work Your Claims
    Implement a systematic process for monitoring claim status, following up on outstanding claims and resubmitting denied or underpaid claims in a timely manner.

  • Offer Flexible Payment Options
    Provide online payment portals, payment plans and electronic fund transfer options to accommodate different patient preferences. By offering convenient payment methods, you can improve the likelihood of prompt payments.

Regularly monitoring and analyzing the collection rate will help you identify areas of improvement and implement targeted strategies to help increase your practice’s revenue.

Previous Key Performance Indicators (KPIs) we’ve discussed include part 1 in our series, monitoring average days in accounts receivable, and part 2 addressing clean claim submission rate and part 3 denial rate.

David Swiercz