The biggest goal for your medical practice is providing the best care to your young patients. However, you can’t afford to let the business operation side of your practice slide, or you’ll soon be out of business. While offering the best care for patients should be your first goal, it’s also essential to keep an eye on how well your practice is performing financially. How efficiently is your practice running? Looking at Key Performance Indicators (KPIs) monthly, quarterly, and yearly can help you see trends in how well your practice is meeting different business and financial goals.
KPI #1 – The Cost Per Encounter
Each time a patient comes into your office, it costs your practice money. However, it should be bringing you in more money than it costs. If it’s costing you more to see patients than you’re bringing in, there’s a big problem. This is why it’s important to know the average cost per encounter as well as the average charges per visit (calculate the cost per encounter by dividing your total operating expenses for a month by the number of office encounters).
If you find that your charges are on the low side, then practice administrators, physicians, and office managers may want to work together to reevaluate the practice’s fee schedule. You may also need to look through practice-related costs to find out where you can make cuts that will lower your cost per encounter.
KPI #2 – Days Claims Spend in Accounts Receivable
The number of days a claim spends in accounts receivable (A/R) will show your medical practice how efficient your revenue cycle is. You can break this KPI down further by looking at the total payer A/R and the total patient A/R. If you have a lot of patients with outstanding accounts and high balances, or if certain insurance companies aren’t paying claims, your practice could be in financial trouble.
What can you do to remedy the situation? If you have cash-only patients, consider asking patients for payment up-front. For insurance companies that aren’t paying claims or taking a substantial amount of time to pay, follow up to figure out why this is happening so adjustments can be made to reduce the number of days claims spend in A/R.
KPI #3 – Total Revenue for the Practice
Changes in the healthcare landscape have led to an increase in patient payment responsibility, so it’s essential for your medical practice to protect your revenue. One of the ways that you can do so is to keep track of your total practice revenue – the grand total of money that you have coming in every month. Break this down into both insurance revenue and patient revenue.
Collecting payments, especially from your patients, can be complicated if you don’t have the correct systems in place. By carefully tracking your revenue each month, quarter, and year, you can get a better look at how well you’re doing in this area. And if your total revenue is not where it needs to be, you can make adjustments throughout your practice to increase revenue.
KPI #4 – Number of New Patients
One of the challenges medical practice owners face is how to attract new patients. For Ex in a pediatric office their patients “age out” of their practice once they turn 18 years old. This means that your practice needs to have a steady stream of new patients coming into your office to replace the patients that you are losing. Ideally, you’ll want to focus on bringing in more newborn patients so you have them for the next 18 years. Track the number of new patients you’re bringing in. Is it equal to or greater than the number of patients you’re losing? If not, then you need to make moves to boost patient acquisition to ensure the long-term success of your practice.
KPI #5 – No-Show and Missed Appointment Rates
Just four no-shows or cancellations each day could cost your practice as much as $150,000 in a year, which is a huge hit to your practice revenue. This means that your medical practice should spend some time looking at no-show and missed appointment rates, so you avoid these massive losses. To figure out your no-show rate, divide the number of appointments missed by the number of patients that were scheduled. Some medical scheduling systems may also provide this data for you.
Automated reminders are one of the best ways to reduce your no-shows. Reminders the day before an appointment and text reminders a couple of hours before an appointment can help. Engaging patients in the scheduling process can help, too. An automated reminder system with a good patient reminder script can lower your no-show rate significantly, making it worth the investment.
KPI #6 – Claim Denial Rate
Preventing claim denials is critical for smooth revenue cycle management for your medical practice. If claims are being denied, it’s costing your office money and delaying payments. Claims may be rejected for a variety of reasons. Care might have been provided outside of network, patient eligibility may not have been checked, or a procedure may not have been coded correctly.
You can also take a look at the percentage of claims that are dealt with on the first pass, working to keep this percentage above 95%. If you have a high rate of denials, you’ll need to address your practice workflow, figure out why denials are occurring, and work on ensuring that rejections and denials are dealt with promptly and effectively.
With a good set of KPIs in place, your medical practice can keep an eye on revenue cycle management, quickly making adjustments to enjoy improved results. If you need help reaching your financial goals, M-Scribe can help. We’re experts in medical billing and coding, and we can help you ensure that your claims are handled quickly and accurately to improve revenue for your medical practice. Learn more about how we can help you track KPIs, improve billing and coding procedures, and boost profits by visiting M-Scribe today.