Keeping up with the day-to-day operations of your medical practice is enough to keep you busy, but you can’t fail to keep track of your practice’s financial performance. It’s not only important to monitor your financial performance, but you must also discover where you’re falling short and how you can boost revenue.
It’s important to measure the key performance indicators (KPIs) of your practice from every angle, which allows you to figure out where you may have issues in processes that are costing your money. By observing and analyzing KPIs, it’s possible to find the problems and then take target action to fix them, boosting your medical practice revenue.
What are KPIs?
Key performance indicators (KPIs) are actionable data your practice can use to stay on track. It’s a quantifiable measure you can use to determine how well you’re meeting your goals. They’re critical for practices of any size, and they should be seen as important guideposts that can help you set goals, develop business strategies, and improve your financial results. Remember, KPIs aren’t just raw data. A KPI must provide you with information that you’re able to turn into an actionable strategy for doing better.
Here’s a closer look at some critical KPIs to track and how you can leverage them to increase practice revenue.
KPI #1 – Denials Due to Lack of Authorization
Take a look at your denial codes and find out how many denials are occurring due to lack of authorization. Payers that require authorization will deny your claim if you fail to get the prior authorization. Start finding where and why these issues are occurring and work to change the behaviors that are causing them. You may be able to use technology like iPads or patient kiosks that allow patients to check in on their own, giving staff more time to verify patient eligibility and secure any required prior authorizations. Eventually, you should be able to eliminate denials due to the absence of authorization, improving your revenue flow.
KPI #2 – Review Cancellation Rates
Another KPI to review is your practice’s cancellation rate. If you have high cancellation rates, it can result in decreased productivity. Not only do you want to know what percentage of appointments are being canceled, but you also need to know the reasons for the cancellations. Is it because the appointment wasn’t actually needed? Was it canceled by the provider? Was the patient unhappy? Be sure to keep track of the reasons for cancellations, so you’re able to see trends that are causing a decrease in productivity and revenue.
KPI #3 – Days in Accounts Receivable
The days in accounts receivable indicates how long it’s taking your practice to be paid for services. Depending on your mix of payers, you should aim for 30 days or less. If you find that it’s higher, you could have payers who are slow to pay, your practice may not be collecting patient payments upfront, or your denial rates could be high. Each additional day a claim spends in accounts receivable reduces your chances of being paid. In fact, according to Physicians Practice, when a claim has been in accounts receivable for 120 days, your chances of collecting fall to just 15%. This KPI offers a good look at how effective your front-end and back-end processes are and making changes in these processes should help you reduce the days in accounts receivable to increase your likelihood of getting paid.
KPI #4 – Percentage of Denials and First Pass Resolution Rates
Tracking your overall percentage of denials is another important KPI to track, and ideally, your denial percentage should be at less than 2%. When you have a higher denial rate, you’re using more resources to follow up on those denials, stressing staff and potentially impacting your revenue flow. If you’re unable to follow up on those denials, then profitability will suffer. Some practices have found that the first pass resolution rates are also helpful KPIs for increasing revenue. When this rate is high, then fewer resources are needed, allowing staff to focus their time on other revenue-generating tasks. Setting a goal to have a first pass resolution rate of 96% or higher boosts revenue, and if your percentage is lower, then you can begin analyzing denial reasons and finding ways to improve these numbers.
Running a practice is a challenging, complex task that’s continually changing, and identifying several KPIs to analyze and tackle can be a great way to begin working to increase practice revenue. Verifying eligibility and ensuring prior authorizations are taken care of will pay off big time across various metrics. As you start to understand your cancellation rates, you’ll be able to improve the way you use practice resources. Managing days in accounts receivable and your denial rates will also help keep the revenue flow moving, ensuring the financial health of your practice.
If you need help on your journey to boost practice revenue, M-Scribe, LLC can offer assistance. We specialize in professional medical billing and coding, and we can work together with you to improve processes, reduce denials, and increase profits. Contact M-Scribe today to learn more about the customizable solutions we have available for your practice.