Key Indicators

Knowing whether your practice is doing well financially is important for the successful running of any practice. Many practices flounder and go bankrupt because they were not monitored properly, leading to their financial ruin.

There are some key indicators which would guide us to make major course corrections where necessary, to bring the practice back on track. Monitoring these key indicators on a regular basis, will ensure that your practice remains financially healthy and continues to run smoothly.

Visits :
The number of Patient visits per month is a straightforward indicator, that is directly proportional to the monthly revenue.

New Patients :
Practices need to ensure that the percentage of New Patients to the total monthly visits is on the increase or steady, on a monthly basis, this would ensure that Old Patients dropping out are compensated by the New Patients, otherwise we would see a drop in the monthly revenue of the practice. When we see the percentage of New Patients decreasing on a monthly basis, this should serve as a warning for us to make course corrections in our practice.

Payor Mix :
An analysis of the Payorwise monthly collections will help us to identify which Payors contribute the most to the revenue of the practice and which payors will significantly impact the practice when their reimbursements change.

Days in AR :
Practices need to know how many days it takes, for them to collect one days charges. The days in AR reflect how quickly and efficiently the practice is able to work the AR and get paid. Higher the Days in AR could be due to a whole host of problems such as Charge / Demographic entry errors, Coding errors,  delayed claim submission, not working the clearing house reports, improper handling of denials and poor AR management. Practices should aim to keep the days in AR under 40.

AR aging :
The AR bucketwise aging is an indicator of how the AR is distributed across different buckets. We can have upto 70% AR (70% of Average monthly charges) in the 0-30 day bucket, upto 15% AR in 30-60 day bucket, upto 10% AR in the 60-90 day bucket, upto 5% AR in the 90-120 day bucket and upto 25% AR in the 120+ days bucket. High AR in the 0-30 day bucket could be due to Charge entry errors, Demographic entry errors, Coding errors or delays in claim submission, high AR in the later buckets could point to improper denial / AR management.

Gross Collection Rate :
The ratio of Actual Collections to Total Charges for a month would be a good indicator of how well we are collecting against the total charges billed. But this ratio needs to be reviewed based on your contractual adjustments. So if you are overbilling your allowed amount by 180 % then a Gross Collection Ratio of 45-50 % is fine.

Net Collection Rate :
The ratio of Actual Collections to Net Charges (Total Charges Less Adjustments) for a month would be a more accurate indicator, than the Gross Collection Rate, of how well the practice is collecting its receivables, since this ratio measures Actual Collections against Actual Collectables, practices should aim for a ratio of 95% or higher.