Revenue Cycle Benchmarking: How to Assess Your Performance

As the new year approaches, healthcare organizations have an ideal opportunity to evaluate their revenue cycle management (RCM) strategies. Effective RCM not only ensures financial stability but also supports the delivery of high-quality patient care. Benchmarking your performance using key performance indicators (KPIs) and metrics can provide actionable insights to enhance efficiency, reduce costs, and improve outcomes.

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Why Benchmarking Matters

Benchmarking allows organizations to compare their performance against industry standards or internal goals. It highlights areas of success, identifies inefficiencies, and establishes a roadmap for improvement. A well-structured benchmarking process helps healthcare providers align their operations with best practices and adapt to evolving regulatory and financial landscapes.

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Key Metrics to Benchmark in RCM

Every healthcare organization is unique, and the benchmarks for success can vary depending on factors such as practice size, specialty, patient services, and payer mix. When evaluating these goals, consider the specific standards and operational needs of your organization to identify what aligns best with your performance objectives. Below are essential KPIs to assess and improve your revenue cycle performance:

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1. Clean Claim Rate (CCR):

• Goal: Aim for a clean claim rate that aligns with industry best practices, typically in the higher range.
• Tip: Implement robust claim scrubbing tools to ensure accuracy and completeness before submission. Regular staff training on coding and documentation standards can further boost CCR.

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2. Days in Accounts Receivable (A/R):

• Goal: Strive to maintain days in accounts receivable within an optimal range, often considered to be below industry averages.
• Tip: Identify and address bottlenecks in claim submission, payer response times, or patient collections. Automate follow-ups to streamline the process.

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3. Net Collection Rate (NCR):

• Goal: Work towards a strong net collection rate that reflects efficient revenue collection.
• Tip: Monitor contract adherence with payers and address underpayments or denials promptly. Utilize analytics to uncover patterns in missed collections.

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4. Denial Rate:

• Goal: Aim to reduce your denial rate to a minimal level in line with industry benchmarks.
• Tip: Conduct root-cause analyses of denials and establish proactive measures, such as pre-authorization checks and upfront patient eligibility verification.

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5. Cost to Collect:

• Goal: Focus on minimizing the cost to collect while ensuring operational efficiency.
• Tip: Leverage automation and machine learning solutions to optimize labor-intensive tasks like billing, claims management, and collections.

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6. Patient Payment Collection Rate:

• Goal: Aim to collect a significant portion of patient balances promptly to ensure healthy cash flow.
• Tip: Provide clear, transparent billing statements and offer multiple payment methods to improve patient satisfaction and prompt payment.

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Steps to Benchmark Effectively

1. Define Your Goals: Establish clear objectives for your benchmarking initiative. Are you aiming to improve cash flow, reduce denials, or enhance patient satisfaction?
2. Collect Data: Gather relevant data from your financial and operational systems. Ensure data accuracy and consistency for reliable benchmarking.
3. Compare Against Benchmarks: Use industry standards, such as those provided by HFMA, MGMA, and others, as well as historical internal data to assess performance.
4. Identify Gaps: Analyze discrepancies between your performance and benchmarks. Determine root causes for underperformance in specific areas.
5. Develop an Improvement Plan: Create a strategic plan to address gaps. Assign accountability, set timelines, and prioritize initiatives based on their potential impact.

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Leveraging Technology for Better Benchmarking

Artificial intelligence (AI) and automation are transforming how healthcare organizations manage their revenue cycles. Jorie AI’s RCM solutions, for example, utilize advanced analytics to monitor KPIs, identify trends, and recommend actions for improvement. These tools enable organizations to act proactively, rather than reactively, to financial challenges.

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Looking Ahead

The beginning of a new year is the perfect time to reset and refocus. By evaluating your revenue cycle through effective benchmarking, you can strengthen your financial health, enhance patient care, and set your organization up for long-term success.

At Jorie AI, we’re committed to helping healthcare organizations achieve operational excellence through tailored RCM solutions. Learn more about how we can support your benchmarking journey at www.jorie.ai.