The Importance of Measurement and Trends in Revenue Cycle
There are an exhausting number of Key Performance Indicators (KPIs) that are widely used in the healthcare industry to monitor revenue cycle performance. These KPIs measure things like preregistration rates, insurance verification rates, days in accounts receivable, accounts discharged but not final billed, and a host of other specific measures. The idea is to measure all areas of the revenue cycle from beginning to end. Decision makers can gain valuable insight into the efficiency of each part of their organization’s revenue cycle, but proper perspective is a necessity when evaluating KPI outcomes.
The key to properly evaluating KPIs is observing trends within the data. A 13-month trending report is ideal in most cases. Viewing data in this form will allow appraisal of seasonal shifts, along with giving a look at the same month from the prior year. The utilization of trending data is common in analyzing financial statements, giving management a look at more complete look at financial performance. When drilling down into revenue cycle performance, trend reports provide the same ability to compare and analyze the detailed aspects of your registration, medical records, and billing departments.
For instance, let’s say that your hospital’s A/R Days for the month of November are at 51 days. What exactly does this mean? Based on industry benchmarks, this could mean that your organization on right on the edge between average and above average for this single indicator. Now, we look back and see that a 13-month A/R days trending report reveals that A/R Days were at 73 in November of 2021. That would represent significant progress over 13 months!
Or, the trending report could show the opposite, with a substantial increase in A/R days. While the single-month measure isn’t completely out of the suggested benchmark range, there should be concern over the KPI trending in the wrong direction.
These trends are the things that should drive decisions. Often, decisions are made by comparing KPI performance to benchmarks rather than looking internally at whether or not there is a progression (or regression) taking place within that part of the organization.
Value to Departments
KPI trends within departments can equip managers with the information that they need in order to determine if their employees are performing effectively. Appropriate workloads, educational opportunities, and even ineffective employees can be identified by looking into trends specific to each department. Some of these indicators may need to be assessed by looking at day-to-day trends over a few weeks or months, as long as the timeframe is long enough to identify trends. In addition to establishing opportunities for improvement, this data can also be used positively to recognize high performers. The key is that data produces an objective measure that can be helpful in creating accountability.
Value to Administration
Administratively, KPI trends can be used in predictive analytics and forecasting in order to provide reasonable expectations for future organizational performance. Determining productivity based on revenue per FTE, identifying the percentage collected of net revenue, evaluating operating expenses per adjusted discharge – monitoring trends in these areas can be a game-changer for CEOs and CFOs. They can also assist in helping owners and boards to clearly understand the dynamics involved in the daily management of your healthcare facility.
There is another conversation to be had in regards to the most impactful KPIs for your organization. Regardless of the indicators that you are currently evaluating, it is vital that you are measuring something. Far too often, healthcare organizations do not have uniform reporting processes in place. If you aren’t measuring where you are and where you’ve been, how do you expect to know where you’re going?
