Nearly every RCM department uses key performance indicators (KPIs). Only a handful of teams are leveraging them to their full potential.
No matter the size and complexity of your organization, KPIs are vital to your success. But you can’t simply evaluate them once (or a few times) and forget them — you need to consistently review them and refine your strategy accordingly. In other words, you should listen to what your KPIs are telling you and respond by adapting your RCM processes.
To help drive that adaptation, we’ve compiled the most impactful KPIs our team at Revco leverages to propel our clients to unprecedented financial health.
KPIs for Collecting Payment from Patients
Patient payment KPIs aren’t just crucial for improving cash flow — they also enhance the patient’s financial experience, strengthening your brand’s reputation. Here are some of the key metrics our team tracks in our Early Out and Medical Debt Collection services.
Abandonment Rate
- Definition: Abandonment Rate measures how often a caller hangs up or disconnects before their call is answered.
- Formula: Abandonment Rate = (Number of Abandoned Calls ÷ Total Incoming Calls) x 100
- Benchmark: Below 5%
Average Handle Time
- Definition: Average Handle Time measures the typical duration of a patient’s interaction with a collection agent.
- Formula: Average Handle Time = (Total call time + Total hold time + Follow up time) ÷ Number of calls
- Benchmark: 6 minutes, but this will vary based on your organization’s size, complexity, and population mix
Average Payment Per Call
- Definition: Average Payment Per Call measures the amount of payment you receive from patients on a call-by-call basis.
- Formula: Average Payment Per Call = Payments collected from calls in a period ÷ Number of calls in that period
- Benchmark: As high as possible
Average Wait Time
- Definition: Average Wait Time measures how long a patient has to wait before receiving assistance.
- Formula: Average Wait Time = Total wait time ÷ Number of customers served
- Benchmark: 20 seconds or less
Liquidation Rate
- Definition: Liquidation Rate measures the amount your collection team has recovered compared to the total dollar value of new accounts in collections during a period.
- Formula: Liquidation Rate = (Gross recoveries for a period ÷ Total placements in that period) x 100
- Benchmark: As high as possible
Point-of-Service (POS) Collection Rate
- Definition: POS Collection Rate measures the percentage of patient payments you collect at the time of service.
- Formula: POS Collection Rate = (Total POS payments ÷ Total charges) x 100
- Benchmark: 35% or more
Right Party Contact (RPC) Rate
- Definition: RPC Rate measures the percentage of calls that reach the intended recipient.
- Formula: Right Party Contact Rate = (Number of calls that reach the right recipient ÷ Total number of calls) x 100
- Benchmark: As high as possible
KPIs for Collecting Payment from Payers
Claim denials are on the rise, and reworking denied claims saps precious time and money from healthcare organizations. These RCM metrics will get to the heart of your interactions with payers, helping you to preserve more resources for community care.
Claim Denial Rate
- Definition: Claim Denial Rate measures the percentage of claims denied by payers in a period.
- Formula: Claim Denial Rate = (Number of denied claims in a period ÷ Total number of claims in that period) x 100
- Benchmark: 8% or less
Claim Rejection Rate
- Definition: Claim Rejection Rate measures the percentage of claims rejected by payers in a period.
- Formula: Claim Rejection Rate = (Number of rejected claims in a period ÷ Total number of claims in that period) x 100
- Benchmark: 10% or less
Clean Claims Rate
- Definition: Clean Claims Rate measures the percentage of claims accepted by payers without edits.
- Formula: Clean Claims Rate = (Number of claims accepted without edits ÷ Total number of claims submitted) x 100
- Benchmark: 95% or higher
Other Crucial Healthcare Revenue Cycle KPIs
Because patients and payers comprise the bulk of your organization’s revenue stream, you must leverage metrics that consider both. These are the core metrics our team at Revco uses to propel our partners toward sustainable growth, both in revenue and reputation.
Accounts Receivable (A/R) > 90
- Definition: A/R > 90 measures the percentage of A/R that have been unpaid for 90 days or more.
- Formula: A/R (over 90) = (Total A/R over 90 days ÷ Total A/R outstanding) x 100
- Benchmark: 10% or less
Aged Accounts Receivable Rate
- Definition: Aged A/R Rate measures the percentage of your A/R that falls in a specific “aging bucket” (0-30 days, 31-60 days, etc.).
- Formula: Aged A/R (x days old) = (Total A/R over x days old ÷ Total A/R outstanding ) x 100
- Benchmark: As low as possible, especially for older “buckets”
Average Days in A/R
- Definition: Average Days in A/R measures how much time passes before your organization receives payment.
- Formula: Average Days in A/R = (Total A/R – Credit balance) ÷ Average daily charges
- Benchmark: 50 days or less (ideally, 30 days)
Bad Debt Rate
- Definition: Bad Debt Rate measures the percentage of A/R that your organization doesn’t collect.
- Formula: Bad Debt Rate = (Total amount of bad debt ÷ Total amount of gross charges) x 100
- Benchmark: Less than 3% of net patient revenue
Cost to Collect
- Definition: Cost to Collect measures how much your organization spends to receive payments from patients and payers.
- Formula: Cost to Collect = Total cost of collecting payments ÷ Total amount of payments collected
- Benchmark: Less than 5% of net patient revenue
Charge Lag
- Definition: Charge Lag measures the time delay between your organization providing a service and the charge being entered.
- Formula: Charge Lag = Difference between date of service and date of charge
- Benchmark: Ideally, 24 hours or less
Gross Collection Rate (GCR)
- Definition: Gross Collection Rate measures the percentage of payment you receive compared to your total charges.
- Formula: Gross Collection Rate = (Total payments in a period ÷ Total charges in that period) x 100
- Benchmark: 95% or higher
Net Collection Rate (NCR)
- Definition: Net Collection Rate measures the percentage of payment you receive compared to what payers contractually owe you.
- Formula: Net Collection Rate = [Total payments in a period ÷ (Total charges in that period – Contractual adjustments)] x 100
- Benchmark: 95% or higher
Resolve Rate
- Definition: Resolve Rate measures how quickly you receive payment for claims during a given period.
- Formula: Resolve Rate = (Total number of claims paid in a period ÷ Total number of claims in that period) x 100
- Benchmark: 95% or higher
performance-driving RCM insights?
Expert Tips for Implementing KPIs
Our team at Revco has compiled a few insider tips that every RCM leader should know.
- Precisely calculate liquidation rates. Rather than reviewing a defined batch of placements, some organizations divide the current month’s placements by the current month’s collections. Naturally, collections during the current month will be low, resulting in an inaccurate picture of your collections performance.
- Don’t overlook call center KPIs. Calling KPIs are the foundation of success in collections. Your team should have a strong understanding of how long your reps are on calls, how often they’re able to get payment, and the average amount of that payment. Abandonment Rate and RPC Rate should also be carefully measured. Optimizing metrics like these is a surefire way to improve the patient experience and drive outstanding success in collections.
- Adapt your KPIs as technology advances. For best results, your collection team should be able to connect with patients via call, text, email, or live chat. Then, you should track which outreach methods are most successful for specific segments (e.g. younger patients or patients with bills over a certain amount). Knowing how patients prefer to be contacted and make payment will enhance your outreach.
Maximize Your Revenue With Revco
We’re here to help your organization achieve unprecedented financial health. Our KPI-backed, patient-centric solutions are the key.
In everything we do, we aim to create an outstanding patient experience. We believe that educating and empowering patients is crucial to facilitating payment, whether it’s at the time of service or months down the road. And we’ll diligently follow up on denied claims to ensure that a smaller financial burden falls on the patient — and more revenue is returned to your organization.
If you’d like to explore partnership, take a look at our Early Out, Medical Debt Collection, and Denials Management services today.
Thank you for joining us!
