These key metrics are crucial to understanding how to measure billing performance and ensuring your practice is profitable.
When you do a blood test, there are some crucial factors you’re looking for to make sure your patient is healthy. You also know that if there are any numbers that are off – then something needs to change.
The exact same strategy applies to your clinic’s financial health. There are certain indicators that measure billing performance and tell you if you’re in good financial health or if some intervention needs to happen.
So in this article, we’ll be going over the most important reference points to measure billing performance and ensure your practice is running smoothly.
4 Key Metrics to Measure Billing Performance
There are plenty of metrics you should be keeping an eye on when it comes to your business’ finances. When you outsource your medical billing, you’ll get access to a team of experts that know these numbers like the back of their hands.
But if you’re not ready to take that leap just yet, here are 4 of the most important metrics to measure your billing performance:
1. Days in A/R
The first metric to measure your billing performance is the number of days in accounts retrievable.
This simple number tells you how long it takes to collect a payment for any service. For a clinic to run smoothly, it’s important to have a general idea of the speed of cash flow so that you can make informed business decisions about the future.
A healthy practice should aim for around 35 days as its average A/R.
2. Past 90 Days A/R Percentage
Connected to the last metric, it’s essential to know how many of your accounts remain outstanding after 90 days. Once an account has remained unpaid after 90 days, they are at a much higher risk of ending up as uncollected.
In other words – this is a key metric to measure billing performance because it shows you what percentage of your accounts are likely to not pay you for your services. An acceptable average is between 10%-15% of your total A/R past 90 days.
While this number isn’t the end of the world, it does give you a general idea of how effective your collection efforts are. If you have a high percentage, then it’s an indicator that you should consider revving up your efforts or to outsource your medical billing.
3. Net Collection Rate
Your net collection rate is another key metric that describes how much revenue you’ve collected in comparison to how much you should have collected.
If your practice isn’t performing well with this billing metric, that means that you’re not getting reimbursed for all of your services. Anything lower than 96% could be a huge sign that your clinic is in low financial health and that you need to take steps to improve your revenue gathering urgently.
This is one of the main benefits of outsourcing medical billing, as expert teams are able to make this metric their priority and get your clinic back on track.
4. Denial Rate
An unfortunate reality is that there will be times when an insurance claim is rejected. You should aim to keep this as low as possible, but occasional challenges can occur.
This is another key metric to measure billing performance as it describes the efficiency and quality of the claims you’re sending off. Having a high denial rate can put your practice in danger as you won’t be able to get paid for the service you’re providing.
You should aim to keep the denial rate at 1-2%, as low as possible.
Reach Out to Learn More
Every clinic should measure its billing performance to ensure that they are financially stable and healthy. Long-term financial problems will create barriers to quality care – not to mention serious stress for the providers.
If you’d like to learn more about how to measure your billing performance or if you’d like to maximize it by trusting an expert team, contact us here to get started.