Even as medical practices focus on the well-being and care of their patients, as a business, they must be profitable. That’s why Revenue Cycle Management (RCM)—the processes that healthcare systems use to track revenue from patients’ first appointments to final payments—is essential to a successful practice.
But as I work with businesses using RCM, I notice that most are using it almost exclusively to manage the business’s operations—the essential processes of getting billings out the door and getting payments in the door.
But when it comes time to assess operations and efficiencies, many find themselves having to rely on a disjointed array of disparate reports that are awkward to locate and not tailored to their needs or the needs of any others for whom the reports are intended.
The Reporting Limitations of Revenue Cycle Management (RCM) Systems
It’s easy to understand why the above frequently occurs. Most billing systems have been built over time; they’ve grown into a patchwork of unrelated add-ons from multiple vendors, purchased by decision-makers who are often far removed from RCM management and their reporting needs.
Inability to integrate multiple systems together
Each of the components that comprise the RCM—such as EDI, billing, and HR— is essential, and each has different systems to run it. While those systems are generally effective at doing what they’re intended to do, none of them have true business intelligence functionality that would help provide more precise control and more effective management of RCM operations. Without true BI features, high-level insights and a real-world grasp of the processes and performance of the health care practice won’t be available.
While many apps have some degree of integrated reporting or even dashboard capabilities, they have no way to deliver insights into the bigger picture of the organization’s performance. Limited to siloed reporting, managers miss out on opportunities to get accurate, multi-layered feedback about how the business components—individually and together—are contributing or detracting from its performance and profitability. Numerous opportunities for updating processes, increasing cost-effectiveness, reducing redundancy, and eliminating wasted time and money are missed.
For an RCM to get the results it’s intended for, it ultimately needs a true business intelligence platform that can integrate the organization’s disparate RCM-relevant data and provide a comprehensive and accurate examination of the key elements of revenue cycle performance. This is doubly true for those managing multiple practices or facilities.
Inability to aggregate the data from multiple sources
Further, since RCMs interact with data stored outside of resident systems—usually quite substantive information such as Electronic Health Records (EHR), scheduling data, and provider credentialing data—if all of the data can’t be accessed, integrated, or aggregated, managers cannot leverage it for meaningful reporting to help drive effective decision-making. They might be able to access some of the data via their systems integration platforms, but they don’t give them answers to essential questions they need to know about the practice, such as:
- How much are we billing?
- How much of that have we collected?
- How much is still yet to be collected?
- How long does it take to be paid for services rendered?
- Is the number of staff used for billing appropriate and necessary
- Where should my focus be to improve operations?
- What aspects of operations need improvement in order to reduce delays in the revenue cycle?
- Are we utilizing software tools and business intelligence in the most cost-effective manner?
Whether it’s for a large or a small medical practice, when the RCM has system-wide analytics capabilities, managers can begin to identify where and how to get a health care organization paid for their services in an efficient and timely manner. But it is only when the system can supply accurate, reliable, repeatable, and automated reporting that managers can act. With actionable metrics, managers can reduce and remove costly lags and other weaknesses in the revenue cycle workstream.
Lack of flexibility and user-friendliness
User-friendliness also suffers when RCMs are, in effect, a collection of modular components without BI connectivity. Reports are short on flexibility and are designed for certain users in the organization and not others. They rarely offer any ability to dynamically drill down to underlying detail when it’s called for.
And there’s further fallout since when users feel that what they want is too hard to find or access, they stop trying. Even if leadership gives a nod to enhancing the system, truly robust, integrated, and user-friendly add-on options are often cost-prohibitive.
Bringing BI Functionality to RCM
Revenue Specialists come to ClicData for help because their clients ask them for capabilities that their systems can’t provide.
Their current reporting falls far short of their needs; they cannot produce critical KPIs to allow them to efficiently monitor their revenue-related metrics. As a business intelligence platform, ClicData provides the foundation and the features to bring together all the data that the RCM touches into a comprehensive, user-friendly, customizable, and time-sensitive dashboard reporting system.
Wide array of integrations and data connectors
To begin, ClicData allows systems to connect up to 250 types of data sources—whether internal or external—into a single data warehouse, from which simple, derived, and/or aggregated metrics can be displayed on intuitive, clean dashboards. In other words, management can pull the data they need from wherever it’s located and choose or create the metrics they want to see.
As a BI tool, ClicData provides extensive analytics functions, expanding the range of possible metrics and reports that managers might want to access and review regularly.
Easy data aggregation
There’s another benefit: aggregated data provides insights that are both more consumable and less technical, so users are better informed and better equipped to respond to them quickly and with more impact. At the same time, users can also have the choice to dive into the details when they want to explore the data underlying the metrics—without having to run a different report.
Easy to scale dashboards and reporting
ClicData is especially suited to growing health care businesses. Organizations can build their platform incrementally, adding just one module at a time, without having to install one huge enterprise-wide business intelligence solution.
If managers decide they want to integrate new dashboards, they can add them on an as-needed basis according to what insights they want to see and what metrics they want to focus on. New data sets are easy to incorporate into a dashboard stream; new dashboards can be deployed without much effort, and there’s no limit to the number of dashboards they can build. Companies that lean on a complete reporting and dashboard tool enjoy being more agile, proactive, and responsive to trends, business objectives, and events in real-time.
6 KPIs to Manage Revenue Cycle Cost-Effectiveness
KPIs are especially helpful for financial officers and management since numbers don’t lie. When it comes to RCM, monitoring duplicate and repeat claims submissions, denial rates, and lag times from service delivery to reimbursement can help them gauge revenue streams and processing activities. To do this, they need to capture data from usually discrete systems and integrate it into a single dashboard that presents them clearly and all in one place. Here are key KPIs I recommend for businesses to start gaining more control of the health of their revenue cycle:
1. Collection Success Rate
This KPI describes the ratio of actual collected revenues to expected revenues. Different companies use different methods to estimate expected revenues; some use a percentage of billed amount while others load insurance fee schedules. Variances above or below 100% can be telling: those over 100% might indicate potential refunds, underestimating, for example. Ratios below 100% might point to denials or lower reimbursement rates for some services or payers.
Collection success rates should be viewed at both the organizational level and at other sub-categories within the organization to look for patterns of over or underpayment that require further investigation.
2. Days to Create Billing
This is the number of days it takes from the date of service to the time that the bill is coded for billing insurance. Many factors could impact this time, including the time it takes the physician to sign off on the transcription, unclear medical notations, or the complexity of the services.
3. Days to Bill
Once a bill is coded, you want to measure the time it takes to send the claim to insurance for reimbursement. With Electronic Data Interchange (EDI), the time from bill creation to submission should be almost immediate. Longer times can indicate a delay in system operations or missing data, such as subscriber, insurance carrier, or physician data, for example.
4. Days to Create Billing + Days to Bill
The above two metrics together measure the timeliness of your billing and point to where delays in operations might be occurring.
5. Insurance Denial and Rejection Rates
Insurance denials and rejections can result in a huge and costly drain on RCM efficiency. They demand a huge amount of human time investment to research, review, and correct the claim and rectify the bill as needed. I recommend classifying denials into categories—such as Insurance, Non-Covered Service, Duplicate, and Medical Necessity—to help identify where improvements are most needed to determine the next steps more quickly. One of the most common reasons for up-front denials, for example, is incorrect or outdated insurance information, which results in a cost of time and money. (The Department of Health & Human Services reports that up to 42% of health claims are coded incorrectly, and 19% lack appropriate documentation.) Small steps to improve inpatient intake operations can help mitigate these types of costly inefficiencies.
6. Rate of A/R > 90 Days
This metric tells you the ratio of current open balances—for both patients and insurance—greater than 90 days compared to total receivables. (120 days can also be used.) A healthy RCM should have a ratio of less than 30%. Open balances that are beyond that point should be reviewed either for insurance write-off or patient collections. The longer balances remain outstanding, the less likely it is that they will be collected.
Time to Improve Your RCM With BI
Successful revenue cycle management seeks to establish high levels of efficiency, short wait times between billing and reimbursement, and reduced patient care hours that go uncompensated. Being able to identify lag times and other weaknesses in the revenue cycle workstream helps management focus improvements where they matter most. Business intelligence helps RCM do what it intended to do: analyze the workstream to streamline operations, make performance more efficient, and, ultimately, make the business more profitable.
If you’re interested in seeing ClicData’s reporting and dashboard tool live, you can book a demo with our product specialists and we’ll show you how to quickly turn data into insights for your RCM.