In our last article, we went over a list of the top three key performance indicators in health care small practices should be tracking, explaining what they were, how you can find them and why they’re useful.
But figuring out which medical practice performance metrics to track is only half the battle. Practices that don’t take an organized approach to analyzing their metrics data are cheating themselves out of information that could improve patient satisfaction and reduce costs.
For that reason, it’s not enough to just track these metrics; you also need to identify reasonable benchmarks for each metric, know what red flags to look for and be prepared to test strategies for improving your metrics over time.
Here’s what we’ll cover:
Net Collections Rate: Optimize Billing to Increase Profits
In our previous article, we explained how finding your net collections rate is the best revenue cycle metric because it tells you how much money you actually collect out of the total amount you’re allowed to collect. As a refresher, here’s that formula:
(Charges – Contractual Adjustments)
What you should aim for: In a perfect world, you’d be collecting 100 percent of the payments you’re allowed, but that’s not always possible thanks to issues like denied claims and patients who just aren’t always able to pay. Instead, you should be looking for a net collections rate of 95 percent or higher.
If you’re consistently hitting this mark, that’s awesome! If not, you’re definitely not alone, but the good news is there are things you can do to improve your revenue cycle and raise your net collections rate.
Give your patients plenty of payment options. That means accepting cash, checks, debit and/or credit cards in the office and optimizing your patient portal to accept PayPal or Apple Pay. All of these methods put money in your account, and offering these options makes it as easy as possible for your patients to pay you quickly.
Work with patients to come up with payment plans. For those cases where patients are willing to pay you but just aren’t able to do so in one payment, consider offering the option of an installment-based payment plan. It could be a great way to get payments from patients who wouldn’t otherwise be able to cover their expenses. Just be sure to thoroughly document the details of this plan and get your patient’s signature so you’re covered if they fail to make a payment.
Collect all copays at the time of service. It’s always easier to collect payments when the patient is standing in your office, so make a policy to try and collect these copayments (and deductibles, if possible) before they leave. Use tools like appointment reminders to make sure patients are aware that they’ll be expected to make a payment. That way you’ll minimize the number of patients who come in for appointments unprepared to pay you.
Pay attention to your medical claims. We’ll cover this a little more in the next section, but tracking your clean claims rates and all medical claims errors is a great way to home in on what’s causing claims to be rejected and then fix those issues.
Clean Claim Rate: Pinpoint Common Errors to Streamline Claims Submission
Remember this one?
Claims re-submitted for acceptance
That’s one of the formulas you can use to calculate your clean claim rate, which tells you what percent of the claims you submit are accepted without issue. It’s the most helpful medical practice performance metric for determining how good your team is at collecting all the required data for submitting these claims.
What you should aim for: Just like your net collections rate, a perfect 100 percent would obviously be ideal here, but that’s a bit too much to expect. Realistically, you should shoot to be around the 95 to 98 percent mark.
Again, major kudos to you if you’re consistently happy with your clean claim rate; however, for those who want to bring their number up, there are ways to do that.
Figure out what your most common claims errors are, and fix ’em. Build out a process for documenting feedback every time you get claims back for edits and track the specific issues you’re having over a period of time (say, six months).
After enough time has passed, you’ll have collected enough data to start seeing trends that will tell you what specific errors your billing team make most often. From there, you can implement fixes that will increase clean claims.
Verify and authorize everything ahead of time. You need to verify everything from coverage and policy effective date to in/out of network benefits and copays. The trick is to get this done at least two business days before services are rendered.
Likewise, you need to obtain authorization for any procedures or other services at least a week before they take place. Doing so gives you enough time to identify issues and correct them before the services or treatments are provided.
Know your codes. More specifically, know the specific code guidelines you should be using for which carrier. Look for CPT and ICD compatibility and make sure you’re following the right submission process. Doing things their way makes them more likely to accept your claims, so it’s worth the effort.
No Show Rate: Communicate With Patients to Optimize Your Schedule
I’ll be honest, there are a lot of metrics you can track around patient visits: cancellations, late arrivals, scheduling trends etc.
But one of the most important ones is your no show rate because it lets you see how much time you’re blocking off in your schedule for patients that aren’t coming in—that means time you could (and should) be spending seeing patients.
Once more, here’s the formula for finding your no show rate:
Total number of scheduled appointments
What you should aim for: How great would it be if none of your patients ever missed an appointment? As fun as it is to think about, it’s not practical. National averages for no show rates range from 5 to 30 percent (with some variation depending on specialty), but you obviously want yours to be as low as possible. Aim to keep your no show rate under 10 percent, but as close to zero as you can get it.
Here are a few useful strategies to manage your schedule and bring that percentage down in your practice:
Charge a fee for no shows or last-minute cancellations. It can be a standard fee (say, half of what you would charge for an office visit) or a flexible fee that gives you room to adjust depending on circumstances. Either way, charging patients who don’t show up does two things: It discourages no shows and it lets you recoup at least some of the money you would have made during that appointment.
Educate patients on why no shows cause problems. You may be surprised to find out that many patients don’t show up because they simply aren’t aware that it causes a problem for you. Some practices have had success in reducing their no show rate just by taking the time to explain to patients all of the complications they cause when they fail to show up for scheduled appointments without notice.
Send lots of appointment reminders. An even higher percent of patients don’t show up for appointments because they just forgot all about them. It may seem overly simple, but trust me, sending out appointment reminders will reduce your no show rate. Find a system that can send these reminders to patients in several different ways: text, phone call, email, physical mail, whatever you have to do to get their attention.
A checklist is a great tool to help you keep track of these three KPIs and the solutions that can help you improve them. It might look something like this:
The recommendations above are manual solutions to improve these medical practice business metrics, and, while they’re great places to start, they can become difficult to maintain over time as your practice grows.
That’s when you should call our medical advisors at (855) 998-8505 to discuss your needs and learn about specific software products that meet your unique criteria.