The Revenue Cycle Management Technology Adoption Model (RCMTAM)

    RCMTAM offers healthcare providers a comprehensive tool to evaluate and enhance financial and technological performance through an evidence-based, five-stage maturity model.

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      Unlocking Revenue Success: Key Healthcare RCM KPIs for a Strong Bottom Line

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      Healthcare organizations have a lot on their plate, and how well they manage revenue is crucial to their financial well-being. Revenue Cycle Management (RCM) acts as a vital link in the intricate world of patient care, documentation, payment, regulations and changing payer demands—ensuring earned revenue is paid and securing the financial stability of hospitals and health systems.

      So, how can you tell if your RCM strategy is effective? By keeping tabs on these five key performance indicators (KPI), you can pinpoint areas where your revenue cycle is strong and where it needs improvement to achieve lasting financial success.

      1. Days Not Final Billed (DNFB) 

      Every day a claim isn’t coded, scrubbed and billed could mean a delay in revenue or even uncollectible debt. High DNFB rates indicate issues in your RCM system – such as incomplete records, coding mishaps or billing errors. This KPI serves as a financial health check for your organization’s revenue flow and back-office efficiency.

      Reducing DNFB requires a multifaceted approach that starts with identifying bottlenecks, including average DNFB days and number of accounts in DNFB status. Most organizations strive to keep DNFB below five days.

      By streamlining medical record coding processes, investing in technology that supports real-time charge capture and fostering a culture of data integrity and urgency, you can significantly shorten the DNFB window.

      2. Clean Claim Rate

      Submitting claims isn’t the final step; it’s all about getting them paid using as few of resources as possible. Your organization’s clean claim rate shows how well your RCM turns services into revenue by looking at the percentage of claims processed error-free. A high clean claim rate signals smooth processes, with low touches, and strict quality checks for quick reimbursements.

      To maintain a high clean claims rate, healthcare organizations need to foster a culture of accuracy, ongoing education and staying up to date on coding changes. Misunderstood payer rules, missing signatures, incomplete information and typing errors can lead to claim denials. The best practice KPI in this area is in the high 90th percentile.

      Best in-class technology offerings should provide accurate insights to help ensure providers maximize cash collections from all insurance payers – the first time – to close the gap between peak cash potential and actual cash generated on claims.

      Build an effective clean claims strategy with technology that can:

      • Integrate data sources
      • Improve processes
      • Identify opportunities
      • Automate processes to flag errors

      icon-symbols-checkmarks RELATED: Claims Management Solution Buyer’s Guide

      3. A/R > 90 by Payer

      Accounts receivable (A/R) measures the money owed to a practice or hospital. The segment over 90 days by payer is a crucial indicator, pointing to slow reimbursements, payment disputes or potential write-offs.

      Growing figures in this area highlight systemic inefficiencies in claims management and payer reimbursement partnerships. By monitoring this KPI, it offers valuable insights for your organization’s strategic decision-making. Best practice KPI performance here is keeping this metric below 30% of the claim inventory.

      If a specific payer consistently falls into the “over 90 days” category, it’s a signal to review engagement terms or identify the root cause of payment delays, such as denials, incomplete files or inadequate documentation.

      For optimal efficiency, internal RCM operations, including payment posting and reconciliation, should be automated where possible. In fact, automated workflow solutions that reduce A/R days can save an average of $3 million annually and can result in 300 to 500 fewer denials per month. Regular audits are also necessary to guarantee workflows are both efficient and adaptable to the ever-evolving payer landscape and standards.

      icon-symbols-checkmarks RELATED: Lifecycle of a Claim

      4. Denial Write-Off Percentage

      Denial write-offs are the cost of doing business in healthcare, but excessive rates can negatively impact an organization’s bottom line.

      If it’s high, it’s a sign for you and your team to dig deeper into the reasons for denials and payer issues. Denials can pop up at different RCM stages – registration mistakes, lack of prior authorization or coding errors. Best practice performance here is in the range of 1% to 3% of NPR – the lower, the better.

      Automation can isolate line-item detail to determine the root causes of denials, as well as predict potential incremental reimbursement opportunities to ensure the claim touches are worth the effort.

      icon-symbols-checkmarks RELATED: Rising Denials and Underpayments: Reversing the Trend to Improve Revenue

      5. Point-of-Service Collections

      Point-of-service (POS) collections from patients is not a foreign concept for healthcare organizations – 96% claim to have pre-payment and POS policies and procedures in place – especially since more patients use high-deductible insurance plans or pay out of pocket.

      A POS strategy is all about helping patients navigate the coverage and costs and providing payment options upfront, covering copays, deductibles and out-of-pocket costs. The industry standard benchmark for POS collections is 1% of Net Patient Revenue (NPR)

      Without solid upfront POS procedures, staff members are often forced to pursue overdue payments long after services are rendered. On the other hand, an effective POS process empowers healthcare organizations to boost cash flow, reduce bad debt and improve the patient experience with a more convenient payment process.

      icon-symbols-checkmarks RELATED: Southern California Hospital Achieves 4,500% Increase in Monthly POS Collections in 13 Months

      For healthcare RCM leaders, mastering KPIs is like checking their institution's financial pulse. Delving into these metrics spots paths for improvement. Be proactive, using KPI insights for long-term well-being through processes, tech upgrades and staff support.

      FinThrive Analyze provides users with a single, holistic view of each step of the RCM process. Learn more about how you can consolidate RCM data into a single repository, break down data silos and receive actionable insights with on-demand data access.

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