The Ultimate Guide to RCM Metrics:

Measuring Success and Identifying

Areas for Improvement
Healthcare organizations aiming to optimize their financial performance
prioritize efficient Revenue Cycle Management (RCM). Recognizing its pivotal
role in ensuring financial stability, 40% of healthcare providers channel
investments toward Backend RCM automation, according to a report from
HFMA and Eliciting Insights.

Central to the success of RCM automation is the meticulous measurement

of Key Performance Indicators (KPIs). These metrics provide invaluable
insights into various components of the revenue cycle, enabling
organizations to identify strengths, capitalize on advantages, and enhance
their financial well-being.

This Ultimate Guide to RCM Metrics serves as a roadmap for healthcare

organizations seeking to enhance financial performance, optimize
operational efficiency, and ensure sustained success in an ever-evolving
healthcare ecosystem. Through an integrated approach to RCM
measurement and analysis, organizations can unlock untapped potential,
foster innovation, and deliver superior patient care while achieving financial
excellence.
Table of Contents
Introductio
Introducing Revenue Cycle Management (RCM) and its role in healthcare
organizations

The importance of measuring RCM success through effective metrics to ensure

financial health.

Key RCM Success Factor

Key areas where an effective RCM program should lead to improvement.

Core RCM Metric

Core metrics directly tied to RCM success factors.

Calculation methods for each metric.

Advanced RCM Metric

Additional metrics that provide deeper insights into RCM program effectiveness

Benefits of using these advanced metrics for identifying specific problem areas.

Utilizing RCM Metrics for Improvemen

How to use RCM metrics to identify areas for improvement

How identified improvement areas can be addressed through adjustments to

RCM processes and technology.

Implementing a Successful RCM Measurement Strateg

Key considerations for establishing a robust RCM measurement strategy.

The importance of clear communication and stakeholder involvement within

healthcare organizations.

Case Studies (Optional

How RCM metrics have been used to improve financial performance in different
healthcare settings.

Using RCM Automation to Streamline Workflow

Conclusio

The importance of RCM metrics in achieving financial goals for healthcare

organizations

The value of continuous monitoring and improvement through effective RCM

metrics.
The Ultimate Guide to RCM Metrics:

Measuring Success and Identifying

Areas for Improvement

Introduction

A streamlined process that includes multiple steps, such as patient registration,

appointment scheduling, claim submission, and reimbursement, is essential for
effective RCM in the healthcare industry. Each of these phases offers chances
to maximize revenue and avoid dangers that could impair financial
performance.

KPIs help organizations measure their performance, spot bottlenecks, and make
targeted improvements by serving as benchmarks for assessing the efficacy and
efficiency of each step.

Although revenue cycle management can be laborious and time-consuming,

minor issues can result in significant losses—up to hundreds of thousands of
dollars annually—if improper supervision is not provided. At Jindal Healthcare,
we are here to help you understand the crucial metrics and provide helpful tips
for how to use RCMs to pinpoint areas that still need work.
The Ultimate Guide to RCM Metrics:
Measuring Success and Identifying
Areas for Improvement

Key RCM Success Factors

Several critical areas are positively affected by an efficient RCM program:

a) Enhance Revenue Capture: Streamline procedures to perfect revenue

capture. Monitoring revenue KPIs can shorten reimbursement cycles and

decrease denials.

b) Improve Operational Efficiency: Organizations can find inefficiencies and

bottlenecks in their revenue cycle processes. Tracking KPIs makes it possible

to make focused interventions to raise operational effectiveness.

c) Enhance Patient Experience: The patient experience can be improved by

examining specific KPIs, such as billing transparency metrics and patient

satisfaction scores. This will enable businesses to improve patient loyalty

and satisfaction.

d) Mitigate Financial Risks: Organizations can proactively find and address

potential financial risks before they escalate by keeping an eye on KPIs that

measure claim denials, days sales outstanding (DSO), and other financial

indicators.

e) Optimize Resource Allocation: By highlighting areas of underperformance

or overperformance, KPIs can help healthcare organizations make

well-informed decisions and distribute resources accordingly.

The Ultimate Guide to RCM Metrics:
Measuring Success and Identifying
Areas for Improvement

Core RCM Metrics

While several KPIs can offer insightful information about different sides of the revenue
cycle, some metrics are especially important for evaluating and enhancing RCM
performance. Here are some crucial KPIs that healthcare institutions ought to check.

a) Days in Accounts Receivable: How long does it typically take a healthcare

facility to get paid for the services given? A high DSO can have a detrimental

effect on cash flow since it shows inefficiencies in the revenue cycle process.

b) Claim Denial Rate: The percentage of claims that payers reject. By watching

this KPI, organizations can reduce denials and increase reimbursement rates

by showing common denial causes and putting corrective measures in place.

c) Revenue Cycle Length: This metric tracks the average time it takes for a

healthcare organization to complete the entire revenue cycle, from patient

registration to final payment collection. A shorter revenue cycle length shows

greater efficiency and faster revenue realization.

d) Percentage of Net Collection: The percentage of total billed charges collected

after deducting contractual adjustments and writeoffs. A high percentage of the

net collection indicates effective revenue capture and

e) First-Pass Claim Rate: Measures the percentage of claims accepted by

payers upon first submission, without requiring rework or resubmission.

A high first-pass claim rate indicates efficient billing processes and reduces

the risk of delayed or denied payments.

f) Accounts Receivable Aging: Based on the length of time accounts receivable

have been outstanding, this metric typically divides them into buckets such

as 0-30 days, 31-60 days, 61-90 days, and over 90 days. Monitoring AR Aging

helps identify overdue accounts and prioritize collection efforts.

The Ultimate Guide to RCM Metrics:

Measuring Success and Identifying

Areas for Improvement

How These Metrics Reflect a

Practice’s Health

Precise financial reporting offers vital information about the financial stability of
medical practices. They provide a thorough understanding of the revenue cycle, which
facilitates performance evaluation, pinpoints areas for development, and guides
decision-making that can grow the company. Typical contents of these reports
include:

a) Collection rate: A comparison between the total amount billed and

the amount of money collected. This indicator shows how well the

practice converts billed services into actual income.

b) Denial Rate: This shows the number of claims that insurance payers

rejected in a given period. A high denial rate could be a sign of a problem

with the insurance verification process, coding errors, or documentation.

c) Clean Claims Rate: The percentage of claims that are neither denied

nor rejected. A high clean claims rate indicates that the practice has a

precise and efficient billing system.

d) Charge lag days: How long it takes for charges to be made and recorded

in the system, following the provision of services. Charges should be made

that same day or the following day. This metric indicates the charge

capture workflow's health and areas needing improvement.

e) Days in receivables outstanding: This metric illustrates the amount of

time outstanding funds are held in accounts receivable before ultimate

collection. A practice search for efficiencies if the number is high.

A low number denotes a wellmanaged billing and collections process

f) Accounts Receivable Aging: Based on the length of time accounts

receivable have been outstanding, this metric typically divides them into

buckets such as 0-30 days, 31-60 days, 61-90 days, and over 90 days.

Monitoring AR Aging helps identify overdue accounts and prioritize collection efforts.
The Ultimate Guide to RCM Metrics:
Measuring Success and Identifying
Areas for Improvement

Utilizing RCM Metrics

for Improvement
What is the most effective way to assess a practice's performance if it has
recently made efforts to optimize the revenue cycle? Creating a dashboard with
essential performance metrics can help identify what is and is not working in
the revenue cycle and provide guidance on how to address common issues. Take
these key performance indicators into consideration when creating a revenue
cycle dashboard:

a) Days in receivables outstanding: This is the best measure of practice

billing performance (DRO). A DRO of between 30 and 40 days is ideal,

the lower the number, the better, as it suggests that revenue cycle

operations are functioning well. When a DRO continuously exceeds 60 days,

it should raise concerns.

When it comes to collecting unpaid balances, 60 is the new 90 — and

the longer bills are unpaid, the less likely it is that they will be paid.

Enhance outcomes by being meticulous with time-of-service collection

and aiming for accuracy at every stage of the revenue cycle. It is crucial

to remember that the DRO can increase due to uncontrollable

circumstances like handling difficult payers or having many patients

on payment plans. However, this does not imply that the revenue

cycle management is flawed.

b) Receivables outstanding over 120 days: The aged trial balance report

is another excellent way to evaluate successful revenue cycle management

in healthcare. While it is possible to measure success using any

aging categories, focus on the receivables over 120 days. Aim to have

less than 10% of receivables over 120 days. If you hit the 20% mark,

take a serious look at the collection process.

Like other DRO measurements, factors outside of a practice’s control can have
an impact on the numbers. The best way to reduce receivables outstanding over
120 days is to collect payment at the time of service and be diligent about
following up on unpaid balances.

c) Net collections rate: Also known as the adjusted collection rate,

this percentage shows net collections compared to the number allowed

by insurance companies. It also reveals how much revenue the practice

is losing to overwhelming debt or poor billing practices.

The Ultimate Guide to RCM Metrics:
Measuring Success and Identifying
Areas for Improvement

Implementing a Successful RCM

Measurement Strategy
To effectively measure KPIs for a successful RCM, healthcare organizations
should follow these best practices:

a) Define Clear Objectives: Clearly define the objectives and goals of

RCM performance, ensuring alignment with the organization’s overall

financial and operational objectives.

b) Select Relevant KPIs: Select KPIs that are relevant to the

organization’s specific needs and priorities, considering factors such

as specialty, payer mix, and revenue cycle workflows.

c) Establish Baselines and Targets: Establish baseline performance metrics

for selected KPIs and set realistic targets for improvement based on

industry benchmarks and organizational goals.

d) Implement Robust Data Collection and Analysis Processes:

Implement robust data collection processes to ensure the accurate

and timely capture of relevant performance metrics. Leverage

healthcare analytics tools and reporting systems to analyze data and

generate actionable insights.

e) Monitor Performance Continuously: Monitor the KPIs’ performance

regularly to track progress, identify trends, and detect anomalies that

may require corrective action. Regularly review them with key stakeholders

to drive accountability and foster a culture of continuous improvement.

f) Iterate and Adapt: Continuously iterate and adapt RCM processes

and strategies based on insights gleaned from KPI measurement efforts.

Use data-driven learning to identify opportunities for optimization

and implement targeted interventions to drive improvement.

The Ultimate Guide to RCM Metrics:
Measuring Success and Identifying
Areas for Improvement

Case Studies
Medical Clinic, a mid-sized family practice with three physicians, faced mounting
challenges with its RCM processes. Manual claim submissions led to errors and
denials, extending collection times, and impacting cash flow. Frustrated by a lack
of transparency, both staff and physicians felt uncertain about the clinic's financial
performance.

The Challenge:

• High denial rates due to manual coding errors and incomplete

claim submissions.

• Lengthy claim processing times, which cause slow reimbursements.

• Limited visibility into key RCM metrics, hindering proactive

improvement strategies.

• Low staff morale due to cumbersome manual processes and unclear

financial performance

The Solution:

The Medical Clinic partnered with a healthcare revenue cycle management service
provider to implement a data-driven approach. The new system offered several key
features:

• Electronic Health Record (EHR) Integration: Eliminated manual data

entry, reduced errors, and streamlined claim submissions.

• Automated Coding and Scrubbing: Ensured accurate coding based on the

latest guidelines, which minimized claim denials due to coding errors.

• Real-time Claim Status Tracking: Provided instant updates on claim

status, allowing staff to address any issues and expedite

reimbursements proactively.

• Comprehensive Reporting and Analytics: The RCM service provided

detailed reports on key metrics like clean claim rate, days in AR, and

collection rate.

These reports offered valuable insights into the clinic's RCM performance.
The Ultimate Guide to RCM Metrics:
Measuring Success and Identifying
Areas for Improvement

The transition to the new RCM system involved comprehensive training for staff
on claim submission procedures and reporting tools. The clinic also established
clear communication channels to ensure collaboration between RCM specialists
and clinic staff.
The Ultimate Guide to RCM Metrics:
Measuring Success and Identifying
Areas for Improvement

Using RCM Automation to

Streamline Workflow
Reducing receivables, expediting payment, and streamlining revenue cycle
management are all made possible by automation. Robotic process automation
(RPA) can be used to automate any type of repetitive task, including revenue
cycle steps.

RPA replicates laborious manual processes with software-script bots. Tasks like
prior authorization, patient registration, eligibility verification, claims submission,
denied claims, and collections—all of which do not require human decision-
making—are among the error-prone jobs that RPA excels at.

RPA can help analyze a health insurance claim in 12 seconds, whereas human
workers take 85 seconds — and still, RPA is more accurate, according to a
study. So, if possible, automate every part of the medical claims and billing
process with an all-in-one billing solution.

The positive impact of automation on RCM and practice performance cannot be

understated. By eliminating manual errors, claims go through faster, cash flow
improves, and the practice becomes healthier and more productive. When the
practice team spends less time on paperwork, they can focus on the patient
experience, which further supports revenue growth.

The fundamentals of revenue cycle management and sound monetary

management will never change if patient eligibility information is confirmed, and
a clean claim is created, and submitted to the appropriate payer. Nonetheless,
there are numerous chances to maximize every revenue cycle stage and avoid
making revenue mistakes.

Increasing staff training, automating revenue cycle management, and making

investments in medical billing and payment systems that simplify the entire
process can all contribute to better cash flow and financial health.

 The Ultimate Guide to RCM Metrics:

Measuring Success and Identifying
Areas for Improvement

Conclusion
Therefore, healthcare organizations can improve their operational efficiency,
financial performance, and patient experience by measuring KPIs for successful
Revenue Cycle Management. With KPIs, organizations can drive positive
outcomes by identifying areas for improvement and implementing targeted
interventions.

Healthcare organizations can thrive in the increasingly competitive healthcare

landscape and achieve sustainable RCM success by implementing robust
processes for data collection, analysis, and monitoring.

Jindal Healthcare is a leading name in Revenue Cycle Management backed by the $100 Billion OP
Jindal Group. With over two decades of expertise in business process outsourcing, we specialize in
maximizing healthcare providers' revenues so they can reinvest in and focus on elevating patient care
standards. Our approach integrates cutting-edge HealthX AI technology with human insight to drive
optimization, automation, and process enhancement. From End-to-End Revenue Cycle Management
to Practice Management Solutions, Prior Authorization support, Coding Management, and Analytics, we
offer a comprehensive suite of services. Experience unparalleled revenue growth, cost reduction, and
operational efficiency with Jindal Healthcare - your trusted partner in healthcare revenue
optimization. 

www.jindalhc.com