Key performance indicators, or KPIs, are essential to highlighting the moving parts of a business all at once. KPIs provide a view into the health of a company and its ability to perform, by enabling the organization to quickly refer to data to demonstrate the effectiveness of various departments or identify shortfalls. Forbes describes KPIs as “a pertinent part of measuring the successes and failures of your business.” Without KPIs, clients may fail to comprehend the complete picture of a partner company’s success and failures, which affects the client’s ability to fully assess the efficacy of the partner company’s services. The following will analyze the significance of KPIs and performance metrics in healthcare-related business while outlining their role in understanding business outcomes.
Metrics and KPIs are critical in healthcare-related business to evaluate performance and success. Forbes explains KPIs as “measuring the goals of the business against the actual, quantifiable data over a specified period.” These metrics provide objective performance measures and signal outcomes, allowing organizations to track progress toward measurable goals. Metrics are particularly relevant in medical and dental billing, to demonstrate a company’s ability to provide quality assurance and financial sustainability to its RCM clients. Ensuring objective, data-driven assessments is crucial in healthcare management to deliver efficient outcomes and allow practitioners to focus on patient care. Numbers tell the story, and their significance is only heightened in a healthcare setting. Specifically, prospective and current clients need to evaluate the various KPIs defining any healthcare-related business to understand their proficiencies.
The revenue cycle management sector of healthcare focuses on several KPIs to quantify a healthcare organization’s financial performance. One standard KPI is days in accounts receivable (A/R), which indicates the number of days it takes for the provider or organization to be paid for their services. A low A/R collection percentage can negatively impact a practice’s bottom line, so regular follow-up of pending claims and fast-tracking claim reimbursement can help improve A/R delays. Nobility RCM collects more than 91% of aging accounts receivable within the first 90 days of its service with new clients, demonstrating the company’s dedication to ensuring its partners are quickly compensated for their services. Additionally, another standard KPI is the clean claim rate (CCR), which is the percentage of claims paid the first time the claim is submitted to the insurance company for review and payment. This KPI reveals problems and inefficiencies in claim submission and processing or conversely can demonstrate the effectiveness of claims processing protocols implemented by an RCM partner. Nobility’s CCR is 98%, illustrating the company’s efficiency in processing claims. The industry benchmark CCR is around 95%, so this KPI indicates that Nobility exceeds industry expectations. Nobility also boasts a 100% approved billing claims submission rate within 24 hours, which reflects the company’s industry-leading commitment to ensuring claims are approved. A medical or dental practice can also assess the effectiveness of its RCM team by looking at the denial rate. The denial rate is a percentage of claims denied by payers; a low denial rate indicates healthy cash flow and signifies the claims are processed efficiently. If the denial rate is left unmeasured, it can negatively affect other KPIs, such as the ones previously discussed. In the healthcare RCM industry, a 5 to 10% denial rate would be the industry average, with any denial rate exceeding 10% signaling ineffectiveness on the part of the RCM partner. Overall, there is a strong correlation between KPIs and the financial health of a medical or dental practice, as these metrics hint at whether there is long-term financial stability for the organization.
Often, companies face challenges in implementing performance metrics into their processes. It can be difficult for companies to collect accurate data, and some employees may resist the shift to a more numbers-oriented approach. However, these challenges can be overcome with investments in staff training, technology upgrades, and process improvements. With sufficient investment into technology and staff training, companies can transition their business model to a more data-focused, objective approach that reliably integrates data to determine performance metrics for optimal efficiency. These metrics will continue to evolve in the coming years, particularly with the integration of AI and advanced analytics. While this evolution will undoubtedly bring about more challenges, companies can meet these challenges and maintain a data-driven approach through sufficient and ongoing investments in technology and training.
In the medical billing industry, standard performance metrics are set by the Medical Group Management Association (MGMA). MGMA focuses on several of the aforementioned metrics, such as denial rate and A/R collection rate. In MGMA’s article Foundational Benchmarks and KPIs for Medical Practice Operations in 2023, the organization outlines the importance of these metrics and encourages examining metrics such as A/R days and A/R aging comparisons; charge posting and billing lag time; gross revenues; and payer mix. Nobility closely monitors MGMA performance metrics and aligns its KPIs to them, consistently ranking in the top 3% and securing MGMA Gold Standard status. By adhering to MGMA performance metrics, Nobility enjoys improved efficiency and quality control. This gold standard serves as evidence of Nobility’s performance which consistently exceeds industry standards to the benefit of all its clients.
Overall, RCM partners should utilize KPIs and performance metrics to assess outcomes and ensure they are exceeding the expectations of their clients. Standards such as MGMA performance metrics allow healthcare RCM partners to hold themselves accountable for their performance, by demonstrating their efficiency through proven data. Without following strong performance metrics such as those endorsed by MGMA, an RCM partner can fail to prove its potential to prospective and current clients. Ultimately, using a data-driven and objective measurement approach ensures peak efficiency and performance for RCM teams to financially improve healthcare operations of the clients they serve.