A revenue cycle KPI refers to a quantifiable goal that a long term care facility’s leadership team uses to make strategic performance decisions. Every facility is different and will have its own set of unique revenue cycle KPI targets that their teams work toward.
It is essential for any organization, including long term care facilities, to understand the overall health of the business by determining its revenue cycle KPIs (Key Performance Indicators). Revenue cycle KPI objectives reflect how the facility is performing operationally and financially. They highlight a facility’s unique targets so leadership can assess and make critical operational adjustments to achieve a strategic advantage over their competitors.
Effective data collection, reliable data storage, efficient retrieval, and advanced reporting are at the heart of KPI tracking. Due to the vast quantities of data that long term care facilities collect, it is essential to invest in modern nursing computer software programs with built-in storage, reporting, and analytics tools. This allows staff to better organize data while compiling charts and reports so that leadership can make better data-based decisions.
Additionally, most long term care facilities will track different KPIs that are relevant to their departments, such as:
- Strategic KPIs: These KPI metrics are typically tracked by the facility’s leadership—directors, board members, and administrators—who measure strategic goals, such as:
- The return on investment
- Profit margins
- The entire facility’s revenue
By tracking these specific KPIs, leadership can gain a high-level snapshot of the areas in which the facility is underperforming, where it is performing well, and what improvements need to be made.
- Operational KPIs: These KPIs are tracked by the facility’s managerial staff daily and monthly. For long term care facilities, these KPIs are typically based on:
- Clinical processes
- How tasks are performed
- The methods used
- The quality of care
- The efficiency of staff performance levels
By measuring these KPIs, facilities can track resident care better while highlighting significant problem areas that need more attention.
- Financial KPIs: Long term care facilities need to have a solid grasp of their financial revenue cycle KPI objectives, as these directly impact a facility’s profit margins and reimbursements. The financial revenue cycle KPI objectives are usually tracked by a facility’s revenue cycle team, which uses an efficient Revenue Cycle Management (RCM) system to simplify workflows, improve billing processes, and coordinate claims better. This allows facilities to maximize their reimbursements while optimizing their cash flow.
- Customer KPIs: These KPIs are used to track resident satisfaction and retention. By measuring these metrics, facilities can gather valuable insight regarding their services, activities, and amenities, items that directly contribute to the resident’s quality of life.
With so many KPIs to track, it can be difficult for facilities to know which KPIs they should prioritize and the best practices they should follow. Here we will highlight the most important revenue cycle KPI objectives.
The Top 3 Financial Revenue Cycle Management Best Practices
Long term care facilities have replaced paper documentation in favor of electronic nursing documentation. And the rise of long term care EMR has paved the way for improved data collection processes, better data analysis, and more informed decision-making, thanks to data analytics and the inclusion of KPIs.
While it is essential to track multiple KPIs, one of the most important KPIs to track is a financial revenue cycle KPI, as it directly impacts the financial stability of a facility. Therefore, when leadership is reviewing their KPIs, particularly their financial revenue cycle KPI objectives, they should have in mind the following revenue cycle management best practices:
- Calculate net days in accounts receivables
While it is normal for long term care facilities to wait for reimbursements or service payments from insurance companies, it is advisable to submit the claim between 33-45 days in the accounts receivable. Once this deadline passes, it is more challenging for facilities to receive any payment for services rendered, negatively impacting the facility’s financial health.
The revenue cycle KPI determines the average length of time it takes for a submitted claim to be paid. That is why it is important that your KPI dashboard has the capacity to calculate net days in accounts receivables.
- Develop a cash collection KPI as a percentage of net patient revenue
The purpose of a cash collection KPI as a percentage of net patient revenue is to evaluate a facility’s financial health. The Net Patient Revenue (NPR) is the money generated from patient services that are collected from payors, such as Medicare, Medicaid, and private insurers. The NPR is calculated from the total patient revenues minus patient discounts. Therefore, if a long term care facility has a negative NPR, this means its discounts are greater than its total revenue.
This revenue cycle KPI determines a facility’s revenue cycle because it indicates its financial strength. By knowing the financial health, leadership can then develop meaningful business strategies with realistic goals.
The revenue cycle KPI also represents the efficiency of a facility’s revenue cycle process, providing a realistic figure for what the facility can expect to receive for Medicare reimbursements or payments from alternative insurance companies. Therefore, the financial team needs to track the monthly revenue cycle KPI, which includes reviewing patient service payments, undistributed payments, bad debt recoveries, and Medicare reimbursements.
- Track the revenue cycle KPI for claims denials
Billing for the services rendered in long term care facilities can be complicated, especially because different residents have different insurance payors and financial assistance. Therefore, facilities need to know what insurance coverage residents have before submitting a claim, as failure to do so can result in claims denials or inaccurate reimbursements, negatively impacting a facility’s revenue stream.
When seeking to better understand payer or insurance requirements, facilities should pay close attention to the following factors that can impact and reduce claim denials:
- Benefits and Eligibility: First and foremost, facilities must confirm the resident’s insurance to verify their eligibility and benefits coverage. It is also advisable to check for secondary and tertiary insurance and obtain the necessary authorization before submitting a claim. This will allow the financial or revenue cycle team to identify and submit timely claims.
- Procedure Codes: Facilities must also be vigilant for valid procedure codes for the services rendered, which identify medical procedures. Each procedure has a unique five-digit code that confirms to health insurance companies what type of care was provided. Entering incorrect procedure codes will result in inaccurate or claim denials. Using eMAR software can mitigate these human errors because the long term care EMR software program has digital procedure codes that staff can select rather than enter manually.
- Diagnosis Code Changes: Facilities must also update diagnosis documentation to ensure that all new, changed, or deleted diagnosis codes are accurate and in line with the CMS’ requirements. Suppose the facility has invested in effective long term care software. In that case, the documentation process will be significantly easier, enabling caregivers to update resident records using handheld devices that allow for real-time updates.
While it may be challenging for facilities to improve their revenue cycle KPI metrics, it is not impossible, especially if they adopt an effective RCM system to ensure that all billing and claims processes are accurate and timely.
Contact us here to learn about our RCM software and how it can improve your billing processes.
Revenue Cycle Key Performance Indicators: Mistakes to Avoid
As mentioned earlier, long term care facilities need to collect, store, and organize vast amounts of data, which, when done successfully, can significantly improve the facility’s financial revenue cycle operations. However, the problem lies with implementing effective revenue cycle key performance indicators, translating that data into valuable information and avoiding mistakes that negatively impact a facility’s revenue cycle KPI.
Furthermore, if a facility does not have an efficient nursing home EHR system with financial modules in place, the revenue cycle team cannot manage or monitor the facility’s revenue cycle performance, leading to inefficient workflows, poor performance management, and financial instability.
Therefore, every leader should strive to understand how to measure revenue cycle management success while avoiding the following unnecessary mistakes:
- Entering the Incorrect Date of Birth: When a resident is admitted into a facility, it is essential to check their insurance coverage and who the primary insurance subscriber is. If the primary insurance subscriber (spouse, another family member, or employer) is not the resident, the correct procedure is to enter the date of birth for the primary insurance subscriber rather than the resident. Entering the wrong date of birth for an insurance claim will result in claim denial.
- Not Following Up with Authorizations: Another practice that falls into revenue cycle management best practices is for facilities to ensure they follow up on submitted claims. While it is essential to submit a timely claim, it’s also crucial to follow up with the insurance providers and ensure the claim is reviewed with all the correct information provided. Failure to do so can result in inaccurate reimbursements and claim denials, ultimately impacting the facility’s financial performance.
For more, make sure to check out the various revenue cycle management best practices PDF documents made available to long term care organizations, such as the Missouri RHC Revenue Cycle Management Best Practices guide, which provides further insight into revenue cycle management and understanding the claim life cycle.
The Importance of Prioritizing Revenue Cycle KPI Goals
It is up to leadership to prioritize the facility’s revenue cycle KPI goals so they can provide quality care to their residents. This entails having in place an effective strategy to manage the facility’s administrative, clinical, and financial functions, thus allowing the facility to be accurately reimbursed for the services rendered.
Effective revenue cycle management comes into play by understanding all the necessary revenue cycle KPIs. Failure to do so will result in financial instability, poor clinical workflow, and ineffective operational management. Therefore, a facility’s success goes hand-in-hand with its revenue cycle management, encompassing everything from admission to submitting a claim and receiving payments.
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