From the June 2022 issue of HealthCare Business News magazine
Key performance metrics
As noted, many healthcare organizations choose to outsource some or all RCM processes, but even when RCM is no longer in-house, healthcare organizations must still track vendors’ performance.
It is vitally important for health systems to track several key metrics to ensure RCM efficiency and effectiveness. Thinking again of the RCM process as a highly complex machine, it’s essential, therefore, to monitor the metrics examples below and adjust along the way to achieve success.
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In addition, including the appropriate performance metrics in your contracts with third-party service providers helps hospitals to minimize risk, enhance efficiency, and maximize revenue collected. A few performance metrics that should be addressed with specific performance targets in your contracts and monitored on an ongoing basis include:
• Cost to collect: Total fees as a percentage of total collections
• Gross A/R days: Total A/R divided by average daily gross revenue
• Collections as a percent of net A/R: Total collections divided by net A/R
• Customer service ratings: Based on customer satisfaction surveys
• Self-pay A/R as a percentage of total A/R: Portion owed by patients as a percentage of total receivables
• Bad debt as a percentage of gross patient revenue: Bad debt divided by gross patient revenue
Each of these metrics should be explicitly defined in the contract. This contract should also allow for incentives if the above metrics are met or exceeded. Finally, ensure that appropriate penalties are in place if performance falls below defined thresholds.
RCM as an outsourced service is highly complex and includes a vast number of elements and functions—such as billing, A/R management, denials management, cash posting, credit balance processing, customer service, bad debt management and medical eligibility. Even when collecting on a single account, RCM can require data to be passed among a variety of disparate organizations, which can lead to errors. For this reason, it is important to closely manage your third-party RCM services and software and continually monitor metrics to optimize your processes.
About the authors: Eric Slimp is the director of purchased services for symplr. Mitali Maheshwari is a HCIT advisor at symplr. With deployments in 9 out of every 10 U.S. hospitals, symplr is the leader in enterprise healthcare software and services.
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