HFMA Revenue Cycle KPIs

Healthcare providers are under pressure to optimize revenue cycle operations as value-based care and consumption of healthcare services continue to soar. KPIs help assess organizational functions.

Are you one of those providers keen to develop KPIs that can help track revenue cycle efficiency? It’s understandable if that’s where you’re at.

Sandra Wolfskill, Director of Healthcare, Finance Policy and Revenue Cycle MAP at the Healthcare Financial Management Association (HFMA) shares, “The value that key performance indicators bring to the table is the definition of standard and what you want from it is to be something that allows it to be comparable.”

HFMA’s industry standard revenue cycle metrics are called MAP keys which means to Measure, Apply and Perform. These KPIs give healthcare setups and professionals the option to compare their processes with peers and evaluate performance.

Here are the top HFMA revenue cycle KPIs that can help a wide range of healthcare providers.

Optimize Revenue Cycle with HFMA Revenue Cycle KPIs

Streamline your revenue cycle operations with these HFMA revenue cycle metrics.

Net Days in Accounts Receivable (A/R)

Determine revenue cycle efficiency by calculating net days in A/R.

According to HFMA, it is the division of net A/R by daily net service revenue. Balance sheet and income statements contain all required information to calculate net days in A/R.

Net patient receivable in the balance sheet represents net days in A/R. It’s the combination of net credit balance, uncollectible account allowance, charity service discounts and contractual third-party allowances.

It should exclude non-patient A/R, capitation/premium revenue, revenue from 340 Drug Purchasing Program and A/R related to third-party settlements that are not patient specific. This HFMA key revenue cycle metrics also excludes state subsidy payments, county subsidy payments, ambulance service charges, retail pharmacy charges and physician/clinic charges unless recognized by Medicare.

Cash Collection as a Percentage of Net Patient Services Revenue

This HFMA revenue cycle KPI reflects an organization’s ability to cash their net patient services revenue. It helps determine the financial status of a healthcare business.

According to HFMA, this metric can be calculated by dividing total patient service revenue (in cash) by the average of the monthly net patient service revenue. Total patient service revenue (in cash) is the amount patients pay for medical services. It should include undistributed payments, IME payments, bad debt collections and DSH reimbursements from Medicare.

However, healthcare providers should exclude Medicaid DSH payments, safety-net, Medicare pass-through and direct graduate medical education. You should also exclude all non-patient revenue such as payment to physicians, charges for ambulance and so on.

Cost to Collect

The third HFMA revenue cycle metrics is cost to collect. This KPI helps healthcare providers determine revenue cycle efficiency and productivity.

It is the division of total revenue cycle cost by total patient service revenue (in cash). The revenue cycle cost includes salaries, fees for outsourced services and arrangements, fringe benefits, subscription costs, IT costs for storing revenue cycle data, contingency costs and bolt-on application and support staff costs.

It should not represent hard health IT expenses such as hardware and server costs, licensing fee and third-party full-time staff for system support. Hospitals must also leave out costs to acquire physical spaces, lease or rent amounts and scheduling fee if it is done by department staff.

The best way to optimize revenue cycle: identify and start with one HFMA key revenue cycle metric that is important for you. Then expand metrics with MAP keys. Once the KPIs and data collection processes are finalized, consider comparing your performance with your peers. Based on the results you get, you can determine the need to upgrade or improve your performance.

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