Physician Revenue Cycle Key Indicators of Best Practices

Physician calculating revenue cycle

Physician revenue cycle operations continue to transform fundamental aspects of modern medical practice. The current unsustainable system drafts individual elements of the revenue cycle in search of success, often ignoring key steps in revenue cycle management in healthcare.

MAP Key indicators are objective industry standard metrics used to track and measure revenue cycle performance in a healthcare setting. They are a set of 14 key performance indicators grouped for physician practice management that benchmark revenue cycle success.  The Healthcare Financial Management Association, or HFMA, has predetermined these MAP Key indicators in a mission to lead the financial management of the healthcare industry. A productive system maintains each aspect of the cycle in a cohesive and efficient manner continuously. Unfortunately, the paradigm shift in collections reflects a troubling combination of MAP Key indicators giving industry leaders a distorted view of their revenue cycle.

 

MAP Key Indicators of Physician Revenue Cycle Operations

Although there are a wide variety of MAP Key indicators that reflect economic growth or looming disaster in the healthcare revenue cycle of a physician’s practice, there are a few metrics that apply across the board.

Focus on these selected key performance indicators when distributing resources for physician revenue cycle operations management:

  • Net days in accounts receivable from the income statement and balance sheet.
  • Cash collections as a net percentage of patient revenues.
  • Denial write-offs as a net percentage of patient revenues.
  • Claim denials not including non-covered services or patient financial responsibility.
  • Revenue cycle cost to collect.

These performance indicators lay the groundwork for benchmarking success in the revenue cycle management process, although there may be small noted differences in the revenue cycle in a large versus small physician practice.

Revenue cycle operations include the entire life of the patient account from creation to collection. Accounts receivable management, however, refers to the oversight of the revenue collection period. High-performing practices have a shorter collection period, typically no more than 36 days.

Note the importance of minimizing lag between patient discharge and payment collection. Patient financial responsibility rose a striking 11 percent in 2017 according to a TransUnion Healthcare Analysis, and it shows no signs of slowing.  With an increasing focus on patient financial responsibility, a shorter accounts receivable period equates to healthier physician revenue cycle operations.

Many years of operational experience, as shown in this case study, has helped many physician practices effectively interpret performance metrics before implementing necessary changes. The ability to successfully identify optimal practice criteria based on quantitative and qualitative measures is most important.

Initially, an effective Practice Evaluation can help to better focus your resources for improvement and success in key areas. Although many use the terms revenue cycle operations and accounts receivable management interchangeably, they are not one and the same.

 

Physician Revenue Cycle – 6 Essentials of Effective Management

MAP Key indicators can help determine where to best funnel resources for the physician revenue cycle. However, a successful, mostly fee for service healthcare operation must incorporate six essential elements into their revenue management cycle from the very beginning.

Some recent studies suggest that post-insurance balances account for the fastest growing component of bad medical debt. This is likely due to the rise in patient financial responsibility and the increasing popularity of High Deductible Health Plans.  Patients currently account for 30 percent of healthcare revenue making them the third largest payer group in the United States.

Proactive preliminary planning is a fundamental necessity and effective revenue cycle operations require a patient-centric approach and a specialized skillset.  Here are six essential elements for effective physician revenue cycle operations management:

  • Competent management with a specialized and intelligent skillset.
  • A fitting centralized or decentralized organization model.
  • A single efficient practice management system.
  • Transparency in billing, productivity standards and infrastructure controls.
  • A coding and compliance model based on continuing education.
  • ICD-10 implementation plan.

Lacking even one of these elements can cripple the physician revenue cycle operations management plan to a degree that may be irreparable. However, effective and sophisticated infrastructure development can facilitate smoothly functioning revenue cycle operations.

The key to optimal cash flow in the revenue management cycle is to focus efforts on external drivers that have been previously passed over due to a lack of concentration on patient collections. Some of these external drivers include things like refiled claims that suffered denial on the first pass and post-insurance balances owed by patients.

Management and administration must both focus efforts on revenue cycle management steps to ensure successful outcomes while tracking and analyzing metrics along the way.

 

Implementation – Key to Success

Effective and efficient physician revenue cycle operations are only as good as the implementation and monitoring of key indicators to achieve best practices.  In addition, ask yourself if you are prepared for new compensation models being mandated, such as value-based reimbursement.

To maximize revenue potential, the entire medical office must focus on not only generating revenues, but achieving the shortest accounts receivable cycle possible.

The steps in revenue cycle management are virtually the same in large and small physician practices with some variances.  Physicians and CFOs are facing unparalleled pressure in the industry to increase productivity, preserve financial solvency, meet regulatory mandates and reduce revenue cycle operations expenses.

The goal is to become more efficient while delivering the highest quality care, maintain a profit, and utilizing best practices and operational quality to maintain compliance and provide a measurable return on investment.

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