Does Your Revenue Strategy Need a Checkup?
The right KPIs for a healthy business
By Kim Cuce’
In today’s challenging environment in the post-acute homecare space, rising labor costs and falling reimbursements leave little time to focus on crucial metrics. Discover the key performance indicators (KPIs) that are essential for businesses’ revenue cycle management, how to calculate them and the root causes behind each KPI and how to influence them positively.
Proactive Transformation for Business Health
Businesses are advised to initiate transformative actions proactively rather than reactively. Just as individuals undergo annual health screenings to establish a baseline for their well-being, businesses should also conduct regular operational assessments. These “business health checks” act as preventative measures, enhancing performance and averting complex challenges before they arise, ensuring early detection and management of potential issues.
When it comes to business health checks, it’s important to implement strategies to identify cost reduction opportunities, uncover untapped revenue streams and achieve operational excellence by addressing root causes.
Optimizing KPIs Through Billing System Configuration
A fundamental determinant of key performance indicators is the structuring of the business’s billing systems. For operations to run both in a timely and efficient manner, businesses must be well-versed in each insurance contract, including delineation of covered versus non-covered items, authorization prerequisites, quantity restrictions and allowable charges. Moreover, it’s important to diligently maintain price tables, ensuring they are up to date, as these directly influence the entire order cycle.
Key KPIs & Strategies
To set goals and improve performance, businesses need to master benchmarking. Find out where the business is today with each KPI and then set goals from there.
Such KPIs and benchmarking standards include:
Days Sales Outstanding (DSO):
This is the average number of days between the date of service and the date of payment. The ideal DSO is less than 55 days. Potential root causes of DSO greater than that could include Certificates of Medical Necessity and authorization delays, price table issues, order and confirmation delays, etc.
Held Revenue:
Identify and address issues causing revenue to be held, such as missing or expired documentation, ineligible policies, etc.
Denial Rates:
Avoidable denials, no authorizations, inconsistent modifiers and more can be managed by understanding insurance contracts and setting up price tables correctly. For example, remove the price record from that insurance if it’s a non-covered item, forcing it to be billed to the patient; modifiers can be hard coded into the price table; coverage limits can be set up for max allowables, etc. Aim for a denial rate of less than 8%.
Current Climate & Patient Empowerment
Despite the challenging landscape of insurance rate drops, the post-acute homecare industry remains steadfast in its commitment to patients. It is crucial to continue emphasizing the importance of empowering patients in the health care process and creating a fairer system for all parties involved. The goal should extend beyond merely meeting patients’ needs; it should also encompass empowering their desires.
By embracing proactive strategies, such as regular business health checks, automating existing processes to cut costs and empowering patients, providers can navigate these challenges. The industry must not only adapt to the current conditions but also anticipate future changes, ensuring that both patients and providers are positioned for success.
Kim Cuce’ is the director of business optimization for VGM & Associates and gave a presentation on this topic at the 2024 VGM Heartland Conference. Before joining VGM, Cuce’ owned a comprehensive medical billing company with a diverse clientele; she has also served as director of operations and reimbursement and payer relations at successful durable medical equipment (DME) companies. As the managing partner of a DME provider, she orchestrated remarkable revenue growth; a year later, she was asked by a major provider to provide consulting services on reimbursement challenges. For questions, contact RCS@vgm.com.
