Impact Insights

Maximize Revenue Cycle with Key Performance Indicators

You enter the elevator with your hospital/health system chief financial officer or chief medical officer, and the conversation goes something like this.

“How did the system install go?”

“How is your department doing?”

“What is the patient no-show rate?”

“Is the physician staff completing their documentation in a timely manner?”

Are you prepared to answer these questions about your team’s performance? Using key performance indicators (KPIs) will give you full confidence in your response. The monitoring of clearly defined indicators will provide you solid information to assist in running revenue cycle by providing concrete, objective information on which to act.

First, you must identify the KPIs important to your organization. In the healthcare industry, many KPIs are consistent across organizations and are provided by your electronic health record (EHR) vendor. Your EHR vendor will provide a set as a starting point, but you’ll likely need to go deeper to measure items less technical in nature and more “people” focused.

Using standard KPIs allows for an objective comparison with other organizations in your area. When identifying KPIs you will use, think through what it is that you need to monitor. Often, the KPI will be for a specific operational measure. Examples of measurable KPIs are daily census, denial volume by payor, case mix index and unfinished clinical notes.

After identifying the KPIs, operations personnel will work in partnership with the business intelligence team to develop the report or extract. As you prepare for the meeting, ask yourself questions to determine the requirements. Using denial volume by payor as the example, think of what your inputs need to be to demonstrate the output, based on the definition of the KPI. Those could include:

  • Date of Service
  • Medical Record Number
  • Name
  • Date of Discharge
  • Diagnosis
  • Payor
  • Denial code
  • Denial date

Nearly anything that can be entered into a system can be reported out. Be careful of any fields where the user can free-text information (typing the information with no validation check rather than choosing from a pre-defined list of choices), as those data elements are more difficult to translate into actions.

Once the KPIs are developed, it is time to apply them. New KPI history will start with your first run in the production environment. Existing, or provided KPIs, will also start on the first run; however, if this is a measurement you have used in a different system (for example, you are converting to a new system), that history can be stored in an external file and referenced later. To make the most of your KPIs, gathering the KPI data for a year will provide valuable long-term strategic actions. For example, if you notice payments have steadily increased for Payor X, what can be learned from Payor X and applied to other payors?

If you do not have access to historical data, fret not. Reviewing the KPIs on a regular schedule will allow you to identify variations quickly. Using the denial volume by payor as the example, watching the KPI weekly will allow you to react and adjust, limiting the impact to your accounts receivable. Payor Y begins denying accounts that do not have a defined modifier when a specific diagnosis is used on an account. Using the KPI metric, you can research the denial and determine the new payor rule and adjust the system, allowing a quicker rebilling of denied claims and eliminating new denials, returning your accounts receivable (AR) to its expected level.

Developing and utilizing a risk mitigation plan to react to unexpected KPI information allows for a quick response to a variety of situations. Observing an indicator unexpectedly rise or fall below previous performance, or expected performance, should trigger an action to research further. If you have the plan already developed, the response will be quicker. By monitoring things like payor denials on a consistent and scheduled basis, corrective actions can bring your numbers back into alignment and enhance your overall process and operational goals.

If you do not already have KPIs established or would like assistance with existing KPIs, contact our team at Impact Advisors. We can help you identify, develop, and plan your KPI measurements, establishing you as the top provider for your services.