Claimocity Claims
8 KPIs to Track for a
Healthy Revenue Cycle
Managing your revenue for your healthcare practice isn’t just about getting paid; it’s about getting paid quickly and accurately. But how do you know if your revenue cycle is running smoothly? That’s where Revenue Cycle Management KPIs come in.
By tracking the right Key Performance Indicators (KPIs), you can spot inefficiencies, reduce claim denials, and improve cash flow. In this guide, we’ll review the most important revenue cycle KPIs, explaining what they are, why they matter, and what benchmarks to aim for.
What are Revenue Cycle KPIs?
Think of revenue cycle KPIs as your practice’s financial health checkup. These financial and operational metrics track how efficiently you’re billing, collecting payments, and your overall revenue cycle performance. By keeping an eye on these key indicators, you can catch inefficiencies early, improve cash flow, and make smart improvements to keep your practice financially healthy. Comparing your KPIs to industry benchmarks can help you identify where your practice is excelling and where there is room for improvement. With these insights, you can make data-driven decisions that allow you to work smarter, get paid faster, and keep more of what you earn.
Why Do Revenue Cycle KPIs Matter?
Poor revenue cycle performance can lead to delayed reimbursements, denied claims, and lost revenue. The truth is stark: without proper KPI tracking, you’re essentially flying blind when it comes to your practice’s financial health. Tracking KPIs provides actionable insights that help identify problem areas, optimize billing workflows, and ultimately increase profitability. Monitoring your RCM KPIs will help you:
- Speed up reimbursements by improving claims processing
- Cut down on denied claims and reduce rework
- Lower administrative costs by making billing more efficient
- Make sure you’re collecting every dollar you earn
By keeping a close eye on these KPIs, you can fine-tune your billing strategies, prevent revenue from slipping through the cracks, and make sure your practice stays on top of its finances and avoids costly setbacks.
8 Essential Revenue Cycle KPIs to Track
To keep your revenue cycle running smoothly, you need to track the right key performance indicators (KPIs). These metrics go beyond measuring efficiency—they pinpoint bottlenecks, highlight areas for improvement, and ensure you’re optimizing revenue collection. A strong revenue cycle starts with understanding the right metrics. But just tracking numbers isn’t enough—you need to know what they mean, why they matter, and industry-standard benchmarks to help you gauge performance.
1. Clean Claim Rate
What it is: The percentage of claims accepted by payers on the first submission without any errors or rework. This metric directly measures your billing accuracy and efficiency.
Why it matters: Rejected claims delay your money and waste valuable staff time. By maximizing your clean claim rate, you’ll accelerate payments and slash administrative workload.
Benchmark: Top performers achieve a 98% clean claim rate. Set your target at 95% minimum to remain competitive in today’s healthcare landscape.
2. Reimbursement Rate
What it is: The percentage of expected reimbursement you receive from payers based on your contracts.
Why it matters: A low reimbursement rate may indicate underpayments, incorrect billing, or unfavorable payer contracts. Tracking this metric helps practices identify revenue leakage and improve collections. It can also reveal opportunities to renegotiate better terms with your payers.
Benchmark: Reimbursement rates can vary significantly based on specialty, payer contracts, and service type. Industry averages typically range between 85-89%.
3. Days Accounts Receivable (A/R)
What it is: The average time it takes to collect payments after sending a claim. This helps determine how quickly your practice turns billed services into revenue.
Why it matters: The longer a claim sits unpaid, the harder it is to collect. High A/R days indicate inefficiencies in billing or payer processing, while lower A/R days mean faster revenue turnover.
Benchmark: Ideally, the number of days in accounts receivable should be under 40 days to maintain a healthy cash flow.
4. Gross Collection Rate
What it is: The percentage of your total charges that convert to payments. It’s a straightforward ratio of money received compared to what you billed.
Why it matters: This metric gives you a quick snapshot of your practice’s overall financial health. Though it doesn’t account for contractual adjustments like your net collection rate does, it helps you understand the big picture of your billing effectiveness.
Benchmark: Aim for 95% or higher. However, this metric is most valuable when tracked alongside your net collection rate to get the complete picture of your revenue cycle performance.
5. Net Collection Rate
What it is: The percentage of revenue you collect after adjustments for contractual allowances, bad debt, and other write-offs.
Why it matters: A strong net collection rate means your practice is effectively collecting what it’s owed. If this number is low, it could signal issues with claim follow-up, denials, or patient collections, which all directly impact your bottom line.
Benchmark: High-performing practices achieve 95% or higher. If your net collection rate is below 95%, immediate attention should be given.
6. Denial Rate
What it is: The percentage of claims denied by payers, either due to coding errors, missing information, or policy issues.
Why it matters: Denials represent revenue that’s stuck in limbo. They require costly appeals and often indicate deeper problems in your billing process. Keeping denials low will ensure a more predictable cash flow.
Benchmark: Your denial rate ideally should be below 5%. If you’re above 10%, that should signal your revenue cycle needs urgent attention.
7. Average Reimbursement Per Claim
What it is: The average payment received per processed claim. This helps assess payer performance and billing accuracy.
Why it matters: This spotlights your most profitable services and payers. Watch for downward trends that could signal coding issues or changing payer policies.
Benchmark: While this varies significantly by specialty and service type, establish your own baseline and track month-over-month changes.
8. Cost to Collect
What it is: What you spend on billing operations compared to what you bring in. This includes your staff time, software, and any outsourced billing services.
Why it matters: If you spend too much time chasing down payments, you’re eating into your profits. Understanding this metric helps you make smarter decisions about staffing, technology, and whether to handle billing in-house or outsource it.
Benchmark: Aim to keep collection costs below 5% of your revenue. The industry average is around 3%, so if you’re spending more, there’s room for improvement.
How to Track Your Revenue Cycle KPIs
Spreadsheets and manual tracking are relics of the past. Tracking revenue cycle KPIs requires accurate data collection and real-time monitoring. Utilizing an RCM platform like Claimocity can provide:
- Automated KPI tracking and reporting
- Customizable revenue cycle dashboards
- Real-time claim status updates
- AI-powered insights to improve billing performance
With the right tools, you can turn raw data into meaningful insights that help you make confident decisions and improve your practice. If you’re not sure if managing billing in-house or outsourcing is the right move, check out our guide on In-House vs. Outsourced Medical Billing to weigh your options and find the best fit for your practice.
What to Do If Your KPIs Aren't Measuring Up
If your KPIs show your practice has inefficiencies, don’t panic—take action:
- Audit your front-end processes: Review patient registration, insurance verification, and authorization procedures to catch issues before they become denials.
- Optimize billing workflows to reduce claim errors and streamline submissions
- Enhance payer negotiation contracts to improve reimbursement rates
- Adopt AI-powered charge capture for more accurate claims and reduced manual entry
- Train staff on proper coding and documentation requirements
- Consider outsourcing billing services to improve efficiency and reduce administrative burdens
Take Control of Your Revenue Cycle
Tracking the right KPIs isn’t just about numbers—it’s about receiving what you’ve earned and ensuring your practice’s financial health. With the right revenue cycle management solution, you can turn those metrics into valuable insights and tangible results.
Claimocity’s comprehensive reporting solutions deliver the insights you need to optimize your revenue cycle:
- Practice IQ Dashboards: See real-time snapshots of provider activity, productivity trends, and benchmarking data.
- Advanced Practice Analytics: Uncover revenue opportunities with powerful enterprise insights into performance metrics, RVU tracking, length of stay management, and more.
- Detailed RCM Reporting: Transform your KPIs from numbers into action with comprehensive monitoring and regular financial and operational reports.
- Provider Compensation Dashboards: Take the guesswork out of provider payments with user-friendly, transparent insights tailored to your practice’s unique compensation plans.
Our performance metrics consistently outperform the industry standards so our providers can get paid faster, reduce denials, and keep their revenue cycles running smoothly. Take a look at what your numbers could look like with Claimocity:
Our fully integrated platform gives you complete visibility into your revenue cycle performance, allowing you to identify opportunities and address issues before they impact your bottom line. With Claimocity’s reporting tools, you can stop wondering about your financial health and start improving it—all while reclaiming valuable time that would otherwise be spent gathering and analyzing data.
Ready to gain control of your revenue cycle with industry-leading reporting? Schedule a demo with Claimocity today!
