Revenue cycle management (RCM) is a critical process for ensuring your healthcare organization is able to secure the funding it needs to provide a consistently high quality of care. Taking a data-driven approach to RCM by monitoring important key performance indicators (KPIs) can help you boost your overall profitability by identifying areas for improvement that may not have been previously visible.

By establishing and tracking the right KPIs, your organization can uncover opportunities for improving your RCM to collect more revenue, reduce operating expenses and improve overall financial performance. These eight healthcare RCM metrics are essential for monitoring your organization’s financial health from multiple perspectives.

1. Gross Collection Rate

Your gross collection rate is the total number of dollars you receive compared to your bills, which indicates how effective your organization is at collecting outstanding payments in a general sense.

While this metric is a useful benchmark and an important part of calculating other healthcare RCM KPIs, it doesn’t account for limiting factors like write-offs and care discounts. As a result, it’s best to use it specifically for more general purposes. 

2. Net Collection Rate

While gross collection rate is a general measure of the total income you collect over a given period, your net collection rate provides more specific insights. 

Your organization’s net collection rate is a measure of how much money you collect compared to the total amount your payers owe you. Unlike your gross collection rate, this number provides a more complete view of your ability to collect payments because it also accounts for bad debt, taxes, discounts and other factors that can impact your ability to do so.

3. Net Days in Accounts Receivable (A/R)

The longer your organization waits to receive payments from patients and payers, the more revenue you stand to lose. Days in accounts receivable (A/R) is a measure of the average number of days it takes to collect outstanding payments, which is a direct indicator of how efficient your revenue cycle is. 

Net days in A/R is an easy metric to measure since the data you need is readily available on your organization’s balance sheet. This data point includes information from several areas, including:

• Allowances for uncollectible accounts and third-party payers
• Charity care discounts
• Net credit balance

Ideally, your A/R should come to 30 days or fewer — the lower the number, the better your RCM strategy. If you end up with a higher number, you may need to assess your current system.

4. Clean Claim Rate

The more claims your organization has to fight, the higher your costs. A high clean claim rate indicates a financially healthy organization that experiences few claim denials.

The clean claim rate is the percentage of insurance claims that do not require manual interventions. This metric includes all claim types except those flagged for examination and those submitted directly to third-party payers. 

Monitoring this metric over time can help you identify areas for improvement in claims management, which can reduce the overall number of denied claims your organization encounters each year. 

5. Cost to Collect

Securing payments isn’t free. Although revenue flows in from care payments, your organization also incurs costs during the RCM process:

• Staff salaries and benefits
• Overhead expenses
• Technology costs

Healthcare cost to collect is an essential metric that accounts for all of the above costs over a specific period, such as a set number of months or years. If your cost to collect is high, you should look for opportunities to reduce costs and improve RCM efficiency. 

6. Claim Appeal Rate

According to one 2024 study, insurance claim denials cost healthcare organizations approximately $19.7 billion dollars per year. Hospitals take the brunt of this loss due to the high number of uninsured and underinsured patients who present to the emergency department rather than seeking preventive care. 

Appealing denied claims can help your organization recoup some losses, but an ineffective appeals process can prevent you from successfully making an appeal. Monitoring your claim appeal rate assists you in determining whether you need to improve your internal protocols for fighting claim denials. 

The claim appeal rate compares the total number of denied claims in a specific period to the total number of appeals your organization makes. A high percentage indicates an efficient, streamlined protocol that improves your chances of success, while a low percentage reveals opportunities for improvement.

7. Bad Debt

Also known as write-offs or uncompensated care, healthcare bad debt is the amount of money owed to your organization that you cannot collect. 

Many healthcare organizations have recently seen a rise in bad debt due to increasing insurance costs and out-of-pocket payments. Although each type of organization has a different level of acceptable bad debt, it’s still critical to find effective ways to address this issue in order to improve RCM.

Fortunately, bad debt is a straightforward metric to track. All the data you need to log this metric is readily available on your balance sheet, and an RCM solution with detailed reports allows you to drill down to the most granular data behind it. 

8. Missed Charges

Tracking and monitoring missed charges over a specific period can help you uncover recurring patterns that could be preventing you from collecting payer reimbursements.

Some of the most common causes of missed charges include unbilled claims, coding accuracy issues, unbundling, undercoding and missing explanations of benefits from payers.

Your missed charges data can help you determine which billing issues may be behind lost payments, providing the information you need to pinpoint effective solutions for these processes.

Achieve Your Healthcare RCM Goals With Millennia

Whether your organization is a private physician practice or you’re part of a large hospital system, tracking the right data is crucial for staying operational. Millennia’s end-to-end revenue cycle management solution provides a complete analytics and reporting suite so your organization can gain the insights you need to maximize patient payments.

See how the right technology can uncover key areas for improvement in your organization. Request a consultation today to get started.