Managing the behavioral health revenue cycle may seem as simple as submitting claims and collecting payment, but this couldn’t be further from the truth. Operating a successful revenue cycle requires just as much time, expertise, and resources as the clinical side of your practice. Similar to measuring progress for your patients, tracking revenue cycle performance is crucial to truly understanding where your practice stands financially to make the necessary improvements for long-term growth.
Tracking Revenue Cycle Metrics: The First Step to Meeting Your Financial Goals
Setting clear revenue cycle goals and aligning your team to those objectives paves the way for consistent, measurable improvement. Evaluate your performance on a regular basis to determine where revenue is slipping through the cracks, what’s causing your practice to miss billables, and, ultimately, how to optimize your financial health. These are the top four revenue cycle metrics your behavioral health practice should be monitoring:
- Average collection rate. This metric measures the percentage of total billed charges that your practice successfully collects after an episode of care. Essentially, your collection rate quantifies how effectively your billing office collects the money you’re owed for your services. This number is calculated by dividing the total payments by the overall charges. Aim to maintain your collection rate between 95% and 99% to ensure practice profitability.
- Denial rate. Your denial rate tracks how often your claims are rejected by payers. A high denial rate is a clear sign that your revenue cycle has major gaps, as claims are leaving the door with errors and incomplete information, causing patients to seem ineligible for insurance coverage. Your denial rate should be no higher than 10%, and ideally below 5%, to avoid disruptions to this major source of revenue.
- Days in insurance AR. The longer an insurance claim lives in accounts receivable (AR), the less likely your practice is to get paid. Your goal should be to minimize AR days, as this leads to faster payment cycles and stronger financial stability. In many cases, high AR is a culmination of billing errors, revenue cycle inefficiencies, and a lack of follow-up. While some AR is inevitable, your accounts should only age for about 30 days. Any longer indicates inefficient and costly collection efforts.
- Cost to collect. Your cost to collect represents the total expenses incurred to collect payments from both payers and patients. This figure is calculated as a percentage of total collections. The higher your cost to collect, the less your practice earns from each claim. A low cost to collect — less than 6% — is key to maintaining profitability, especially for high volumes of small balance claims.
Maximizing Financial Performance: How a Specialized Partner Can Help
These metrics are just the beginning of a complete revenue cycle monitoring initiative. Behavioral health practices must continually analyze and extrapolate from countless key performance indicators (KPIs) to truly understand their financial health and what optimizations need to be made to improve revenue and efficiency — but this can be incredibly difficult to do with a busy in-house billing team.
With an outsourced partner like Accurio, tracking your revenue cycle performance becomes simple. By offering fully customized, business intelligence-based revenue cycle management (RCM) solutions, Accurio helps billing teams simultaneously master complex billing while gaining an inside look into real-time practice financials. Pairing this level of analytics-driven insights with deep expertise in the behavioral health billing space, Accurio helps practices achieve a 98% average collections rate, 30-day insurance AR, and a cost to collect of less than 6%. With over $100 million of revenue collected for hundreds of practitioners, Accurio knows what it takes to close every revenue cycle gap and position behavioral health practices for long-lasting success.
Want to learn more? Download the white paper to explore the five red flags your behavioral health practice should look for and discover proven solutions to overcome them to drive practice growth.
