Your medical practice has never had it so good. The number of patients is increasing and you have enough left over after paying all your overhead expenses and bills. You even have enough left over to take that European holiday after paying off your mortgage and the household bills. Wow! You are doing well and your practice is earning money….or is it?

The cash flow is an indicator of the current financial health of your practice. However, there are other metrics that need to be evaluated to ascertain the true financial health of your practice. Equally important is to evaluate the metrics of your practice against the industry standards. That will provide you with the true picture – whether your practice is really successful.

The best way to evaluate the degree of success for your practice is to compare the metrics that impact your revenue cycle with those set as benchmarks or industry standards. Benchmarking your key metrics against the industry standards has to be a continuous process if you want to improve your revenues and ensure that your practice is really successful. What are these key metrics that you need to benchmark to measure the success of your practice?

Healthcare revenue cycle metrics

The key metrics that any practice should evaluate and benchmark are:

  • First pass resolution rate
  • Days in accounts receivable
  • Days in accounts receivable more than 120 days
  • Adjusted collection rate
  • Denial rate
  • Average reimbursement rate
  • Overhead expenses

The above mentioned revenue cycle management key metrics for your practice are those that you can easily measure and improve if required. However, it is important to know how to measure each of these and against which benchmarks.

First Pass Resolution Rate

Measuring the number of claims submitted by your practice that get resolved in the first instance (a great feeling by the way); the first pass resolution rate is an indicator of the effectiveness and success of your RCM process. In order to measure your first pass resolution rate, divide the total number of claims resolved on the first submission by the total number of claims resolved during the same period of time. If the answer is 90% and above, you meet the benchmark set for this metric.

Days in Accounts Receivable

From the time you submit your claim to the time you receive the payments – the average of these numbers of days across all your claims is known as days in accounts receivable. To calculate your days in accounts receivable you need to first calculate your practice’s average daily charges. This is done by adding all charges for the given period less the credits received. Next divide this result by the total number of days in the given period. (For example if the given period is 3 months, the total number of days would be 90). Now divide the total receivables by the earlier calculated average daily charges and you have your days in accounts receivable. Although 30 to 40 days is preferable, if the answer is below 50 days, you are meeting the set benchmark for days in accounts receivable.

Days in Accounts Receivable more than 120 days

Achieving good days in accounts receivable can mask elevated amounts in receivables pending for more than 120 days. Thus it is important to calculate and check the results of days in accounts receivable more than 120 days against its benchmark. This metric essentially indicates your ability to collect timely payments. In order to calculate this metric, you need to divide the total value (in dollars) of accounts receivable that are pending for more than 120 days by the total value (in dollars) of the total current accounts receivable. Next, multiply the resulting answer by 100 and you get the figure for days in accounts receivable more than 120 days. While less than 12% is preferable for this metric, anything between 12 and 25% will meet the set benchmark.

Adjusted Collection Rate

At times, there is a substantial difference in what you have collected as against what you should have collected. Revenue losses due to factors such as untimely filing, uncollectible bad debts, non-contractual adjustments etc are calculated to provide you with this metric. The percentage of reimbursement collected from the total amount allowed is known as the adjusted collection rate. Calculation of adjusted collection rate is done by dividing payments (net of credits) by charges (net of approved contractual agreements) for the selected time frame (use a 12 month time frame). Multiply the resulting answer by 100 to get the adjusted collection rate. As per the benchmark, your adjusted collection rate should be 95% at the very minimum.

Denial Rate

You need this metric to understand and quantify the effectiveness of your RMC process. It is represented by the percentage of claims denied during any given period. Calculating the denial rate is done by dividing the total amounts (in dollars) of claims denied by the total amount of claims submitted, within the same period and multiplying the result by 100. While the industry benchmark for this metric is between 5 and 10%, outsourcing your RCM process to a professional agency could help in keeping it below 5%.

Average Reimbursement Rate

A great way to track an accurate picture of your practice’s financial health, the average reimbursement rate is the percentage that your practice has collected against the claims submitted. To calculate the average reimbursement rate, the sum of total payments received needs to be divided by the sum of total charges/claims submitted and the result multiplied by 100. The benchmark average for this metric is between 35 and 40%.

Overhead Expenses

Are you spending more than other similar practices? The only way to find this out is to measure your overhead expenses metrics with the benchmark set by MGMA for specialty specific overhead rates. If your metrics point to higher overhead costs, it is time to review the different areas in your practice which involve payouts.

The MedConverge Advantage

With over two decades of experience in the healthcare revenue cycle management domain, we can perform a complete revenue cycle analysis and benchmark comparison of your medical practice and provide you with an action plan to get your metrics up to industry standards. Call us today to schedule your first consultation. Combining the full spectrum of RCM, our experts will help you in achieving the benchmarks thereby improving your bottom line.

Why settle for just one European holiday when you can see the rest of the world!


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  6. Rincon, R. L. (2016, November 07). Five Revenue Cycle Metrics Profitable Practices Are Measuring. Retrieved November 20, 2018, from
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