The healthcare landscape is constantly changing, and with that comes new challenges for laboratories. One of the biggest challenges is billing and reimbursement, which can be complex and time-consuming. To make things easier, we’ve compiled a list of healthcare KPIs (key performance indicators) that every laboratory should be tracking to ensure efficient RCM (revenue cycle management). By tracking these KPIs, you can stay on top of your billing and get paid faster.
Overview- What are Healthcare KPIs?
In any industry, key performance indicators (KPIs) show how well an organization is achieving its goals. In healthcare, KPIs are essential for understanding whether a laboratory is providing high-quality patient care and operating efficiently.
There are many different KPIs that laboratories can track, but some of the most important ones relate to turnaround time, billing and collections, and denials management.
Losing hard-earned revenue is undoubtedly an overwhelming and frustrating thing for healthcare practitioners. Therefore, they should make sure that their laboratory practice isn’t leaving even a single penny on the table. In addition to this, compliance issues have also become a constant headache for healthcare practices. Failure to comply with the ever-evolving federal/state laws can land healthcare professionals in legal trouble. For instance, if your lab billing system isn’t compliant with the rules and regulations, proposed by the concerned authorities. Then you may end up in heavy fines, federal penalties, cancellation of licenses and even imprisonment.
Billing and collections are another important KPIs for laboratories. This metric shows how well the lab is doing at submitting claims to insurance companies and collecting payment for services rendered. A high billing and collections rate indicates that the laboratory is efficient at getting reimbursement for its services.
Denial management is also a critical KPI for laboratories. Denials happen when insurance companies refuse to pay for services that were provided. A high denial rate can indicate that the laboratory is not coding its claims correctly or that it is not following up on unpaid claims in a timely manner. Mostly denial issues happen with in-house billing & also when lab owners outsource to company that doesn’t have experience in specialty. For example, if you own pathology lab, outsourcing billing to 3rd party that has experience in that specialty is paramount.
Unavoidable Healthcare KPIs & How to tackle those?
There are a few key healthcare KPIs that every laboratory should be tracking. Here’s a look at a few of the most important ones and how you can tackle them:
RCM KPI #1: Revenue per Full-time Equivalent (FTE)
This is a measure of how much revenue your laboratory brings in per full-time equivalent employee. To calculate it, simply take your total revenue for the year and divide it by the number of full-time equivalent employees you have.
If you want to improve this number, there are a few things you can do. First, make sure you’re billing for all the services you provide. Second, streamline your billing process so that it’s as efficient as possible. And finally, consider hiring more staff or outsourcing your billing work to increase capacity and boost revenue.
RCM KPI #2: Accounts Receivable (A/R) Days Outstanding
This measures how long it takes your laboratory to collect payments from patients or insurers after services are rendered. To calculate it, take the total number of days that invoices were outstanding during the year and divide it by the number of invoices issued during the year.
If you want to reduce your outstanding A/R days, there are a few things you can do. First, follow up with patients or insurers who haven’t paid their bills yet. Second, offer discounts for early payment or set up a payment plan for patients who are struggling to pay their bills.
However, you can also skip this work-load & outsource your medical AR recovery services to LBS.
RCM KPI #3: Contractual Variance
Contractual variance refers to the discrepancy between your compensation and the terms you agreed to with your payors. There are 3 different types of medical billing systems & also for every specialty there are different codes. The way your biller submits the claim could have an effect on this, among other factors. Even if a claim is paid even after it is presented erroneously, it could be paid insufficiently.
Analytics for your practice should be able to demonstrate situations in which the amount you anticipated receiving under the fee schedule fell short of what you actually received from the insurance company.
After running a laboratory for some time, it’s easy to get caught up in the day-to-day tasks and lose sight of the bigger picture. That’s why it’s important to have key performance indicators (KPIs) in place to track progress and identify areas of improvement.
There are a few KPIs that are particularly important for laboratories focused on revenue cycle management (RCM). Here are four that you should keep an eye on:
1. Revenue per specimen: This KPI measures the average amount of revenue generated per specimen. It’s a good way to track overall financial performance and see how your laboratory is trending over time.
2. Claims Denial rate: This KPI measures the percentage of claims that are denied by payers. A high denial rate can be indicative of problems with billing or coding.
3. Collections rate: This KPI measures the percentage of outstanding invoices that have been collected from patients. A low collections rate can indicate problems with your billing process or patients’ ability to pay.
4. Accounts receivable days: This KPI measures the average number of days it takes to collect payments from payers. A high number of accounts receivable days can indicate billing delays or slow payment from payers.
Monitoring these KPIs will give you a good overview of your laboratory’s financial health and performance. If you see any red flags, it’ll be easier to take corrective action and get back on track.
Why choose Laboratory Billings for your Lab Revenue Cycle Management?
There are many reasons to choose Laboratory Billings for your lab billing & RCM needs. We are a full-service RCM company with over a decade of experience in the healthcare industry. We understand the unique needs of laboratories and have developed our services to meet those needs.
We offer a comprehensive suite of healthcare Lab RCM services, including billing, coding, collections, and denial management. Our team of expert coders and billers will work with you to ensure that you get the maximum reimbursement for your lab services. We also offer a state-of-the-art electronic medical billing system that will streamline your billing process and increase your efficiency.
In addition, we are dedicated to providing our clients with the best possible care and service. Contact us today to find out how we can help you improve your laboratory’s bottom line.