Why KPIs Matter
Key performance indicators (KPIs) give revenue cycle leaders objective measures of financial and operational performance. RHIA candidates should be familiar with the most common KPIs, how they are calculated, and what they reveal about revenue cycle health.
Core Revenue Cycle KPIs
- Days in Accounts Receivable (AR): average number of days it takes to collect payment after a claim is billed; calculated as total AR divided by average daily revenue
- Clean Claim Rate: percentage of claims submitted without errors requiring correction or rework
- Denial Rate: percentage of claims denied by payers out of total claims submitted
- Net Collection Rate: percentage of collectible revenue actually collected, factoring out contractual adjustments
- Cost to Collect: total revenue cycle operating cost divided by total cash collected
Front-End vs. Back-End Metrics
Front-end KPIs, such as registration accuracy and point-of-service collection rate, measure performance before a claim is generated. Back-end KPIs, such as denial rate and days in AR, measure performance after claim submission. A comprehensive revenue cycle dashboard tracks both to identify where breakdowns occur.
Benchmarking
Organizations such as the Healthcare Financial Management Association (HFMA) publish benchmark data that allow hospitals to compare their KPIs against industry standards. Benchmarking helps distinguish between an isolated internal issue and a broader industry trend.
Using KPIs to Drive Improvement
- Establish baseline performance for each KPI
- Set realistic improvement targets tied to specific initiatives
- Monitor trends monthly or quarterly rather than reacting to single data points
- Link KPI performance to departmental accountability, including coding and HIM functions
HIM's Connection to Revenue Cycle KPIs
Coding accuracy and timeliness directly affect discharged-not-final-billed (DNFB) rates, days in AR, and denial rates. HIM leaders should understand how their department's performance metrics roll up into overall revenue cycle KPIs.
Exam Tip
Practice calculating days in AR and denial rate from sample financial data, since numeric calculation questions are common in this content area.