To have a financially healthy medical practice you need to keep an eye on a number of indicators and compare those to industry standards. Billing benchmarks are a great way to compare your practice’s financial performance with the standards for the industry. What follows are some best practices and practical tips that can help keep your practice performing in league with the best. First, take some time to evaluate where your practice stands on some important benchmarks.
How does your practice’s performance compare to these industry benchmarks?
Avg Days A/R – Best Practice is < 40
Avg Days A/R Over 120 – Best Practice is < 12-15%
Days from TOS to Billing – Best Practice is < 3 days
Net Collection Rate – Best Practice is > 96%
Denial Rate – Best Practice is < 3-5%
Claims Paid in < 45 Days – Best Practice is 85-90%
The adage is true, to manage you must measure. In the business world, one way to measure financial health is to compare your data with how the rest of the industry is doing and to established standards that define where performance should fall. The process is called benchmarking. It is a continuous process that measures and compares performance internally and externally. The benchmarks listed above are some of the most important and the ones that should be monitored at the very minimum. You want the numbers for your practice to be equal or better than each benchmark. First, you should work at getting the numbers where they need to be, and once everything is working optimally, try to surpass the benchmarks.
It is no accident that the first two benchmarks are related to accounts receivables. Management of accounts receivable is important in any business. Not only do they represent money you are owed and have not been paid, but, in the healthcare field, the longer a bill goes uncollected, the less likely it is to ever be collected. For that reason, the two most vital accounts receivable benchmarks are the average number of days your receivables go uncollected, and how many of your receivables are over 120 old.
If your practice’s numbers are not hitting these benchmarks, then that is probably the place to start examining your revenue cycle. A low days in accounts receivable number means that the collection processes you have in place are working properly. Similarly, if too many of your unpaid claims are over 120 old, it is time to concentrate on getting those bills paid earlier.
Although the ideal is to meet or exceed each of these benchmarks, do not consider your practice a failure if they are not. Instead, look at benchmarks as where you want your practice to move toward. Reaching these goals may take some time and maintaining those numbers will take effort as well. Start by concentrating on one or two benchmarks and move to the next one when you start to see improvement.
Benchmarks are a great tool and a great way to stay informed about your practice’s financial health. Invest in your practice by contracting with ProMD to perform a billing assessment.ProMD will analyze your historical performance as compared to industry benchmarks to determine areas in which you are doing well, but more important it will identify areas of improvements that will maximize results.
ProMD Practice Management is happy to help with your billing assessment needs so you can maximize profits and increase patient satisfaction. To learn more about how ProMD can make your practice run like a well-oiled machine, call 888-622-7498 or fill out our online form to request a billing assessment.