StevenLash San Diego explain how you can manage Your Cashflow to Create a Financially Healthy Organization

steven lash san diego

Whether you believe global warming is fact, fiction or somewhere in between the necessity for managing your cash flow effectively is paramount. It is very real. As the old saying goes “Profit is an opinion, cash is a fact”.

You can best determine the best Revenue Cycle Management tactics for your financial future by understanding, focusing and measuring the following three key metrics.

Days in accounts receivable

The days in accounts receivable (DAR) measurement represents the length of time it takes, on average, for a claim to be paid. The industry standard that most practices should strive for is less than 40 days. Some practices may be able to achieve a lower number based on patient population mix. 33 days. If a claim is tied up with payers, the practice isn’t receiving that money.

A key component is of DAR, is getting charts completed by the providers, and when a chart is completed getting that claim out the door. Typical standard is no longer than 48 hours.

Timely filing limits are important. Deadlines established by insurance carriers requiring claims be filed within a certain period from the date of service are more favorable to the carriers than to providers. Once these deadlines have passed, it is highly unlikely that the practice may receive any payment. It is not uncommon for commercial carriers to require that claims be filed within 90 days of the date of service. While that timeframe may seem sufficient, the nuances of a busy practice can make these parameters challenging, especially without a solid RCM strategy that addresses DAR.

Maintaining a low DAR — preferably under 40 days — will ensure adequate cashflow.

Clean claims ratio

Also known as the first-pass ratio, the clean claims ratio (CCR) is the percent of claims that are paid at first submission. A clean claim has never been rejected, does not have a preventable denial, has not been filed more than once and contains no errors. The perfect claim.

Most practices’ clean claim rate is in the 70-85 % range. If your CCR is above 93 %, then that’s a reflection of proper systems and effort in place to succeed. It’s important to identify your clean claims ratio to understand how the practice workflow, bottlenecks, process issues, etc. If the practice has a low CCR then a root cause analysis needs to be performed to fox systemic issues. More clean claims equal more money, faster.

Net collections ratio

Steven lash San Diego explain how the net collections ratio is the percentage of total potential reimbursement collected out of the total allowed amount. Denial rates, unreimbursed visits, and other factors affect this ratio.

An important distinction to be made is that your financial metrics should be calculated based on net collections, not gross charges. Net collections will help you measure what your organization can realistically receive in reimbursement, while gross charges are unreliable.

The net collections ratio is critical because it represents the efficiency of the revenue cycle overall and is thus the ultimate indicator of success with collections. A large component of this figure is the ability to specifically manage patient collections, which are more difficult to collect due to the rise of high-deductible health plans.