Ignoring your revenue cycle? Avoid financial losses and growth limitations by focusing on these metrics.
The competing demands of a pathology practice like reimbursement, patient care, and time management can easily overshadow the revenue cycle, especially when overhead is met. However, this oversight comes at a significant cost: millions in unrealized revenue that could fuel growth for what is most likely a thriving business.
Regardless of billing management (vendor reports or in-house teams), pathology practice leaders must utilize these 5 KPIs to maximize revenue, cash flow, and ultimately, the financial health of their practice.
1. Total Accounts Receivable (AR)
Total AR reflects the cumulative amount of money owed to the laboratory for services rendered but not yet paid by payers, insurance companies or clients. High total AR can indicate issues with billing processes such as claim submission delays, high denial rates or general inefficiencies in payment collection.
2. Days Sales Outstanding (DSO)
DSOs indicate how many days it takes for a laboratory to collect payment after a service has been provided. A lower DSO in the range of 30-45 days indicates the laboratory is collecting payments efficiently.
3. Denial Rate
Denial rate refers to the percentage of claims that are rejected by payers during a specific period. A few of the most common denials include timely filing, missing information and coding errors which can be avoidable with proper claim scrubbing before being sent to the payer. Other common denial reasons include medical necessity or a request for medical records.
A lower denial rate (<20%) can identify efficient billing workflow, improved revenue and DSO’s which can provide healthier cash flow into the business.
4. Appeal Success Rate
Appeal success tracks your ability to effectively overturn denied claims through the appeal process. Providing additional documentation, correcting errors, and proving medical necessity are among the ways to achieve a successful appeal.
A robust appeal process is necessary to recover revenue from rendered services that otherwise would be written off. This metric also reflects the efficiency of the billing team and their ability to navigate payer requirements.
5. Bad Debt Rate
This percentage represents revenue lost due to uncollectible payments, highlighting potential weaknesses in the revenue cycle, such as poor claim follow-up, billing errors, or payer denials.
Utilizing a billing software or partner who accounts for pathology related nuances with claims all the way to the payer plan level is essential in reducing this number. By selecting the right partner, you can ensure accurate and compliant billing, and implement robust procedures to maximize your collections.
The complexity of pathology management can easily divert attention from the revenue cycle, leading to substantial financial losses and hindering organizational growth. By focusing on these essential KPI’s, pathology leaders can ensure their billing partner is performing as they should, or hold an in-house team accountable for optimizing the billing process to maximize revenue and stabilize the business’ finances.
Quadax brings over 50 years of reimbursement expertise in anatomic, clinical, and molecular pathology to tackle your lab’s unique challenges. Our tailored solutions streamline revenue cycles, enhance efficiency, and ensure timely, accurate payments. Let our team of experts help you chart a path to maximize reimbursement. Schedule a strategy call here.
