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Key tips for tracking hospital revenue metrics

As clinical and financial lines blur, CFOs need to constantly keep tabs on which ones are integral to maximizing income.

John Andrews, Contributor

As clinical and financial lines blur, CFOs need to constantly keep tabs on which ones are integral to maximizing income.As clinical and financial lines blur, CFOs need to constantly keep tabs on which ones are integral to maximizing income.

Tracking metrics for revenue analytics is a key part of any healthcare organization’s financial operation and CFOs need to constantly keep tabs on which ones are integral to maximizing income, specialists say.

In the current provider landscape, the metrics lines are blurring between the clinical and financial, said Bobbi Brown, vice president of financial engagement for Salt Lake City, Utah-based Health Catalyst.

“It’s a new world and there needs to be collaboration between the clinical and financial people,” she said. “It goes back to physicians and making sure you have that collaborative working relationship with them. Tell them what they need to do and they will work with you.”

[Also: What CFOs think about revenue cycle]

To be sure, proactively tracking clinical events that come with a CMS-imposed financial penalty, such as hospital-acquired infections, patient readmissions and core measure adherence, all tie in with the bottom line and must be added to the metrics list, said Skip Lemon, managing director of healthcare practice for Chicago-based Huron Healthcare.

“What I’ve observed is that the degree of functional integration between clinical and financial has broadened,” he said.

The CMS metrics are what Brown calls “a new world with penalties.” Because they are prospective, providers know them in advance for value-based purchasing and what the payment cut is going to be, so the question becomes “what is there to monitor,” she said.

[Also: How consumerism is changing revenue cycle]

“If there were problems with readmissions, does a problem still exist?” she asked. “Is there a problem with hospital-acquired conditions? Same thing. To avoid the 1 percent penalty, you need to come up with different metrics.”

Metrics tracking should start with the basics, looking at the traditional areas, such as accounts receivables, days outstanding levels and aging claims, said Dan Unger, director of financial applications for Health Catalyst.

“If you have a timely filing limit at 90 days, look at 60-plus,” he recommends. “The big one is charging out the final bill – that is gaining more traction with ICD-10 coming.”

An overarching metric that is almost always calculated incorrectly is the net collection rate, Unger said.

“This is the end-all and be-all metric of the revenue cycle process,” he said. “It captures the effectiveness of the revenue cycle and how well the dollars are being collected.”

With standard metrics, denial rates are often calculated incorrectly and charges are posted for the month, even though they are unrelated, Unger said.

“It’s not a true view of how processes are going,” he said. “It is apples divided by an orange.”

Unger pointed out “unapplied cash” as another key metric.

“It goes back to how fast the cash coming in the door is posted,” Unger said. “Is it constantly behind? Understanding the process is critical.”

Under the new value-based healthcare payment model, the metrics mantra has become “no outcomes, no income,” said Keith Eggert, executive vice president and general manager for healthcare at Santa Rosa, Calif.-based VisiQuate.

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“From an analytics perspective, it requires streaming intelligence, not static dashboards that get updated periodically,” he said. “It needs to be flowing to facilitate constant performance. The power of data-driven decision making puts the power in the individual’s hands. It eliminates speculation and emotional decision making.”

The “old school” metrics are also critical, said Eggert, who five years ago helped the Healthcare Financial Management Association create the “map keys” to solidify the definitions and utilization methodologies. Among them: cash to net revenue, cash to contracted reimbursement and cash to contract and payment rate.

“If you are calculating payment rate on contract, are you liquidating that amount of cash? It can be reduced by write-offs,” he said. “Cash to contract and payment rate is more telling because there is a lot that goes into viewing what the reimbursement should have been. It’s one of the better metrics.”

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