We frequently have conversations with DSOs about revenue cycle performance, metrics, and KPIs. The dental revenue cycle generates mass amounts of useful data which can sometimes seem overwhelming and difficult to organize. However, if you believe the noted management consultant Peter Drucker who said, “You can’t improve what you don’t measure,” then where and how do you start? For any DSO, starting with these five baseline metrics is a great foundation to find simplicity on the other side of complexity. Data is your friend.

Percentage of A/R Greater than 90 Days

Aged receivables exist in every DSO and practice. Calculating the % of receivables over 90 days is an important indicator of the overall health of your RCM because, while some claim failures are inevitable, too high a percentage in the 90 day plus range can be a sign of more systematic and serious resourcing or billing challenges. It’s human nature to deal with the easy claims first, but allowing an unpaid claim to age drastically reduces the chance of receiving any payment at all. Even if the balance is ultimately transferred to the patient, patients will struggle to remember and not feel compelled to pay for a procedure months after a visit. This metric is becoming increasingly more important as out-of-pocket costs rise, so keep a close eye on it.

Ideally, less than 15% of your receivables should reach this age, but the lower the better. The cost to collect increases over time, and the longer you allow your accounts to age, the less likely it is you will recover them and the more it will cost you to do so.

Clean Claim Rate

An ounce of prevention is worth a pound of cure. A clean claim is a claim that flows from submission to collection without needing additional involvement from the RCM team after the first submission. Clean Claim Rate gives your team visibility to problems that are causing claims to require resubmissions, like mistakes in patient registration information or claims failing to meet a payer’s requirements.

They say, “you never have time to do it right, but you always have time to do it over.” Slow down, and focus on clean submissions, clean claims is the #1 way to reduce revenue cycle workload and increase collection speed, the best groups average over 70% in clean claims.

Collection Days

Collecting what is owed entirely and quickly is what all RCM teams aspire to.  Tracking your collection days, the difference between the payment date and date of service, can help you improve your cash flow by identifying and fixing problems in your billing and collections processes that are causing delays in payment. By reducing your collection days you increase the amount of money you collect in a given time period, which can have a significant impact on your overall cash flow. For example, if you are able to reduce your collection days by 10 days and you collect an average of $100,000 per day, you’ve increased your cash flow by $1,000,000.

Ideally, you want to be able to turn over your A/R in less than 30 days. Top performing teams can collect open A/R in less than 15 days though this metric will vary by payer mix as well.

Denial Rate

Your denial rate is the percentage of insurance claims that are fully denied by the payers. There are a couple of possible variations to this metric as it can be calculated both at the claim level but also at the claim line level.  Let’s focus on the claim level. This metric validates the effectiveness of your pre-billing processes, especially your insurance eligibility and benefit validation process. A low denial rate indicates that your revenue cycle processes are working well and you are preventing as many mistakes from happening as possible. Keeping an eye on this metric could alert you to claim pre-billing verification opportunities, submission issues, or sometimes credentialing issues that could dramatically affect your revenue and cash flow.

The best performers have an average claim denial rate below 5%, but many DSOs and practices are regularly over 10%.

Claim Yield

The final baseline metric your practice should be regularly monitoring is Claim Yield. This measure represents what the payer paid against the expected fees.  For example, if your practice collected 70 claims with a total expected amount of $10,000 and received only $6,000 in payer payment, then the claim yield would be 60%.

A high claim yield indicates that the organization is able to successfully collect payment for a large percentage of the claims it submits. On the other hand, a low claim yield may be a sign of problems with the organization’s billing and collections processes, such as incorrect coding, inadequate follow-up on unpaid claims, incorrect fee schedule, or other issues that may be causing claims to be denied. By tracking claim yield and identifying areas for improvement, organizations can optimize their billing and collections processes and increase their overall revenue.

Ideally, every claim you submit for payment would be paid at 100% but we know that isn’t the case. Best practices dictate that your Claim Yield should be greater than 90%, industry best performers can achieve up to 95%.

Starting with a solid understanding of these five key metrics will give you confidence troubleshooting, allocating your time and resources, and put you and your RCM team on a path to continuous improvement.   Monitoring them consistently over time will help ensure that your RCM results are stable, reliable, and hopefully optimized.