Here are three ambulatory surgery center (ASC) revenue cycle key performance indicators (KPIs) you should pay close attention to for insight into where your revenue cycle process may be thriving -- or struggling.
If you work in an ambulatory surgery center (ASC) you are undoubtedly thinking about ways to improve your revenue cycle. Every dollar in an ASC counts greatly, especially with costs increasing and reimbursement tightening.
Unfortunately, for a variety of reasons, ASC revenue cycle management — obtaining, tracking, and accounting for every dollar — is often harder to manage than it should be. If you've ever found yourself thinking, "I need to collect more cash — and do so quicker — but I don't know why I'm not collecting more cash," this post is for you.
Building a healthier ASC revenue cycle starts with discovery — that is, looking into key performance indicators (KPIs) that show how your ambulatory surgery center is doing month over month and offer clues and insights about where your revenue cycle processes might be breaking down. Here are three ASC revenue cycle KPIs you should pay close attention to and act upon if what you discover is not what you want to be seeing.
1) Cash collections as percent of net revenue
Cash collections as a percent of net revenue simply means, "Are we collecting as much cash as we possibly can?" If the answer is no, your first question should be, "What should I expect our net revenue to be?"
This is often where people take an ill-advised shortcut and assume the amount of cash their surgery center has collected in the past is the same amount the ASC should be collecting today and in the future. The reality is that things change, and net revenue should be calculated every single month. Do the math monthly and you'll get an accurate baseline on which to determine just how well — or poorly — you're actually performing.
2) Days to bill
Producing a bill for ASC procedures can be complex. Even the best work can sometimes create claims a payer won't see as "clean" that then lead to denials. Being slow to bill, however, doesn't help. A healthy surgery center revenue cycle is one that generates payment as quickly as possible, and you cannot receive money if you haven't billed for it.
That's why you want to closely watch your ASC's days to bill. Your goal should be to submit claims in fewer than five days. Ask yourself, "Is our surgery center meeting this goal? How consistent is our billing?" Then use the answer like a canary in a coal mine. This key performance indicator can indicate a breakdown on the front end of your ASC's revenue cycle process.
3) Age of accounts receivable (A/R)
Like any business, you want your ASC to receive payment for its services as quickly as possible. A number of situations, including lagging days to bill as mentioned above, can create aging A/R, which is money owed to your ASC that you do not have in your hands.
To best use the age of accounts receivable KPI, first determine what "old" means to you. Typical measures are 60 or 90 days. Then, calculate the percentage of your A/R that is greater than this day limit. While you will almost certainly have some percentage of invoices above 60 or 90 days, that doesn't mean you should assume this figure is okay. After all, the higher your percentage, the less healthy your revenue stream is — even if it's fairly healthy. Working to improve this KPI by bringing that percentage down can greatly benefit your ASC.
Put in the Work to Improve Your ASC's Revenue Cycle Performance
Once you've taken a good look at the three KPIs identified above, what's next? Do the work — first the math and then the team building and management to fix any problems you uncover. With current KPI data, you'll have the information you need to get started and find success when it comes to improving your ASC's revenue cycle management. Knowledge, as they say, is half the battle. What you do with that knowledge is the other half.