Post Detail

While clinical outcomes drive success for healthcare providers, financial performance still plays a vital role in sustaining organizational strength. Tracking payments and watching the bottom line alone falls short of what modern healthcare operations require. Strategic key performance indicators, or KPIs, help teams sharpen focus and guide smarter decision-making.

The following healthcare revenue cycle management KPIs create benchmarks that reveal where an organization excels, where revenue leakage or inefficiencies slow progress, and where meaningful opportunities await. In this article, we highlight 16 healthcare revenue cycle management KPIs every provider should monitor to support continuous improvement and financial resilience.

Gross Collection Rate (GCR)

What it is: The percentage of total billed charges a healthcare provider collects, without accounting for contractual adjustments or write-offs.

Formula:
Gross Collections ÷ Total Charges × 100

Why it matters: While this metric doesn’t reflect the actual collectible amount due to negotiated payer rates, it gives a high-level overview of charge-to-payment ratios. It can help flag billing or pricing issues.

Net Collection Rate (NCR)

What it is: The percentage of collectable revenue earned after contractual adjustments, offering a realistic view of collection performance.

Formula:
Payments ÷ (Charges – Contractual Adjustments) × 100

Why it matters: A high NCR (>95%) is a sign of healthy revenue recovery and efficient billing operations. A drop in this rate could signal issues such as underpayments or ineffective follow-up.

Days in Accounts Receivable (Days in A/R or DSO)

What it is: The average number of days it takes to collect payments after a service is provided.

Formula:
(Total A/R ÷ Average Daily Charges)

Why it matters: A lower number here means faster cash flow and better financial health. Delays may indicate problems in billing, coding, or collections.

Charge Lag

What it is: The time between the date a medical service was provided and the date the charge is entered into the billing system.

Why it matters: Ideally, charge lag should be under 24 to 48 hours. Delays can postpone claim submissions, resulting in cash flow disruption.

Payment Lag

What it is: The number of days from claim submission to receipt of payment.

Why it matters: A long payment lag could point to payer delays or submission errors. Tracking this helps identify and resolve payer-related inefficiencies.

Clean Claims Rate

What it is: The percentage of insurance claims submitted without errors that are processed and paid on the first submission.

Why it matters: A high clean claims rate (>90%) minimizes denials and accelerates reimbursements. This KPI is a direct reflection of the efficiency of front-end processes, such as registration and charge capture.

Initial Denial Rate

What it is: The percentage of claims denied on first submission.

Why it matters: An ideal denial rate is below 5-10%. High rates may suggest eligibility, authorization, or documentation issues, or issues relating to accuracy and human error.

Payment Accuracy

What it is: This metric tracks whether payments received align with the expected amount for the healthcare services provided.

Why it matters: Payment variance audits can uncover underpayments or overpayments. Ensuring accuracy protects revenue and regulatory compliance.

Cost to Collect

What it is: The total cost of collecting patient payments or insurance reimbursements, expressed as a percentage of total collections.

Formula:
(Total Revenue Cycle Costs ÷ Total Collections) × 100

Why it matters: Lower costs indicate more efficient operations. Industry benchmarks vary, but 3 to 4% is a typical target in healthcare.

Bad Debt Rate

What it is: The percentage of billed charges that a healthcare provider is unable to collect. These charges are written off as bad debt.

Why it matters: This metric reflects the effectiveness and efficiency of your collections process. Monitoring this KPI can also help improve financial counseling and upfront collections through offering options like payment plans.

Point-of-Service (POS) Collection Rate

What it is: The percentage of patient payments collected at or before the time of service.

Why it matters: Increasing POS collections improves cash flow and reduces bad debt. Training front-desk staff can improve this metric, as can offering a range of payment options.

Discharged Not Final Billed (DNFB)

What it is: Refers to patient accounts that have been discharged from a facility, but have not yet been billed.

Formula:
Total DNFB Gross Revenue ÷ Average Daily Gross Revenue = DNFB days

Why it matters: DNFB higher than the industry standard of 5-7 days can delay revenue recognition. Effective documentation, coding, and charge capture processes help reduce this number.

Discharged Not Submitted to Payer (DNSP)

What it is: Similar to DNFB, this metric tracks claims for discharged patients that have not yet been submitted to the payer.

Formula:
Total DNSP Gross Revenue ÷ Average Daily Gross Revenue = DNSP days

Why it matters: This KPI helps to identify process delays between service date and claim submission. Maintaining DNSP close to the 2-day industry benchmark accelerates revenue collection and minimizes timely filing denials.

Returned Mail Rate

What it is: The percentage of patient statements returned due to incorrect mailing addresses.

Why it matters: High rates of returned mail indicate that improvement is needed in patient registration and data verification processes. Returned mail also hinders timely patient collections, impacting other KPIs.

Percentage of eStatements vs. Paper

What it is: The proportion of patient billing statements delivered electronically.

Why it matters: A higher percentage of eStatements reduces mailing costs and speeds up patient communication. It’s also a reflection of patient portal adoption.

Patient Portal Payment Conversion Rate

What it is: The percentage of patients who use the patient portal to make payments for their healthcare services.

Why it matters: This KPI is a reflection not just of patient engagement, but also the convenience of your digital payment systems and your team’s efficacy in promoting this payment option. Increasing this rate improves collection efficiency and the patient user experience.

The Bottom Line

Healthcare providers who prioritize the 16 key performance indicators listed above will have a solid understanding of the revenue cycle performance of their organization. Monitoring these KPIs gives providers the information they need to improve cash flow, reduce billing errors, minimize denials, and identify inefficiencies. Acting on this information improves the bottom line and results in more satisfied patients, too.

Investing in billing and payment platforms like MailMyStatements gives you the necessary tools to improve these critical KPIs. Schedule a demo today to learn more about how we can help your organization boost financial performance in order to reach your business goals.