Get The Skinny: 6 Medical Billing Performance Metrics and KPI You Need for 2016

If you’re like the majority of health providers and practice managers, you’re busy enough with day-to-day operations. It’s easy to let monitoring of financial performance slip through the cracks, but keeping track is essential to the success of your organization. In fact, one of the large reasons practices lose money is because they fail to consistently track Key Performance Indicators to assess financial health.

A billing KPI serves a number of purposes in terms of healthcare organization success:

  • They help recognize key success drivers.
  • They prioritize resources.
  • They set those drivers (or goals) through benchmarking – against company historical data and compared to other groups in your specialty.
  • They identify weaknesses in your financial health to help you plan better for the future.

Despite the obvious benefits, there are multiple reasons practices lose sight of these critical metrics. Maybe you don’t have a solid workflow by which staff members track KPIs. Perhaps your practice isn’t even aware of what performance metrics are best to track for your particular specialty. If you outsource your billing, there’s a big possibility that the company doesn’t provide you with the metrics you need to know how well you’re practice is performing.

Feeling overwhelmed? The list of KPIs worth analyzing is a daunting one, so the key is to start with those that most impact your financial performance. We’ll start with those you should monitor on a daily/weekly basis, then monthly. It’s also crucial to remember that work is not done once you measure, it’s what you do with those measurements that is most important. So, we will also discuss what each outcome means, and what you should do to improve them.



1. Cash Receipts - Money that is collected and deposited should be monitored daily, it’s what’s driving your practice financially.

2. Charges - In conjunction with cash receipts; fluctuations in charges will result in fluctuations in cash receipts, so monitor this closely. 

3. Payables - Knowing when your unpaid invoices are due and how much cash is readily available to pay those expenses is absolutely critical. Monitoring this weekly allows you to determine the cash flow of the practice and helps ensure that you have enough to cover expenses.


1. Net Collection Ratio - This metric will truly show if you're collecting all of your money. The MGMA suggests a net collection of 95% or higher. If you're not meeting the standard, there's definitely room for improvement. That ratio is:

Payments / (Charges - Contractual Agreements)

2. AR Greater Than 120 Days - This is a great indicator of whether or not your patients and insurers are paying you in a timely manner. A high percentage can point out issues with timely claim denials or effectiveness of follow up on no-response claims. That ratio is: 

Total AR over 120 / Total AR 

Some of the best performers’ percentage is 5%-7%, but that will vary depending on your particular specialty. You can look at this ratio in two ways, both are important to keep track of.

By Patient - Patient deductibles are at an all-time high so it’s crucial to keep track of this number. What will affect this ratio? Front-end processes for collecting patient money at time-of-service, verifying eligibility, and checking deductibles remaining. 

By Insurer - This ratio will indicate whether or not your in-house billing staff or outsourced medical billing company is tracking reimbursement and denials efficiently.

3. Reimbursement Per Encounter - This is easy to calculate, which makes it easy to compare your numbers to medical groups within your specialty. That ratio is:

Payments / Total # of encounters for same given period 


The Importance of Benchmarking Your Healthcare Billing KPI

As previously mentioned, if you’re going to measure KPIs, you should benchmark them as well. Comparing your numbers against historical data isn’t enough. Of course, it’s important to compare against weeks, months and years prior. But consider the use of other industry data that will give you a better sense of how your practice compares to others in your specialty (MGMA is one of your best resources.)

So, what should you do to keep track of these metrics efficiently? 

- Be sure to train your staff on how to calculate your KPIs, because chances are, they will be the ones measuring them. More importantly, make it EASY for them to measure. 

- Look for medical billing software that provides the level of reporting you need to track and report such metrics on a daily, weekly and monthly basis. Consistency is key, so utilizing user-friendly (remember, your staff will probably take these measurements!) and report-rich software is crucial to measuring and reporting regularly. 

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