Attaining the highest reimbursement possible is essential to maintaining a healthy revenue stream. But sometimes, due to unforeseen circumstances, you don’t always receive the payment you expect.
Power Your Practice understands the financial frustrations of medical practices and is here to help. In continuation of our weekly metrics series, today’s installment identifies the percentage of reimbursements you should be receiving after the claims cycle is complete.
Metric #4 – Net Collection Rates
What It Is
The net collection rate is the percentage of total potential reimbursement collected out of the total allowed amount. It is also commonly referred to as the “adjusted collection rate.”
Calculation
(Payments – Credits) ÷ (Charges – Contractual Adjustments)
Benchmark
Your net collection rate should be above 95%.
Why It Matters
This metric lets you assess your practice’s effectiveness when all is said and done (i.e., claims have been submitted, denials processed, patients billed). It tells you objectively the share of the revenue your practice deserved but left on the table. The lost opportunity reflects factors within your practice’s control (e.g., untimely filing) and others beyond its control (e.g., uncollectable debt).
Weak ongoing net collection rates may compel practices to replace staff, revamp processes, invest in new tools or outsource revenue cycle management to increase profitability.
Check back next week for the final installment of our whitepaper review series focusing on the fifth most important metric to track at your practice: Average Reimbursement Per Encounter.
Do you know what you need when setting up a new medical practice?