Co-authored by Amber Civitarese and Stacie Bon
Whether you are the owner of a revenue cycle services (RCS) company or you are responsible for managing specific aspects of the business, it is important to know the answer to the following question: How do you compare?
Benchmarking is a tool that provides a snapshot in time that enables businesses to compare their performance metrics against internal and/or external measures. These comparisons help businesses better understand their operations and identify areas that need attention – leading to improved performance.
Benchmarking is especially important for RCS companies, since they are faced with a dual challenge − to manage the billing and collections of their clients while simultaneously focusing on the business performance of their own organization.
RCS firms that want to expand their programs by incorporating benchmarking methodologies should address the following areas:
Internal and External Comparisons
Used internally, benchmarks can help businesses compare their current performance to previous time periods. Metrics may include accounts receivable (A/R) days, staff productivity, claim denial rates, claim processing time, and more. These internal benchmarks provide quantifiable data to base decisions, enabling organizations to focus on the areas of the business that have the most impact on performance.
Trending this data over time provides additional value, so a business can determine whether changes in performance are seasonal, related to regulatory measures or are impacted by other factors. Identifying these trends will help organizations pin point outliers in the data and what caused them. Additionally, this trending data helps them prepare for future events that may impact performance.
While internal measurements are important, they only compare the organization to themself, allowing an organization to see only half of the story. They may see vast improvements compared to their data and still not meet industry standards and best practices. It is important for organizations to compare their performance internally and also to external benchmarks.
External benchmarks come in many forms, ranging from industry reports and surveys, to best practice metrics established by trusted associations and other sources of data. Comparing internal performance to these external sources is of value, but organizations should realize that these external benchmarks represent a snapshot in time that is often months or years old. The healthcare industry changes rapidly, so a benchmark from several months or years ago may not represent what is currently happening within the industry.
Real-time performance metrics provide a more accurate comparison, enabling organizations to view their performance in context with the industry’s current state, whether it’s experiencing the impact of new regulatory measures, economic variables or other factors.
A wealth of data is generated when medical claims and reimbursement are exchanged between clinical organizations, health plans and the entities that support them. However, much of the data lacks relevance, context or meaning, which prevents it from being actionable. This creates challenges for organizations looking to extract meaningful insights from their transaction data to improve business performance.
When using benchmarking data, it is vital that the metrics share the same definition to allow for apples-to-apples comparisons. This is important whether the data is being used for internal benchmarking or for external comparisons.
The concept of apples-to-apples comparisons also applies to the organization types that are being compared. For example, an RCS company serving primarily home health providers will have different metrics than a billing firm serving radiologists or other specialties. This also applies when RCS companies compare the performance of their clients. Getting meaningful data requires comparing clients to their peers, such as by size, specialty, market or other factors.
Monitor Your Data
Benchmarks represent a snapshot in time. They are not static and will change over time, making it important for organizations to monitor their metrics on an ongoing basis. Performance improvement efforts can be greatly assisted by creating notifications that alert the appropriate staff when metrics hit a specified high or low. This enables organizations to take action before the issue can negatively impact the business.
Key metrics to monitor include:
- Utilization of codes and modifiers – Are coding practices making you an extreme outlier and subject to increased audit risks?
- Claim denial rates – Have your denials spiked for a specific payer or across the board?
- Payment velocity – Are specific payers taking longer to pay you than your peers?
- Staff productivity and efficiency – Is your staff’s productivity higher or lower than your peers?
Prepare for Regulatory Changes and Industry Trends
The October 1, 2015 ICD-10 implementation deadline is one of the biggest regulatory changes to hit the industry in years. While there are many unknowns about ICD-10’s impact, organizations can use benchmarking to prepare for the implementation by:
- Optimizing existing processes as much as possible so current performance issues won’t need to be resolved while addressing ICD-10 related issues
- Determining where ICD-10 will impact processes (e.g., denials, reimbursement, reconciliation, etc.) and put performance measurements in place to monitor and address these issues following the implementation deadline
Additionally, trending data can be used to prepare for other industry changes. For example, organizations can analyze previous data to determine how quarterly and annual coding updates impact their business. Once trends are identified, they can take steps to minimize or eliminate the issues for upcoming changes.
Benchmarks can also be used as a basis for organizations to set internal and external goals. As an example, RCS companies can establish goals for their internal operations and external goals for their clients. RCS companies can help their clients reach the external goals, which adds value to the relationship and also improves the metrics that affect RCS business performance.
Furthermore, RCS companies can set up notifications to alert staff when clients’ metrics reach predetermined thresholds, so issues can be proactively addressed. These notifications can also be used to alert staff when clients reach specific milestones, so RCS companies can reward and celebrate clients for their efforts.
Benchmarks established at the beginning of a relationship between an RCS company and their clients are important. These benchmarks open the door to meaningful discussions. An RCS company can level set with clients where they are today and can compare against future benchmarks to document improvements and the client’s return on investment.
Establishing and Recalibrating Goals Based on Benchmarks
Today’s healthcare organizations are essentially having to do more with less. They face higher standards, while reimbursement continues to decrease. Under these circumstances, improving performance with existing resources is challenging, which is why it is critical to focus efforts on the areas that can deliver the most value to the business.
Benchmarks help identify the areas that can have the most impact so that resources can be focused. Organizations can use benchmarks to track the metrics that will help them achieve short-term goals or long-term business objectives. Once the goals are established, organizations can monitor the metrics that drive improvements, whether it’s to meet an industry standard or best practice, decrease A/R days, or focus on correcting coding issues that consistently result in denials from payers.
As benchmarks change, so must the goals. Once improvements are realized, elevating goals help organizations reach for higher levels of achievement. Additionally, industry changes dictate the need for goal reassessment and even complete shifts in direction. To accommodate these changes, organizations should establish periodic reevaluations – monthly, quarterly, etc. – to assess and prioritize goals based on trends within the organization and throughout the industry – ultimately achieving overall business objectives.
Clear Communications Are Essential for Success
Goals provide people with direction, but only if those goals are clearly communicated. For performance improvement efforts to be successful, organizations need to clearly articulate not only what the goals are, but also how they’ll help the business. These communications help people better understand the goals and become aligned with how to achieve them.
It is also important to communicate when improvements are realized and when goals are achieved. Acknowledging these moments – and even celebrating them – rewards people for their efforts and shows the team how data-driven processes can drive success.
This Article was first published in Billing, the Journal of the Healthcare Billing and Management Association, Vol. 20, July/August 2015.