As the owner of your practice, you want to use your time as wisely as possible and only track the numbers that truly matter.
Let’s keep it simple. There are only four benchmarks that you absolutely need to track if you want to help your practice grow.
Gross Collection Ratio
Gross Collection Ratio = Total Collections / Total Charges
Your gross collection ratio gives you a broad picture of what you collected as a percentage of what you charged. With this figure, you do not take your write-offs into consideration.
Say you billed out for $50,000 but brought in $20,000 for the month. Your gross collection ratio would be 40%. That means that for every dollar that you charged, you collected 40 cents.
Your number here depends on your fee schedule. If you’re charging close to your allowables, your gross collection ratio will be higher. If you charge a lot more than your allowables, your ratio will be lower. Most practices hover somewhere around 50%.
Net Collection Ratio
Net Collection Ratio = Total Collections + Write-Offs / Total Charges
Net collection ratios give you a profit view for your practice. You can’t simply consider the amount you bill out.
This figure shows you how much of what you should be getting paid (taking into account the losses you take on as a provider) you are actually being paid. In a perfect world, this number would be at 100% each month.
Let’s pretend you billed out $200K for the month, and the amount you wrote off is $50,000. When you look at your monthly income, you see you only collected $100,000. That would make your net collection ratio 75%, meaning you’re only collecting 75% of what you should have received.
At IPS, we always try to stay above 90% for net collection ratios and our goal is 95%. It’s important to keep an eye on your net collection ratio each month to make sure it stays high, and to diagnose the problem if it dips low.
Days in Accounts Receivable
Days in AR tells you the time between when you send claims out to when you’re paid. If you’re receiving payments in a timely fashion, your Days in AR will be low. If you’ve got some lag time in your reimbursements, your Days in AR will be higher.
When we were paper-based, our Days in AR score was usually around 30-40 days. But with digital solutions, our expectation is now 10-14 days.
Tracking the average Days in AR each month helps to keep everything tight. If your Days in AR goes up significantly one month, it could signify that your staff is slow in inputting data, in sending patient statements out, or other problems. If your Days in AR goes down, it shows your team is doing well and helping your practice.
Patient Visit Ratio
Patient Visit Ratio = # of Patients You Saw / Maximum # of Patients You Could Have Seen
The Patient Visit Ratio helps you evaluate how close you are to your full capacity.
To calculate this figure, factor in how many patients you could treat in an hour (ex: 4 patients) and how many hours you work in a week (ex. 40 hours.) Take into consideration that you want to have time for a lunch break (ex. 1 hour per day) and any other factors that are important to you (ex. leaving 5 hours early on Fridays.) That gives you a total of 150 patients you could see per week (4 patients X 40 hours — 5 hours — 5 hours) if you were working at your full capacity.
If your weekly average is 75 patients, you’ll have a 50% patient visit ratio, which means you’re only operating at 50% of your capacity. If this ratio is consistently low, you’ll want to go out and market to grow your patient base and improve this number.
On the flip side, if your patient visit ratio is consistently near 100%, it may be time to bring on an associate doctor or another staff member to help you manage your patient load.
Do you track these ratios on a monthly basis? What other benchmarks do you track to measure your success? Let me know in the comments.
Calculating monthly benchmarks is one of the success strategies in our free white paper. If you’re ready to grow your practice, click here to download 5 Strategies to Accelerate Cash Flow & Increase Profits.
Jasmine Vializ is the President and CEO of Inlera, a billing and practice management company designed to increase the quality of healthcare by helping doctors to prioritize their patients while boosting their bottom line.
