In the world of healthcare, saving lives is the mission—but staying financially healthy? That’s a daily battle of its own.
Behind every diagnosis, treatment plan, and follow-up appointment lies a web of coding errors, delayed reimbursements, denied claims, and administrative headaches. Doctors heal, but spreadsheets bleed. Many healthcare practices find themselves in a frustrating cycle: providing top-notch care, only to be met with unpredictable cash flow, underpaid claims, and mountains of backlogged billing.
That’s where the smart RCM Process comes in—and more importantly, the Key Performance Indicators (KPIs) that guide it. These aren’t just metrics. They’re the pulse check of your practice’s financial well-being.
In this article, we’ll walk you through the essential KPIs every healthcare practice should monitor—not just to survive, but to thrive.
1. Days in Accounts Receivable (A/R)- A Waiting Game
In healthcare, time is money, literally. The longer it takes to collect payments from insurers or patients, the more your practice bleeds in overhead, staffing, and opportunity costs. That’s where Days in Accounts Receivable (A/R) steps in as a crucial KPI—acting like a thermometer that instantly reveals the health of your cash flow.
What is it?
Days in A/R measures the average number of days it takes to collect payments after a service is billed. The shorter the cycle, the healthier your revenue stream.
The Reality Check
According to the 2024 reports, the industry average for days in A/R sits around 46 days. However, top-performing practices clock in at 30–35 days- a sweet spot that signifies streamlined billing, proper documentation, and proactive follow-up.
But here’s the catch:
A separate 2023 study by RevCycleIntelligence found that nearly 35% of practices had more than 25% of their A/R sitting in the 90+ day bucket, which is considered highly risky and often unrecoverable.
Real-Life Example: A Turnaround Story in Atlanta
Let’s take the case of a mid-sized orthopedic practice in Atlanta. In early 2023, they were averaging 54 days in A/R—well above the recommended threshold.
The issue? Their front desk was under trained in insurance verification, leading to frequent claim rejections and delayed billing cycles.
After partnering with Bolster Healthcare’s RCM process, they implemented:
- Automated eligibility verification tools
- Daily claims tracking dashboards
- Weekly A/R aging reports
- Patient balance text reminders
By the end of Q3 2023, their A/R days dropped to 36, and over $180,000 in old receivables were successfully recovered. Not only did their cash flow improve, but their staff productivity also increased by 22% due to fewer manual follow-ups.
Why It Matters
Long A/R days mean:
- Tied-up capital that could be used for hiring, tech upgrades, or expanding services
- Frustrated patients receiving delayed bills months after treatment
- Diminishing revenue as aged claims lose their appeal eligibility
Quick Tip:
If more than 20% of your A/R is in the 90+ day range, it’s time to reassess your billing process. You may be sitting on a pile of unclaimed revenue.
2. Clean Claim Rate (CCR): The Silent Revenue Booster
Imagine submitting a claim, only to have it bounce back like an unread email. Not once, but dozens of times. That’s not just annoying—it’s costly. This is where your Clean Claim Rate (CCR) becomes your secret weapon.
CCR by the Numbers
According to the 2024 Change Healthcare Revenue Cycle Index Report, the average clean claim rate across U.S. healthcare organizations is 84%, while high-performing practices boast rates above 95%.
Even a 5% improvement in CCR can lead to tens of thousands of dollars in monthly revenue gain, especially for practices processing thousands of claims per month.
Real-Life Example: The Chicago Cardiology Fix
Take the case of a busy cardiology group in Chicago. In Q1 2023, their CCR hovered around 78%, largely due to coding errors, missing patient data, and inconsistent insurance eligibility checks. Each rejected claim delayed revenue by an average of 22 days and cost about $25–$30 to rework.
After switching to an RCM partner and implementing real-time claim scrubbing tools, they saw their CCR jump to 96% by December 2023. The result?
- $120,000+ in recovered revenue over 6 months
- 40% fewer billing staff hours spent on follow-ups
- A noticeable reduction in patient complaints over surprise bills
Why CCR Matters
High CCR means:
- Faster payments
- Lower administrative overhead
- Fewer denied or delayed claims
- Happier patients and providers
Low CCR? That’s a red flag that your RCM process needs a serious tune-up.
Pro Tip:
Aim for a CCR above 95%. If you’re below 90%, it’s time to analyze your front-end processes—especially data entry, eligibility verification, and coding accuracy.
3. Denial Rate: The Hidden Drain on Healthcare Revenue
In the intricate landscape of U.S. healthcare, claim denials are more than administrative hurdles—they’re significant financial drains that can jeopardize a practice’s sustainability. The Denial Rate, representing the percentage of claims rejected by payers, serves as a critical indicator of a healthcare organization’s revenue cycle health.
Alarming Trends in 2024
Recent data underscores a troubling escalation in claim denials:
- Inpatient Claims: Kodiak Solutions reported a 51% increase in final denial rates for inpatient claims from 2021 to 2023. This surge resulted in a $1.2 billion revenue loss for hospitals and health systems, highlighting the growing financial strain on providers.
- Marketplace Plans: According to a 2025 analysis by KFF, HealthCare.gov insurers denied 19% of in-network claims in 2023. Denial rates varied significantly among insurers, with some reaching as high as 54%.
- Private Payers: A 2024 survey by Premier Inc. found that nearly 15% of medical claims submitted to private payers were initially denied, with similar rates observed for Medicare Advantage and Managed Medicaid plans.
Real-Life Impact: A Midwestern Clinic’s Challenge
Consider a mid-sized clinic in the Midwest that experienced a denial rate of 14% in early 2024. The primary culprits were:
- Incomplete Documentation: Missing or inaccurate patient information led to automatic rejections.
- Coding Errors: Misclassification of procedures resulted in mismatches with payer requirements.
- Lack of Prior Authorization: Services rendered without necessary approvals faced immediate denials.
By implementing a comprehensive revenue cycle management (RCM process) overhaul—including staff training, real-time eligibility checks, and advanced claim scrubbing—the clinic reduced its denial rate to 5% within six months. This improvement translated to:
- Increased Monthly Revenue: An additional $120,000 in recovered claims.
- Operational Efficiency: A 30% reduction in time spent on claim resubmissions.
- Enhanced Patient Satisfaction: Fewer billing disputes led to improved patient trust and retention.
Why Does It Matter
High denial rates have far-reaching consequences:
- Financial Strain: Delayed or lost revenue impacts operational budgets and investment capabilities.
- Administrative Burden: Additional resources are required to address and resubmit denied claims.
- Patient Dissatisfaction: Billing issues can erode trust and affect patient retention.
Strategies for Denial Management
To mitigate denial rates, healthcare practices should:
- Conduct Regular Audits: Identify patterns and root causes of denials.
- Invest in Staff Training: Ensure accurate documentation and coding practices.
- Leverage Technology: Implement real-time eligibility verification and advanced claim scrubbing tools.
- Establish Clear Communication with Payers: Foster relationships to promptly address and resolve issues.
4. Net Collection Rate
Net Collection Rate (NCR) stands out as a vital indicator of a practice’s financial health. It measures the efficiency with which a healthcare provider collects the revenue it is entitled to after accounting for contractual adjustments with payers.
Understanding Net Collection Rate
The NCR is calculated by dividing the total payments received by the total allowed charges (charges minus contractual adjustments). This metric provides insight into the effectiveness of a practice’s billing and collections of RCM process.
Industry Benchmarks and Trends
According to the Medical Group Management Association (MGMA), a net collection rate between 96% and 99% is indicative of a well-functioning practice. Rates below this range suggest potential issues in the revenue cycle that need addressing.
However, recent data highlights challenges in achieving these benchmarks. A 2024 report from Commerce Healthcare reveals that providers collected only 47.6% of total patient obligations in both 2022 and 2023. The collection rates decline significantly as the amount owed increases, particularly for balances over $5,000.
Real-Life Example: A Midwestern Clinic’s Turnaround
Consider a multi-specialty clinic in the Midwest that faced a declining NCR, dropping to 85% in early 2024. The primary issues were:
- Inaccurate Coding: Leading to claim denials and delays.
- Delayed Billing: Resulting in missed payment windows.
- Inefficient Follow-Up: Causing outstanding balances to age beyond collectibility.
By implementing targeted strategies, including staff training on coding accuracy, adopting automated billing systems, and enhancing follow-up protocols, the clinic improved its NCR to 96% within six months. This turnaround led to a significant increase in monthly revenue and reduced the average accounts receivable days.
The Importance of Monitoring NCR
A high NCR ensures that a practice is effectively collecting the revenue it has earned, which is essential for:
- Sustaining Operations: Ensuring funds are available for salaries, supplies, and other operational costs.
- Investing in Growth: Providing capital for expanding services or upgrading equipment.
- Maintaining Financial Stability: Offering a buffer against unforeseen expenses or revenue shortfalls.
Regularly monitoring the NCR allows practices to identify and address inefficiencies promptly, ensuring financial health and the ability to provide quality patient care.
Strategies to Improve Net Collection Rate
- Enhance Coding Accuracy: Regular training and audits can reduce errors that lead to claim denials.
- Streamline Billing Processes: Implementing electronic health records (EHR) and billing systems can expedite claim submissions.
- Strengthen Follow-Up Procedures: Timely follow-up on outstanding claims and patient balances can improve collections.
- Analyze Payer Contracts: Understanding and negotiating favorable terms can maximize reimbursements.
5. First Pass Resolution Rate (FPRR)
FPRR measures the percentage of claims that are successfully processed and reimbursed upon their initial submission, without necessitating additional information or corrections. A high FPRR indicates an efficient billing process, leading to faster reimbursements and reduced administrative costs.
Industry Benchmarks and Trends
Achieving a high FPRR is essential for healthcare organizations aiming for optimal financial performance. According to industry standards, a well-functioning RCM process should aim for an FPRR of 90% or higher.
This benchmark signifies that the majority of claims are accepted and paid upon first submission, reflecting effective billing practices and minimizing the need for costly rework says reports from MD Clarity
However, recent trends have highlighted challenges in maintaining high FPRR levels. A 2024 report by MDaudit revealed a significant surge in coding-related denials, which increased by over 125%. This uptick underscores the growing complexity of medical coding and the critical need for accuracy in claim submissions.
Real-Life Example: A Community Hospital’s Strategic Overhaul
Consider the case of a 200-bed community hospital that faced declining FPRR due to outdated billing systems and frequent coding errors. In response, the hospital partnered with an RCM analytics firm to revamp its processes. By integrating advanced data analytics and implementing targeted staff training programs, the hospital identified and addressed inefficiencies in its billing workflow.
Over a 12-month period, these initiatives led to the recovery of $3.2 million in missed charges and a 15% increase in high-margin procedures. This strategic overhaul not only improved the hospital’s FPRR but also enhanced overall patient throughput and financial stability.
Strategies to Enhance FPRR
To improve FPRR, healthcare organizations can adopt several proactive measures:
- Invest in Advanced Claim Scrubbing Tools: Utilizing sophisticated software to detect and correct errors before claim submission can significantly reduce denials.
- Implement Rigorous Staff Training: Regular training sessions focused on accurate coding practices and up-to-date billing regulations can enhance claim accuracy.
- Conduct Pre-Submission Audits: Establishing a system of thorough reviews prior to claim submission helps identify and rectify potential issues, ensuring cleaner claims.
- Leverage Data Analytics: Analyzing patterns in claim denials can provide insights into recurring issues, enabling targeted improvements in the billing process.
Why These KPIs Are Critical to a Successful RCM Process
As healthcare transitions toward value-based care, financial sustainability and operational efficiency are under a microscope.
Poor billing practices, claim denials, or delays in payment can deeply erode margins. By consistently tracking and optimizing these five KPIs, healthcare practices can ensure:
- Faster revenue realization
- Fewer claim rejections and denials
- Improved patient satisfaction
- Increased team productivity
- More accurate forecasting and budgeting
More importantly, these KPIs empower practices to adopt a proactive rather than reactive approach to revenue management.
Bolster Healthcare: Your KPIs Tell a Story. We Help You Turn It Into Profit.
Tracking KPIs is no longer enough. In a rapidly shifting healthcare landscape, you need a partner who doesn’t just measure performance—but moves the needle.
That’s where Bolster Healthcare comes in.
We’re not your average RCM provider. We bring data, strategy, and deep specialty expertise together to drive predictable revenue growth—not just reports.
Why Practices Like Yours Choose Bolster Healthcare RCM Process:
- Live KPI Dashboards – No more waiting for monthly reports. Get real-time, actionable insights that help you make smarter decisions today.
- Denial Prevention AI – Our predictive analytics tackle denials before they happen—so your claims stay clean and cash flow stays strong.
- Certified Billing & Coding Experts – Whether you’re a cardiologist or chiropractor, we’ve got specialists trained in your specialty.
- Full-Cycle RCM Support – From the first patient call to the final dollar collected—we manage all RCM process, so you don’t have to.
- Proven Performance – On average, our clients see a 35% boost in revenue in just 6 months. That’s not a claim. That’s a track record.
Your practice deserves more than reports. It deserves results.
Let’s turn your revenue cycle into a growth engine.
Book a FREE RCM Performance Audit today and see where your revenue is leaking—and how we’ll fix it.