Measure:

Net Days in Accounts Receivable

Purpose:
Trending indicator of overall A/R performance

Value:
Indicates revenue cycle efficiency

Equation:
N: Net A/R
D: Average Daily Net Patient Service Revenue


Measure:

Aged Accounts Receivable (A/R) as a Percentage of Billed A/R

Purpose:
Trending indicator of receivable collectability

Value:
Indicates revenue cycle’s ability to liquidate A/R

Equation:
N: >30, >60, >90, >120 days
D: Total Billed A/R


Measure:

Cash Collection as a Percentage of Adjusted Net Patient Services Revenue

Purpose:
Trending indicator of revenue cycle to convert net patient services revenue to cash

Value:
Indicates fiscal integrity/financial health of the organization

Equation:
N: Total Cash Collected
D: Average Monthly Net Revenue


Measure:

Bad Debt

Purpose:
Trending indicator of the effectiveness of self-pay collection efforts and financial counseling

Value:
Indicates organization’s ability to collect self-pay accounts and identify payer sources for those who can’t meet financial obligations

Equation:
N: Bad Debt Write-Off
D: Gross Patient Service Revenue


Measure:

Charity Care

Purpose:
Trending indicator of local ability to pay

Value:
Indicates services provided to patients deemed unable to pay

Equation:
N: Charity Care Write-Off
D: Gross Patient Service Revenue


Measure:

Charity as a Percent of Uncompensated Care

Purpose:
Trending indicator that monitors charity care versus bad debt

Value:
Reflection of charity care (provided to the community)

Equation:
N: charity care
D: Total Uncompensated Care (Bad debt + Charity Care)


Measure:

Cost to Collect

Purpose:
Trending indicator of operational performance

Value:
Indicates the efficiency and productivity of revenue cycle (RC) process

Equation:
N: Total RC Cost
D: Total Cash Collected


Measure:

Cost to Collect by Functional Area

Purpose:
Trending indicator of operational performance by functional area as reported in KPI 4 (Cost to Collect)

Value:
Indicates the efficiency and productivity of revenue cycle process by functional area

Equation:
N: Total x (x = the cost of each functional area) cost*
D: total cash collected

*Sum total of all x’s (i.e. sum of the cost of each functional area) should equal total cost of KPI 4


Measure:

Case Mix Index

Purpose:
Trending indicator of patient acuity, clinical documentation, and coding

Value:
Supports appropriate reimbursement for services performed and accurate clinical reporting

Equation:
N: CMI (average RW/Patient) = Sum of relative weights for all patients*
D: Number of patients in the month*

*Excludes normal newborns and Medicare-exempt units