Category: News

We frequently have conversations with DSOs about revenue cycle performance, metrics, and KPIs. The dental revenue cycle generates mass amounts of useful data which can sometimes seem overwhelming and difficult to organize. However, if you believe the noted management consultant Peter Drucker who said, “You can’t improve what you don’t measure,” then where and how do you start? For any DSO, starting with these five baseline metrics is a great foundation to find simplicity on the other side of complexity. Data is your friend.

Percentage of A/R Greater than 90 Days

Aged receivables exist in every DSO and practice. Calculating the % of receivables over 90 days is an important indicator of the overall health of your RCM because, while some claim failures are inevitable, too high a percentage in the 90 day plus range can be a sign of more systematic and serious resourcing or billing challenges. It’s human nature to deal with the easy claims first, but allowing an unpaid claim to age drastically reduces the chance of receiving any payment at all. Even if the balance is ultimately transferred to the patient, patients will struggle to remember and not feel compelled to pay for a procedure months after a visit. This metric is becoming increasingly more important as out-of-pocket costs rise, so keep a close eye on it.

Ideally, less than 15% of your receivables should reach this age, but the lower the better. The cost to collect increases over time, and the longer you allow your accounts to age, the less likely it is you will recover them and the more it will cost you to do so.

Clean Claim Rate

An ounce of prevention is worth a pound of cure. A clean claim is a claim that flows from submission to collection without needing additional involvement from the RCM team after the first submission. Clean Claim Rate gives your team visibility to problems that are causing claims to require resubmissions, like mistakes in patient registration information or claims failing to meet a payer’s requirements.

They say, “you never have time to do it right, but you always have time to do it over.” Slow down, and focus on clean submissions, clean claims is the #1 way to reduce revenue cycle workload and increase collection speed, the best groups average over 70% in clean claims.

Collection Days

Collecting what is owed entirely and quickly is what all RCM teams aspire to.  Tracking your collection days, the difference between the payment date and date of service, can help you improve your cash flow by identifying and fixing problems in your billing and collections processes that are causing delays in payment. By reducing your collection days you increase the amount of money you collect in a given time period, which can have a significant impact on your overall cash flow. For example, if you are able to reduce your collection days by 10 days and you collect an average of $100,000 per day, you’ve increased your cash flow by $1,000,000.

Ideally, you want to be able to turn over your A/R in less than 30 days. Top performing teams can collect open A/R in less than 15 days though this metric will vary by payer mix as well.

Denial Rate

Your denial rate is the percentage of insurance claims that are fully denied by the payers. There are a couple of possible variations to this metric as it can be calculated both at the claim level but also at the claim line level.  Let’s focus on the claim level. This metric validates the effectiveness of your pre-billing processes, especially your insurance eligibility and benefit validation process. A low denial rate indicates that your revenue cycle processes are working well and you are preventing as many mistakes from happening as possible. Keeping an eye on this metric could alert you to claim pre-billing verification opportunities, submission issues, or sometimes credentialing issues that could dramatically affect your revenue and cash flow.

The best performers have an average claim denial rate below 5%, but many DSOs and practices are regularly over 10%.

Claim Yield

The final baseline metric your practice should be regularly monitoring is Claim Yield. This measure represents what the payer paid against the expected fees.  For example, if your practice collected 70 claims with a total expected amount of $10,000 and received only $6,000 in payer payment, then the claim yield would be 60%.

A high claim yield indicates that the organization is able to successfully collect payment for a large percentage of the claims it submits. On the other hand, a low claim yield may be a sign of problems with the organization’s billing and collections processes, such as incorrect coding, inadequate follow-up on unpaid claims, incorrect fee schedule, or other issues that may be causing claims to be denied. By tracking claim yield and identifying areas for improvement, organizations can optimize their billing and collections processes and increase their overall revenue.

Ideally, every claim you submit for payment would be paid at 100% but we know that isn’t the case. Best practices dictate that your Claim Yield should be greater than 90%, industry best performers can achieve up to 95%.

Starting with a solid understanding of these five key metrics will give you confidence troubleshooting, allocating your time and resources, and put you and your RCM team on a path to continuous improvement.   Monitoring them consistently over time will help ensure that your RCM results are stable, reliable, and hopefully optimized.

 

The State of Dental

As we head into 2023, DSOs are quickly approaching the crossroads of a perfect storm formed by COVID, The Great Resignation, and a looming recession. How groups handle the next 12-18 months will, in large, determine who comes out on top, and who is swallowed up. The economics driving this shift is due in part to rising inflation and the cost to borrow. Debt is becoming more expensive and riskier for DSOs to continue the explosive growth they’ve experienced over the previous 18 months. A primary vehicle for increasing cash flow has been to add practices to a DSO’s portfolio, but as the winds of change blow, a buzz word floating around the DSO space is “same store growth.”

Recession and Same Store Growth

Same store growth, as it pertains to a dental office, is the primary focus on maximizing efficiencies and increasing cash flow compared to the previous year. There are many aspects of an office to look at to accomplish this: optimizing your supply procurement, utilizing AI to diagnose treatment more often and accurately, and converting more patient calls to appointments. While all aspects of an office should be looked over with a fine-tooth comb, for most offices revenue cycle optimization is the largest source of untapped cash flow.

Importance of RCM

Revenue Cycle Management, RCM, has gained traction from a buzz word to a realized crucial function at the office and DSO level. Anywhere from 60-90% of an office’s patients have some level of dental insurance coverage. This means that most “production” will not be paid by the patient, but that the office will be submitting a claim for insurance payment. The tracking of claims, payments, and outstanding balances due from insurance or patients is the management of an office’s revenue cycle. Unfortunately, this process today is quite manual, time intensive, and difficult to track for a single office. RCM becomes exponentially more difficult when you are dealing with 10 locations, or 50 locations. There are very few tools or reports available within a practice’s management system that allow for the tracking or working of these claims, and it’s made especially difficult when multiple systems are used across an organization (i.e. a few offices on Dentrix, Open Dental, or Eaglesoft). When you look at and understand the steps required to manage and follow up on claims, it’s not surprising that most offices struggle to keep up.

Tools and Solutions

The saying goes, “you can’t manage what you can’t measure.” This is what leaders are thinking, and currently are looking for new technology as an answer. There are companies, like InsideDesk, that are turning the tables, and providing RCM data that finance and operation leaders have been looking for. While the analytics and insights are powerful, it’s only half the solution. InsideDesk also provides a platform to help RCM teams become more effective and efficient, at a time when the cost of labor is at a premium. Automation of tedious tasks like EOB collection and claim statusing allow team members to work more claims per day. The daily guided claims list prevents time wasted from printing out AR reports or creating cumbersome excel sheets. These tools allow offices to increase cash flow, and senior leaders to track progress at a time when “same store growth” is becoming top of mind for all.

The Dental Support Organization world is expanding and evolving constantly. There has been a surge of new groups that have come into the space this year to plant their flag and grow their vision of a DSO. There have also been a handful of large acquisitions, like Mid-Atlantic Dental Partners becoming a part of the Sonrava Health organization; consolidators of individual dental practices consolidating with other DSOs. Dental executives and leaders are realizing that the processes that turn production into realized revenue are becoming more complex and difficult to manage. It takes “a village” of people, often distributed & remote, each accountable for their step in the revenue cycle to ensure success. The more you scale, the more interdependencies and handoffs there are.  Managing a revenue cycle process requires focused leadership.

Revenue cycle teams take on many different shapes and structures depending on the DSO’s business model, personnel, and maturity. The three most common RCM models are centralized, decentralized, and hybrid. These teams are often led by a regional manager, someone in operations, or a more distant finance executive. The leader usually has a list of responsibilities and teams reporting to them outside of the RCM team. Sometimes, they don’t have RCM or claims management specific experience. This is challenging because from the outside looking in, the claims lifecycle seems like it should be straightforward. Anyone doing the job knows that insurance is anything but straightforward. This can create friction when leaders are looking to improve their revenue realization performance, but don’t fully understand why their collections aren’t increasing.

Enter the much needed and necessary revenue cycle leader. This is a vital member to the team that brings claim and revenue specific knowledge. They help to bridge the gap between your frontline employees and your senior leadership. The need for and importance of a designated revenue cycle leader has never been greater than today. They know how to organize the team to optimize for maximum revenue collection. They have the experience to know what to look for in a successful RCM technology solution. Your RCM leader also will understand the importance of visibility on their team’s work to deploy resources effectively. This leader will also know that KPI’s like “90+ days collection” or “revenue realization rate” are going to have the largest impact on increasing collections. These differences produce immediate outcomes that determine whether your team realizes 70% of dollars owed or 95% of dollars owed. Having someone specifically designated to oversee and guide the department that, as mentioned previously, brings in the revenue for the company is an absolute necessity. Most DSO’s have “someone”, but that person needs to be a revenue cycle leader with experience to effectively move the needle. DSO leaders are realizing the importance of this position and should be one of the top priorities going into 2023 if it doesn’t exist in their organization today.