How to Grade the Health of your Revenue Cycle

10 Minute Read
Posted by Global Healthcare Resource on May 8, 2024 5:38:45 PM

If someone were to grade the financial health of your organization (i.e., the likelihood the business will survive over time), what grade would you receive? Would you pass with flying colors, fail, or fall somewhere in the middle as ‘average?’ 

For many healthcare leaders, the answer is ‘I don’t know.’ Others may incorrectly assume they ‘pass with flying colors’ simply because patient volumes are high, and business appears to be booming. However, the only way to truly know your financial health is to take a good, hard look at your data. It’s what every savvy healthcare leader—and outsource revenue cycle management (RCM) vendor working on their behalf—does regularly. 

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“Assessing financial health is one of the most important steps today’s healthcare leaders can take,” says Karna Palanivelu, Senior Vice President of Operations at Global Healthcare Resource. “It’s about knowing where you stand and identifying areas for improvement to ultimately improve the cashflow and sustainability of your business.”

Getting started with a financial health assessment: 

To get started, you’ll need to determine how you stack up against this report card that includes several important RCM key performance indicators (KPI) and benchmarks:


Grade: A (good)

Grade: B (average)

Grade: C (poor)

Net Collection Rate Percentage

> 99%

95% - 99%

< 95%

Days in A/R

< 35

35 - 50

> 50

Aging A/R (91-120 days)

< 6%

6% - 9%

> 9%

Aging A/R (120+ days)

< 20%

20% - 24%

> 24%

First Pass Acceptance Rate

> 97%

95% - 97%

< 95%

Denial %

< 5%

5% - 10%

> 10%

Coding Accuracy

97% - 100%

95% - 96.99%

< 95%

Coding Turnaround Time

24 hours or less

More than 24 hours to 48 hours

More than 48 hours


If you score an ‘A’
Congratulations—chances are, you and/or your outsource RCM vendor have worked hard to move the needle on these metrics, promote revenue integrity, and improve overall financial health. This includes reviewing financial reports on a weekly basis (and in some cases, daily) and making immediate improvements to your RCM processes when necessary. However, keep in mind that any metric could change at any time for any reason which is why it’s important to not rest on your laurels. Constant data monitoring is paramount.

If you score a ‘B’ 
Clearly, there’s room for improvement. It’s time to figure out exactly what’s happening and drill down into the root cause.

If you score a ‘C’ 
Time to recalibrate completely. If you continue operating this way, you’re going to eventually experience major cashflow problems that could potentially fold your business.

Doing your homework:
Once you know your grade, it’s time to buckle up and examine gaps in your RCM processes and workflows. Keep in mind that all RCM KPIs are interconnected, meaning when you improve one, you often improve other KPIs simultaneously. For example, when you decrease your denial percentage, your net collection rate may automatically improve. When you increase your coding accuracy rate, your first pass acceptance rate may increase and your days in accounts receivable (A/R) may decrease. 

The goal with all KPIs is to ultimately promote revenue integrity and smooth cashflow. In other words, when you score an ‘A,’ you’re paid in a timely manner—and you’re paid what you deserve.

Earning "extra credit" 
Healthcare organizations that continually grade their RCM performance are better able to achieve financial sustainability. These organizations—and the outsource RCM vendors working on their behalf—aren’t afraid to ask questions like:

‘Why is our denial rate so high when our coding accuracy rate is good?’ The answer might be that it has nothing to do with coding. Instead, there might be a problem with collecting accurate patient demographic information. Or perhaps patient benefits are exhausted or insurance information is outdated (the latter of which happens often during the time of healthcare deductible resets). The fix? Revamped front-end processes for registration and eligibility verification. 

‘Why are our days in A/R so high when our coding accuracy is good?’ The answer might be that coding or charge entry turnaround time is problematic, necessitating the need to work with an outsource RCM vendor that can consistently code claims and enter charges within 24 hours. If that vendor has an offshore talent pool, turnaround time may be even quicker. For example, Global Healthcare Resource leverages time zone differences between the United States, India and the Philippines to support a 12-hour turnaround time, enabling faster payments.

‘Why is it so difficult to control and decrease our aging A/R greater than 120 days?’ The answer might be that the aging A/R greater than 120 days pertains to a certain surgical specialty for which payers frequently require additional documentation before paying. In this case, you may want to explore ways to expedite this process. However, another reason why it may be difficult to control aging A/R greater than 120 days is that billing staff need more education and training on how to converse with insurance representatives to find solutions and/or appeal denials successfully.

Moving to the 'head of the class'
Some healthcare organizations may be adept at moving the needle on their financial health; however, others may require help. “Working with an end-to-end RCM vendor—particularly one that leverages offshore resources—may be the best option. An end-to-end vendor can monitor and improve all KPIs at once, drill down into potential root causes, and help organizations shift from ‘poor’ to ‘good’ performance in a relatively short period of time,” says Karna.

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Global Healthcare Resource

Founded in 1999, Global Healthcare Resource has been a leader in revenue cycle management solutions and proudly employs 6,000+ HIPAA-compliant coders, billing professionals, and patient call center agents. Global operates as an extension of your team to improve productivity and increase ROI.