There’s a ton of data in the healthcare industry. Medical practices generate a lot of data every day - claims submitted, payments received, patient demographics. Having all that data might seem like a goldmine but not all data is created equal.
Too many practices are focused on “vanity metrics” - numbers that look good but don’t provide actionable insight. These metrics distract from what really matters: driving revenue growth, improving efficiency and better patient care. The key is actionable metrics - data points that give you clear practical insight to make decisions.
In this post we’ll explain the difference between vanity and actionable metrics, what metrics to focus on and how to use the right data to transform your revenue cycle and growth.
Vanity Metrics vs. Actionable Metrics
Vanity metrics are numbers that look good but don’t impact your practice’s performance. They may provide some context but rarely give you the insight to make meaningful changes.
Examples of Vanity Metrics:
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Clean Claim Rate: A high percentage of clean claims (claims submitted without errors) is good but doesn’t account for denials, underpayments or resubmissions. A 98% clean claim rate doesn’t mean faster payments or less revenue leakage.
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Total Charges Submitted: This is the total dollar value of claims submitted but doesn’t show how much of that revenue was collected, denied or written off.
Actionable metrics go deeper, uncovering inefficiencies and opportunities for improvement. They give you a complete picture of your practice’s revenue cycle and operational health so you can make informed decisions.
Examples of Actionable Metrics:
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Days in Accounts Receivable (A/R): Measures how long it takes to collect payments. High A/R means inefficiencies in the billing process.
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Net Collection Rate: Shows the percentage of payments collected vs total expected reimbursements, the true measure of billing efficiency.
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Denial Rate: Tracks the percentage of claims denied by payers and gives you insight into coding errors or contract issues.
Why Actionable Metrics Matter
Focusing on actionable metrics can have a real impact on your practice’s financial performance and operational efficiency. Here’s how:
1. Cash Flow
Metrics like Days in A/R impact cash flow. Practices with a streamlined billing process get payments faster, more revenue and less reliance on credit. According to the Healthcare Financial Management Association (HFMA) reducing A/R by just 5 days can make a big difference in cash flow.
2. Better Resource Allocation
Actionable metrics show you inefficiencies so you can optimize workflows and allocate resources where they’re needed most. For example a high denial rate might mean you need to train your billing staff more.
3. More Revenue
By tracking and addressing issues revealed by actionable metrics like uncollected patient balances or denied claims practices can recover revenue that would otherwise be lost. A study by Becker’s Hospital Review found that proactive denial management can recover up to 90% of denied claims.
Actionable Metrics to Track
1. Days in Accounts Receivable (A/R)
This measures how many days it takes to collect payment after a claim is submitted. High A/R means issues with claim submission, payer follow-ups or patient collections. Industry benchmarks say Days in A/R should be below 40 How to Improve:
- Automate claims submission and follow-ups.
- Focus on resolving balances over 90 days old.
- Check A/R regularly to see trends.
2. Net Collection Rate
This measures how much of the revenue you’re owed actually gets collected. A high Net Collection Rate (over 95%) means you have efficient billing processes, a lower rate means underpayments or uncollected patient balances.
How to Improve:
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Ensure accurate coding and documentation.
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Follow up on underpaid or denied claims.
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Implement patient payment tools to streamline collections.
3. Denial Rate
Denial Rate measures the percentage of claims denied by payers. High denial rate (over 10%) means coding errors, payer requirements or contract management issues.
How to Improve:
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Use denial management tools to see common denial reasons.
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Train staff on payer specific requirements.
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Use analytics to track trends and address recurring issues.
4. First-Pass Resolution Rate (FPRR)
FPRR measures the percentage of claims paid on the first submission. High FPRR reduces administrative burden and accelerates cash flow. How to Improve:
- Validate claims before submission to reduce errors.
- Use multi-clearinghouse systems for faster processing.
5. Patient Responsibility Collection Rate
This measures how well your practice collects patient balances. With HDHPs patient responsibility is now a big chunk of revenue. How to Improve:
- Offer patient payment options like online portals and payment plans.
- Provide upfront cost estimates.
- Send automated reminders for upcoming or overdue payments.
How PUREDI Converts Metrics to Growth
At PUREDI we help private practices identify and act on the right metrics. Our data driven approach includes:
- Full Analytics: Track Days in A/R, Net Collection Rate and Denial Rate in real-time.
- Denial Management Tools: Overturn 90% of denials.
- Payment Solutions: Streamline patient collections with online portals and automated reminders.
- Expert Guidance: Our team reviews and provides recommendations to optimize your revenue cycle.
Practices that work with PUREDI see 3-5% revenue increase and 20% reduction in A/R and stability and growth.
