The Top Healthcare KPIs You Should Track to Optimize Your Revenue Cycle

The Top Healthcare KPIs You Should Track to Optimize Your Revenue Cycle

To ensure financial stability and operational efficiency, it is crucial for hospital management to closely monitor key performance indicators (KPIs). By tracking these metrics, healthcare facilities can identify bottlenecks, make informed decisions, and implement effective strategies for continuous improvement. Let’s review the top healthcare revenue cycle KPIs that should be monitored to enhance revenue and maximize performance.

Track These KPIs to Effectively Manage Your Revenue Cycle

Discharged, Not Final Billed (DNFB)

healthcare KPIs

DNFB represents the number of patient encounters discharged from the hospital that have yet to be billed to the insurance payers or patients. It directly impacts their revenue cycle efficiency and cash flow. A high DNFB indicates delayed billing and potential revenue loss, as claims remain outstanding for an extended period. Monitoring DNFB helps hospitals identify bottlenecks in their revenue cycle processes, such as coding delays or documentation issues, enabling them to implement corrective actions promptly.

By reducing the DNFB rate, hospitals can accelerate claim submission and payment processing, leading to improved cash flow, reduced accounts receivable days, and increased financial stability. Additionally, tracking the DNFB rate allows hospitals to identify trends and patterns that may require process improvements or additional resources to optimize the revenue cycle and overall financial performance.

Denial Rate

Denied claims can significantly impact the revenue cycle, leading to delayed or lost payments. The denial rate measures the percentage of claims denied by payers. Healthcare facilities can identify common denial reasons by monitoring this KPI, such as billing/coding errors or lack of medical necessity documentation. Analyzing denial trends helps organizations develop targeted strategies to reduce denials, improve cash flow, and enhance overall revenue cycle performance.

Days in Accounts Receivable (AR)

Days in accounts receivable (AR) is a critical metric that calculates the average number of days it takes for a healthcare organization to collect payment after billing. A higher number of days in AR indicates a potential issue with the revenue cycle, such as billing inefficiencies or delayed reimbursements. By monitoring this KPI, hospital management can identify areas of improvement, streamline billing processes, and accelerate cash flow.

While the target number of days in AR differs for every facility, industry benchmarks recommend staying below 50 days in AR1 with the ideal days in A/R range between 30-402.

Clean Claims Rate

The clean claims rate measures the percentage of claims submitted without errors or omissions on the first submission. A high clean claims rate signifies an efficient billing process and minimizes the need for rework or resubmission. By closely tracking this KPI, healthcare organizations can reduce claim denials, decrease administrative costs, and improve cash flow by ensuring timely and accurate reimbursement.

Payor Mix and Bad Debt Percentages

Payor mix is the percentage of patients covered by private insurance companies, government-sponsored programs like Medicare and Medicaid who reimburse healthcare providers for medical services, and self-pay patients. If a provider has a high percentage of uninsured or underinsured patients, they may experience lower reimbursement rates, potentially impacting revenue.

Bad debt percentage refers to the unpaid bills or patient accounts that a healthcare provider is unable to collect from patients due to their inability to pay, disputes over billing, or other financial reasons. Unpaid patient accounts contribute to this metric, which can negatively reduce the cash flow and overall profitability of the provider.


The cost-to-collect metric assesses the financial resources expended to collect revenue. It measures the expenses incurred during the revenue cycle, including staffing, software, and infrastructure costs. Monitoring this KPI helps healthcare facilities evaluate the efficiency of their revenue cycle operations. Organizations can identify opportunities to reduce expenses, enhance productivity, and improve overall financial performance by optimizing cost-to-collect ratios.

Coding Quality and Productivity

The coding accuracy rate is a crucial KPI that measures the facility’s coding quality by randomly auditing a sample of coded charts against the provider’s documentation to ensure correct code selection. A high rate indicates precise coding, leading to accurate billing and proper reimbursement. Conversely, a low rate suggests potential coding errors, resulting in claim denials, revenue loss, or compliance issues.

The average daily coding encounters rate calculates coding productivity by taking the total number of patient encounters coded by a coder divided by the number of workdays within a specified period, such as a week, a month, or year. It provides insights into the efficiency and workload of the coding staff within a healthcare organization. A higher value indicates higher productivity, as the coder is coding more records within the same time frame. However, it is essential to maintain accuracy and quality while achieving high productivity to avoid potential coding errors that could impact revenue and compliance.

Regular monitoring of these KPIs enables organizations to identify areas for improvement, implement targeted training, and ensure adherence to coding standards, ultimately enhancing the efficiency and effectiveness of the revenue cycle.

Patient Satisfaction Scores

While not directly tied to revenue, patient satisfaction scores play a crucial role in the success of any healthcare organization. Satisfied patients are more likely to make timely payments and recommend the facility to others, thereby positively impacting revenue. Monitoring patient satisfaction scores provides valuable insights into the patient experience and allows management to identify areas for improvement, ultimately leading to enhanced patient loyalty and financial success.

Net Collection Rate (NCR)

The net collection rate (NCR) is a fundamental KPI that measures the percentage of revenue collected compared to the total amount billed. It reflects an organization’s efficiency in collecting payments from payers and patients. A high NCR indicates effective revenue management and successful reimbursement processes. Regularly tracking the NCR enables hospitals to identify any gaps in the revenue cycle and implement corrective actions to improve collections.

Frequently Asked Questions (FAQs) Regarding Healthcare KPIs

How often should healthcare organizations track these revenue cycle KPIs?

Track these KPIs on a regular basis, such as monthly or quarterly, to ensure timely identification of any issues or trends. However, the frequency may vary depending on the size and complexity of the organization’s revenue cycle operations.

Are there industry benchmarks available for these revenue cycle KPIs?

Yes, there are industry benchmarks available for these revenue cycle KPIs. Various healthcare associations, industry publications, and consulting firms provide benchmarking data, like the HFMA MAP Keys, that can be used to assess an organization’s performance relative to peers and industry standards. However, it is important to consider the specific characteristics and context of the organization when interpreting benchmarking data.

Why are KPIs important in healthcare?

KPIs are vital in healthcare because they provide measurable and objective insights into an organization’s performance and financial health. By tracking key performance indicators, healthcare facilities can identify areas for improvement, set clear targets, and make informed decisions to enhance patient care, operational efficiency, and financial stability.

KPIs also enable organizations to benchmark their performance against industry standards and peer organizations, driving continuous improvement and best practices. Moreover, KPIs facilitate communication and alignment among hospital decision-makers and management, ensuring a unified focus on strategic goals and priorities.

Overall, KPIs play a critical role in driving success, optimizing processes, and ultimately delivering better healthcare outcomes.

Don’t Miss This Opportunity for Improvement

Effectively managing the revenue cycle is vital for healthcare organizations’ financial stability and success. Does your organization need assistance monitoring and analyzing these KPIs? Our team of experts is trained to assist decision-makers and management personnel in making informed decisions, implementing effective strategies, and establishing themselves as industry experts in revenue cycle management. Connect with one of our YES consultants to discuss our revenue cycle solutions today.


  1. AAFP, 2023.
  2. HFMA, 2023.

JJ Crumbley

JJ Crumbley, MBA, PMP – Director, Data Analytics & Project Management
healthcare KPIs

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