Metrics of Medical Practices

Most of us would have heard this famous line popularly attributed to Management Guru, Peter Drucker, “What gets measured, gets managed!”. This saying fits healthcare finance more snugly than it fits any other domain. Most healthcare practitioners do not pay enough attention to the financial health of their healthcare business. And so, they do not detect deterioration or seek a cure for it until it is too late! Maybe that’s why in the past few years, bankruptcies in the healthcare sector have doubled. The only solution is for healthcare practices and hospitals to keep close tabs on their key financial metrics.

Why do these Metrics Matter?

As healthcare professionals, we are not strangers to numbers. Every day we rely on counts and rates to diagnose health problems in our patients and monitor their health. A patient’s critical health parameters are measured and compared against reference values to help us understand what is wrong with the patient and plan the course of treatment. Now isn’t it plain that the same applies to the financial health of our healthcare practice as well?

We perfectly understand that as a healthcare professional your passion is patient care. Poring over Balance sheets is simply not your thing. So when we say that you must pay close attention to the financial facet of your healthcare business, we do not mean that you must master CPT code assignments and attempt to understand all the nuances in medical billing. What we do suggest instead is that you get a grip on some key financial metrics and how to interpret them.

These metrics will help you understand whether your healthcare practice is financially robust or run-down. They will also help you hold your billing partner or staff accountable for inaction or lapses that could be easily avoided. They will give you better control over your revenues and ultimately, they will help you grow and serve your patients better.

What are the Key Metrics you must know?

Now that we know the difference that an understanding of these metrics can make to your practice, let’s deal with the next big question. What are these key metrics and what do they tell you about your practice? According to Don Rodden, Principal of Healthpro Medical Billing Inc, the following four metrics can give you a panoramic picture of how your practice as a business is performing and where it is headed.


This is a straightforward measurement that gives you the total payments you have received in any month. But to utilize this as a strategic metric to gauge your financial performance you need to compare it to reference values – the receipts of the previous months, the receipts of the same month last year and year-to-date values for the current and previous years. An increase of 4 % in receipts over the last month can indicate that you are doing better. But you also need to look at this number with the context of other metrics. For example, a 4 % jump in receipts will not be something to be happy about if your charges and RVU volume increased simultaneously by 15%


In any industry, receipts are usually measured against cost and productivity to know if they are commensurate with resource inputs. If you apply this to the US healthcare system then you will be talking about Relative Value Units or RVUs. Payors determine physician payments based on these RVUs, so your income is closely tied to the term.

So as a practitioner, you will benefit from tracking the receipts of particular services performed and knowing the exact amount you have received per RVU.

This will help you identify the major trends in your billing process. You can also go one step ahead and study the trends in receipts per RVU from individual payors. With this information, you can assess if the payors are paying you what they have contracted to pay you and identify where your billing process has failed.


The summary of your Accounts Receivables gives you an in-depth view of your billing performance. A/R is a measure of how much revenue you are due to get from payors and patients for the services you’ve provided. It increases when new services are charged and reduces when payments or adjustments are made.

A lot of factors can stop the amount in your A/R books from actually getting realized in your bank account. A periodic check of the A/R report will help you detect the irregularities in the billing process.


Days in A/R tells you how long it takes for your payments to get to your account once you raise a bill. On average it takes 30 days or less. Most receipts come in within 14 to 21 days. But if a claim is denied or if patient payment ratios are too high then it might take more time.

Days in AR = Total AR / Average Daily Charges (90-day average)

If the’ ‘Days in AR’ is more than 50 days, you need to sit up and check what delays the payments. You must also look at the percentage of total A/R in each ‘Days in AR’ bucket. If more than 10 to 15 % of your total A/R is in the 120+ days category then it tells you that you need to re-visit your billing process.  

mgma medical practices

Billing in healthcare practice is a complicated affair thanks to changing regulations and the multiplicity of players and procedures. So most healthcare practices rely on external billing entities and sometimes these entities are not transparent in their activities. These metrics and reports will aid you in monitoring the work of these billers and making sure that your practice is not leaving money on the table. 

If you are looking for a reliable billing partner with clear and transparent processes who can make sure your billing machinery is running at maximum efficiency, Rannsolve can be your go-to RCM service provider. Professional billing teams at Rannsolve ensure a hassle-free billing process and support your decision-making and monitoring efforts with timely reports. 


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