The Importance of Your Net Collection Rate For Your Holistic Practice
Holistic Billing Services recognizes the importance of operating a streamlined holistic practice. This includes attracting the best patients, managing neverending administrative tasks, and ensuring your overall profit is the best it can be. One of the most critical factors to track is the Net Collection Rate of your holistic practice.
By accurately tracking your net collection rate, you can gain valuable visibility into how exactly your practice is truly performing. Learn more about the importance of your net collection rate and its relationship to your medical billing and coding process.
What is Net Collection Rate?
A holistic practice’s net collection rate is essentially a performance metric. It measures how effective the practice is at collecting all legitimate forms of reimbursement for services, which are typically the amount owed after all-payer contract adjustments are made. The net collection rate will reveal deficiencies in this process. If a practice is struggling to collect revenue due to bad debt, late filings, coding errors, or claim underpayments, it will have a low net collection rate.
Since the net collection rate is directly tied to a practice’s revenue stream, it’s one of the most important performance metrics to monitor. Typically calculated quarterly, the rate represents a snapshot of financial health and efficiency. A low net collection rate should be treated as an urgent priority because it indicates that the practice has a persistent problem when it comes to gathering revenue, which could indicate organizational inefficiency or an issue with patient relations and communication.
What Should Your Holistic Practices Net Collection Rate Be?
A 96% net collection rate is considered ideal across the industry. Anything lower than a 95% clean claims ratio means your holistic practice is losing revenue, which also indicates your holistic practice is wasting further money and time reworking rejected claims. In reality, most holistic practices have a rate that varies between 75% and 85%, which means that somewhere around 15–25% of claims submitted each month have to be worked on twice, at minimum.
Why Does A Strong Net Collection Rate Matter?
A holistic practice’s net collection ratio is one of the most significant collection metrics as it provides visibility into what is actually being collected and what your holistic practice is actually allowed to collect after factoring in any refunds, write-offs, or any other contractual and non-contractual amounts. As a result, your net collection rate is one of the most important collection metrics as it gives a clear picture of your practice’s benchmark performance.
Optimizing your net collection rate can indicate areas where your holistic practice is losing revenue. If your net collection ratio reveals that your practice is underperforming, you must investigate what processes need to be optimized for success. The reasons for a major gap between the score you have and the score you want can range from a variety of reasons, but they all have the same outcome: a negative effect on your holistic practice’s financial health.
What is the Net Collection Rate Formula?
Understanding your net collection rate is critical to your holistic practice’s overall revenue cycle. Optimizing your net collection rate starts with understanding how to assess your net collection rate. Calculating net collection rate involves several important steps:
- Identify the time period that you want to monitor (e.g., 90 or 120 days). Assess data from an earlier period in which the majority of claims would be closed and cleared; going about 6 months back is advisable.
- Calculate total payments (from payers and patients) for the designated time period.
- Calculate total charges minus approved write-offs (e.g., due to contractual reasons, bad debt, professional courtesy discounts, etc.) for the designated time period.
- Divide your calculation in step 2 by your calculation in step 3. Then multiply by 100.
- Do this consistently (e.g., every 90 days) for a period of at least one year to get the most accurate average rate.
Best Practices for Increasing Your Holistic Practice Net Collection Rate
Your strategy to help improve net collection rates will differ depending on your particular set of challenges and your target goals. Once you have the basics of improvement covered – by ensuring your front desk staff is on top of co-pays and that your patients understand your payment policies – you can take a more strategic approach. Auditing claims, coordinating more closely with payer reps, and empowering staff to handle follow-ups can ensure you collect every piece of revenue earned and that your net collection rate gets as close to 100% as possible.
Some strategies for improving your net collection rate include:
1. Implementing front-end point-of-service collections
One of the easiest steps to take is to collect 100% of copayments and deductibles from patients at the initial point-of-service. This ensures that no one walks out of your holistic practice with an outstanding bill and avoids the resulting hassle of collecting payments afterward, which can be just as inconvenient for the patient as it is for the practice. If a patient is unable to cover the cost at that time, the appointment can be rescheduled or other payment options can be discussed.
2. Comprehensively educating patients
Most patients have only a vague understanding of how healthcare practices collect payments from insurance providers; thus, they may not have a clear sense of their financial obligations when they use your holistic services. Providing a brochure or reference sheet to all patients that outlines their role and responsibilities in the payment process can clear up a lot of confusion. It’s also important to have someone on staff who has the financial expertise to answer any questions patients may have about how the claims and payment process works.
3. Provide patients with payment options
Expanding payment options requires some investment on the front-end, but it can have a major impact on net collections over time. As consumers, your holistic practice’s patients are accustomed to being able to pay for services in a variety of ways, whether it’s by credit or debit card, through an online portal, or via a mobile app. By providing a variety of payment options, patients are far more likely to find one that suits their needs and pay their bills promptly.
4. Calculate Your Net Collection Ratio Consistently
For the most accurate net collection rate, your holistic practice needs to be calculating this rate regularly. While the net collection rate can be measured monthly, quarterly, semi-annually, or annually, the longer the time frame, the more data you will have to provide an accurate performance assessment of your practice. Figuring out your net collection rate every 90 days for a period of at least one year will help provide the most accurate average rate.
Why Does Tracking Your Holistic Billing Metrics Matter?
Although the net collection rate is one of the most valuable collection metrics of your practice, other holistic billing rates are important to track to receive the best understanding of your overall efficiency and success. Tracking other metrics can also prepare your holistic practice to stay ahead of any revenue challenges. It’s essential for the success of your practice to be monitoring all billing metrics possible to have a continuous understanding of your financial performance. By tracking these metrics regularly, you can evaluate the monetary success of your holistic practice over a period of time to identify fluctuations and then investigate where and why any problematic changes take place.
Improve Your Net Collection Ratio With The Experts at Holistic Billing
Whatever the causes of a low net collection rate, partnering with a reputable holistic billing service is one of the fastest and easiest ways to turn this key revenue metric around. Experienced holistic billing services can overhaul the way a practice codes its services and how it submits claims to payers to minimize the rate of denials. Outsourcing your holistic billing process over to a third party also frees up time for office staff to focus on providing the best service and care possible. Instead of spending hours on the phone trying to collect outstanding payments, a holistic billing company can focus on expanding the practice’s patient base and improving the practice’s healthcare experience to better retain the patients it already has.
Since 1999, Holistic Billing Services has handled coding and billing issues for a variety of healthcare practices. We understand that each practice is unique and requires a customized solution that aligns with its long-term goals and increase its medical billing metrics. That’s why we work closely with our clients to help them set up holistic billing services and solutions that meet their specific needs and allows them to deliver the best care possible. To find out what we can do for your practice, contact our team today for a consultation.
