Important Self-Pay Revenue Cycle Metrics to Track

Every year, hospitals and health systems spend huge amounts of money. This money goes to operating platforms, clinical improvements, and top-level financial improvements. These investments are designed to optimize and streamline work by analyzing data. However, few hospitals use data analysis to improve their self-pay management process. Focusing on this process is a critical step in boosting revenue cycle metrics.

Hospitals that track the numbers and quantify their data have an advantage in the self-pay management process. The result is new opportunities for more savings. However, data in the healthcare revenue cycle field has exploded over the past decade. All of this new information can make it difficult to know which data is key to optimizing your revenue cycle.

Tracking specific metrics helps organizations identify areas for improvement. It also supports streamlined collections and a better patient financial experience. Below are some essential self-pay metrics. Financial and revenue cycle management teams should track these to boost revenue and reduce costs.

These four critical revenue cycle metrics measure success in self-pay patient management. There are also several key performance indicators (KPIs) within these three categories.

1. Conversion on Self-Pay Patients

A primary goal in managing self-pay accounts is to convert patients to an eligible payment plan, charity care or insurance program. This process not only helps ensure payment but also reduces the burden on patients. Tracking conversion metrics identifies how well your screening and conversion processes work. It also helps determine ways to optimize them.

Number of Accounts Eligible for Screening

Let's look at an example. Imagine if 100 self-pay accounts came in last month and your team couldn't screen 50 people due to unresponsiveness or other reasons. This outcome indicates that your process has a problem. Do you leave these accounts in the mix, label them as “not eligible for screening” or another solution? 

Different facilities take different approaches to deciding what accounts are eligible for screening. Track the reasons why accounts could not be screened and look for patterns. For example, there may be an increase in ineligible accounts because patients are not answering. In this case, you may need to adjust your process for reaching out to patients. This initial data provides a baseline for other metrics. It gives an idea of the scope of the self-pay challenge and helps you evaluate the total potential for conversion. 

Screening Percentage

Now that you know how many accounts were eligible for screening, how many of them did your team or vendor actually interview and screen? The screening percentage measures how many eligible accounts hospitals assess for financial assistance. The higher the percentage screened each month, the better. 

High screening rates indicate your team proactively addresses as many accounts as possible. This means you are maximizing the chances of conversion. Low screening rates may point to gaps in your workflow or staffing issues within the screening process.

Conversion Rate

Conversion rate is one of the most important metrics for hospitals to measure when analyzing self-pay strategies. This metric measures how many accounts move from self-pay status to financial assistance. The higher the percentage converted, the better. A higher conversion rate reflects an effective screening and financial counseling process. A robust process reduces the likelihood of unpaid balances and write-offs. 

Pending Percentage

Measuring success in this category depends on your operation’s size and capacity. Success does not look the same in every facility. The best way to measure it is by tracking your pending percentage over time and looking for consistency. A climbing pending percentage may indicate an underlying issue with your screening process. Your team may be able to improve this issue internally, or it may result from an external factor. For example, the determining Medicaid agency may have a significant backlog that delays decisions. This example is an external factor you cannot control.

Ineligibility Percentage

This metric measures screened accounts that are ultimately ineligible for financial assistance. You may identify these accounts as eligible for payment plans or send them to collections. Your ineligibility percentage is out of your control. However, it’s a good metric to track to understand your bottom line and where your resources go each month.

2. Time to Conversion

The second element of success in optimizing self-pay accounts is the time it takes to complete the process. From identifying a self-pay account to receiving payment, hospitals want to keep this timeline as short as possible.

You can time several trigger points within this process separately. By breaking down the conversion time into various stages, your team can understand where delays might occur. That way, you can take steps to speed up the process.

When measuring success at each of these trigger points, you may face a good amount of variance. This depends on document requirements, turnaround times and other obstacles. There is no “right” timeline, but you should track how long it takes to move from step to step in the process and look for variation. For example, imagine your accounts usually convert from approval to revenue within 35 days. Then, suddenly, that number averages to 55. That's when you know something is wrong.

Screen to Submit

How long did it take to gather information for a financial assistance application after screening someone? Reducing the time between screening and submission is essential. It creates an efficient conversion process and helps with patient anxiety.

You control the time it takes to contact a patient after providing medical services. Self-pay accounts age out quickly. The further away you are from the date of service, the less likely the patient is to respond to give you the information needed for screening. Optimize your process to contact self-pay patients as quickly as possible and set the process up for success. Hospitals often use software to automate this process so patients receive forms quickly.

Submit to Approval

How long did it take to approve the application when it was submitted? Delays in approval can create bottlenecks that extend the time to conversion. You may need to streamline the approval process if the submit-to-approval time is lengthy. You can do this through better coordination with third-party payers or internal audits and adjustments.

Approval to Payment

When the patient was approved, how long did it take the hospital to receive the revenue? Once you approve a patient for financial assistance or a payment plan, the next step is to collect payments. Approval-to-payment time measures how quickly payments begin following approval. Prompt collections ensure a steady cash flow. This means hospitals can cover operational expenses without delay.

3. Point-of-Service Collection Rate

You can bypass time to conversion altogether by settling a self-pay account at the time of service. This step is where you need to know the point-of-service (POS) collection rate. It measures how many eligible self-pay amounts your team collects when providing medical services. High POS collection rates are ideal because they reduce the burden on the back-end collections process. Effective communication about payment options and expectations at the POS improves this rate. This step ensures patients are informed about financial responsibilities early.

POS collections can significantly impact your revenue cycle. They reduce the number of accounts entering the self-pay cycle without a payment arrangement. Train registration and check-out staff to clearly explain financial responsibilities. They should also offer immediate payment options to increase POS collection rates.

4. Cost of Conversion

When it comes to self-pay accounts, there are two management options. The first is paying a third-party vendor to manage the accounts for you. The second is paying your staff to work on these accounts. Knowing your conversion cost does not necessarily indicate success. However, tracking this data can help you better understand if you should outsource the conversion process.

A smaller community hospital may have a lower volume of patients and lower dollars. These hospitals may save more without the fixed costs of in-house management of self-pay patients. On the other hand, trauma centers and hospital systems tend to handle management in-house. They do this to avoid the high contingency fees that come with higher patient volume and more complicated cases.

Cost-to-Collect Ratio for Self-Pay Accounts

The cost-to-collect ratio measures the total expense of collecting payments on self-pay accounts against the amount collected. A lower cost-to-collect ratio indicates that your collections process is cost-effective. If this ratio is high, it may mean inefficiencies, such as a labor-intensive manual process.

Typically, when a hospital uses a third-party vendor, it pays a contingency fee. This means it pays based on the vendor's effectiveness and faces variable costs. The higher the fee, the more accounts are converted.

A hospital that handles self-pay accounts in-house may face more fixed costs. One example is the cost of its technology or internal system. This also includes staff salaries and more. The more efficient the in-house process, the more upside the hospital sees. It's the opposite with third-party vendors: the more efficient they are, the more costs the hospital sees.

Contingency fees also come with an unbalance. It's virtually the same amount of work to approve a high-cost surgery and a small, sutured wound for financial aid. However, the third-party vendor receives more funding for the high-cost surgery. As a result, the hospital must pay more for the same amount of work to approve a small wound. This significant variability can be the straw that breaks the camel's back for many larger health systems or trauma centers.

Tracking Healthcare Revenue Cycle Metrics

Revenue is tight right now, and there are serious challenges in the healthcare landscape. Are you looking to find and use every dollar to your advantage and optimize revenue recovery? Tighter metrics around your self-pay process can help. Automation and specialized self-pay solutions can reduce the cost-to-collect ratio. They can also increase conversions by streamlining operations.

Office Ally’s MAPS solution combines all the tools needed to convert the self-pay patient population efficiently. MAPS offers solutions for:

• Patient outreach and engagement
• Core assistance program eligibility and enrollment processing
• Patient financial services management and reporting

MAPS provides comprehensive tools to streamline collections, track performance, and reduce costs. Learn how MAPS can help your organization optimize the self-pay revenue cycle and achieve better financial outcomes here.