4 Key Metrics You Should Track In Hospital Contract Management
And the healthcare industry is no exception.
Hospitals have become much more competitive with each other over the years.
For this reason, it’s imperative that hospitals remain conscious of their bottom line (net revenue) by making sure there are no unresolved payments floating in the air.
That’s where healthcare contract management comes in to play.
Its purpose is to establish a system where all payer payments are correctly processed according to the contracted amount. This system is crucial because proper use of a hospital contact management system can make a difference of 2-3% net revenue. With so much complexity in today’s payer contracts, hospitals need to have a system where the staff knows exactly how to prioritize where they should be collecting the underpaid accounts.
Try thinking about it like this…
When you bring in your car for repairs, you want to know what services the mechanic did to your car, right? Things like an oil change, tire realignment, and fixing your brake lights can cause more problems if your work was not processed accurately.
When’s the last time you’ve looked under the hood of your contract management system?
PMMC has developed four performance metrics to help hospitals remain assured that every account is, well, accounted for.
These are the 4 metrics:
1. Are all contracts up-to-date?
The first performance metric should be monitored monthly. Although you’re probably thinking a 2-3% annual increase won’t make much difference in catching a significant underpayment, it does.
It increases the chances of missing a large number of smaller balances because staff is too heavily focused on the small amount of larger balances.
2. Are account errors resolved in a timely manner?
The second performance metric allows for more potential revenue recovery, leading to an appropriate cash flow. Unresolved errors are defined as accounts that are defective because they lack sufficient data to be processed in the hospital contract management or billing system. This metrics should be monitored and reported weekly.
3. Does the system calculate accurately?
The third performance metric is determined by looking at two things: the payer’s calculation of the allowed amount and the contract management system’s calculation. This metric should be monitored continuously and reported monthly.
4. Are the payments accurate?
The fourth performance metric should be reported monthly and is designed to ensure that the payments are accurate. If you spot any suspicious variances (underpayments, overpayments, and denials), make sure it gets resolved quickly and accurately. Any issues regarding payment accuracy needs to be corrected and reported to the contract management supplier.
A variance review is also beneficial to getting all the money owed as well as improving the procedures for future patient registration, coding, billing, denial monitoring, and lots more.
That’s why hospital contract management should be considered “mission critical” when dealing with hospital finances. By implementing these metrics into day-to-day operations, hospitals are able to focus more on the immediate needs of the patient and less on potential financial issues.
About Bradley Olin
Bradley Olin is the Marketing Communications Specialist at PMMC, a leading provider of revenue cycle management solutions for hospitals and other healthcare organizations across the U.S. Brad offers a modern outlook into the evolution of the healthcare industry and general practices used to grow an organization’s revenue integrity.