key performance indicators for health care CFO's

Top 5 KPIs Healthcare CFOs Need To Measure

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1. Days Cash On Hand

Days Cash on Hand is an indication of a hospital’s liquidity.

It’s good to have cash at hand when something goes wrong, but having too much is also an indication of improper use of resources. it is important that we distribute our current resources to areas that can ge nerate more revenue in the future .

Total operating revenues

(Cash and cash equivalents + Long-term investments) *365

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2. Operating Profit Margin Percentage

Operating margin is the amount of revenue a company makes after paying for all of it’s operational and overhead costs.

Operating margin excludes taxes and interest paid on debts.

Currently healthcare CFOs are looking for new ways to generate revenue as operating margins have declined across the healthcare industry.

Total operating revenues

(Total operating revenues – Total operating expenses) *100

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3. Net Days In Accounts Receivable

Days in Accounts Receivable is the average number of days a practice takes to collect its payments.

Net days in A/R is calculated by dividing net A/R by Average daily net patient service revenue One way of managing AR is by using a tool that can automate and enable smooth workflow.

Net A/R

Average daily net patient service revenue

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4. Cash Collection as a Percentage of net patient Services Revenue The idea of using this KPI is to determine whether an organization’s revenue cycle has the possibility to convert net patient services revenue into cash.

Total collected patient service cash divided by average monthly net patient service revenue gives Cash Collection as a percentage of net patient services revenue.

Total patient service cash collected

Average monthly net patient service revenue

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5 .Claims Denial Rate

Claims denial rate is derived as a percentage of claims denied.

The total number of claims denied divided by the aggregate number of claims remitted gives Claim Denial rate.

Claims denial cannot be avoided but a mismanagement of denied claims means lost revenue .

Total number of claims denied

Total number of claims remitted

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