10 KPIs Every Clinic Owner Should Demand From Their Medical Billing Partner

The Top 10 Medical Billing KPIs Every Clinic Owner Should Demand

Below is a deep dive into the 10 most important billing KPIs. For each, we cover the definition, formula, example calculation, why it matters, pitfalls, and the questions clinic owners should ask their billing partners.

1. Speed of Collecting Accounts Receivable

What it is

• Measures how long, on average, it takes to collect payments after services are delivered.

How to Calculate It

• Days in A/R = Total Accounts Receivable ÷ Average Daily Charges

How This Looks in Practice

• If your total A/R is $900,000 and your clinic averages $30,000 in daily charges, your Days in A/R will be 30 days.
• For example: A primary care clinic that submits claims daily and follows up quickly with insurers might average 28 days, while a clinic relying on slower manual processes could see 45+ days, signaling a problem.

Why It Matters

• High A/R delays cash, strains payroll, and blocks investment.

Benchmark to Target

• Less than 35 days is healthy.

Common Mistakes to Avoid

• Looking only at the average A/R without breaking it down by payer.
• Assuming patient balances behave the same as insurer balances.
• Waiting until 90+ days before acting, instead of proactive follow-up.
  

2. Effectiveness of Net Collections

What it is

• The percentage of collectible revenue actually collected.

How to Calculate It

• NCR (%) = (Payments Collected ÷ Collectible Charges) × 100

How This Looks in Practice

• If your clinic should collect $970,000 after contractual write-offs, but only receives $940,000, your NCR is 96.9%.
• For example: A cardiology practice may have 98% NCR if they closely track underpayments, while a dermatology practice ignoring payer shortfalls could fall to 88%, leaving money on the table.

Why It Matters

• Shows whether the clinic captures what it’s entitled to.

Benchmark to Target

• 95% is excellent, 90 to 95% acceptable, < 90% problematic.

Common Mistakes to Avoid

• Treating all write-offs as contractual when some are preventable.
• Failing to track small underpayments that add up over time.
• Reconciling infrequently, which hides revenue leakage.

3. Accuracy of First-Time Claim Submissions

What it is

• Percentage of claims accepted by payers on first submission without edits.

How to Calculate It

• CCR (%) = (Clean Claims ÷ Total Claims Submitted) × 100

How This Looks in Practice

• If you send 2,400 claims and 2,280 are accepted without issues, your CCR is 95%.
• For example: A pediatric clinic using automated claim scrubbing might achieve 98% CCR, while another relying on manual entry could hover at 90%, resulting in hundreds of preventable reworks monthly.

Why It Matters

• Each rejected claim costs extra staff time and delays cash.

Benchmark to Target

• 95% or higher is strong.

Common Mistakes to Avoid

• Celebrating a high clean claim rate without monitoring later adjudication.
• Not updating credentialing data, causing preventable rejections.
• Relying solely on clearinghouse edits instead of custom rules.

4. Frequency of Claim Denials

What it is

• Percentage of claims denied by payers.

How to Calculate It

• Denial Rate (%) = (Denied Claims ÷ Total Claims Submitted) × 100

How This Looks in Practice

• If you submit 2,400 claims and 120 are denied, your denial rate is 5%.
• For example: An orthopedic practice may struggle with high denial rates (10–12%) due to complex coding rules, while a well-managed primary care practice might keep denials under 5%, saving thousands in rework.

Why It Matters

• Denials are costly, each one costs $25 to $118 to rework.

Benchmark to Target

• 6 to 12% is industry average; aim for lower.

Common Mistakes to Avoid

• Counting only initial denials and ignoring appeals.
• Not analyzing denials by payer or CPT code.
• Reacting to denials instead of preventing them through better coding.

5. Success of First-Pass Claims

What it is

• Percentage of claims paid in full upon first submission.

How to Calculate It

• FPRR (%) = (Claims Paid on First Submission ÷ Total Claims Submitted) × 100

How This Looks in Practice

• If 2,200 out of 2,400 claims are paid in full the first time, your FPRR is 91.7%.
• For example: A multi-specialty clinic with efficient EHR integration might maintain 94% FPRR, while a clinic with outdated systems may drop to 80%, causing months-long follow-up cycles.

Why It Matters

• High FPRR means efficient processes and faster cash flow.

Benchmark to Target

• Above 90% is strong.

Common Mistakes to Avoid

• Counting partial payments as fully resolved.
• Failing to refresh payer rules regularly.
• Not monitoring FPRR by payer, missing hidden inefficiencies.

6. Impact of Bad Debt on Revenue

What it is

• Percentage of charges written off as uncollectible.

How to Calculate It

• Bad Debt Ratio (%) = (Bad Debt Write-offs ÷ Total Charges) × 100

How This Looks in Practice

• If you write off $30,000 on $1,000,000 in charges, your bad debt ratio is 3%.
• For example: A mental health clinic offering flexible payment plans might keep bad debt at 2%, while a practice without upfront patient estimates could see 7%+, creating cash flow holes.

Why It Matters

• Bad debt reflects revenue permanently lost.

Benchmark to Target

• Less than 5% (varies by specialty).

Common Mistakes to Avoid

• Writing off balances too quickly without offering payment options.
• Not separating patient-driven bad debt from payer-driven issues.
• Overlooking patient education on insurance responsibilities.

7. Monitoring of Credit Balances

What it is

• Percentage of accounts receivable showing credit balances.

How to Calculate It

• Credit Balance (%) = (Credit Balance A/R ÷ Total Accounts Receivable) × 100

How This Looks in Practice

• If $45,000 of $900,000 A/R is in credits, that’s 5%.

For example

• A pediatric clinic might see recurring credits if patient copays are collected incorrectly. If refunds aren’t issued promptly, regulators may flag the practice, even though revenue looks positive.

Why It Matters

• Excessive credits may indicate overbilling or delayed refunds.

Benchmark to Target

• Keep under 5%.

Common Mistakes to Avoid

• Letting credits accumulate, which attracts auditor attention.
• Not processing refunds promptly, creating patient dissatisfaction.
• Failing to reconcile payer overpayments separately.

8. Delay Between Service and Charge Entry

What it is

• Average time between patient encounter and charge entry.

How to Calculate It

• Charge Lag (Days) = Total Lag Days ÷ Number of Charges Entered

How This Looks in Practice

• If 1,800 total lag days exist for 800 charges, the average lag is 2.25 days.
• For example: A dermatology clinic entering charges within 24 hours improves reimbursement speed, while another taking 5+ days risks billing delays, payer rejections, and lost revenue.

Why It Matters

• Delayed entry means delayed reimbursement.

Benchmark to Target

• 1 to 2 days for most specialties.

Common Mistakes to Avoid

• Allowing providers to delay charge entry for days or weeks.
• Not using EHR templates or automation to speed entry.
• Failing to identify whether charge lag is provider-specific.

9. Efficiency of Patient Collections

What it is

• Percentage of patient responsibility that is actually collected.

How to Calculate It

• PCR (%) = (Patient Payments Collected ÷ Total Patient Responsibility) × 100

How This Looks in Practice

• If $90,000 is collected from $120,000 owed by patients, your PCR is 75%.
• For example: A clinic using online payment portals and automated reminders could reach 85% PCR, while a practice relying on mailed paper statements may collect just 55%, losing significant revenue.

Why It Matters

• With rising out-of-pocket costs, patient collection efficiency is critical.

Benchmark to Target

• Industry average is 50 to 70%; best practices exceed 80%.

Common Mistakes to Avoid:

• Depending only on mailed paper statements.
• Not offering digital or flexible payment options.
• Ignoring point-of-service collection opportunities.

10. Aging of Long-Term Receivables

What it is

• Percentage of receivables outstanding longer than 90 or 120 days.

How to Calculate It

• A/R > 120 Days (%) = (Accounts Receivable Over 120 Days ÷ Total Accounts Receivable) × 100

How This Looks in Practice

• If $150,000 of your $1,000,000 A/R is over 120 days old, then 15% is in this aging bucket.
• For example: A specialty clinic with weak follow-up might see 25% of receivables over 120 days, while a clinic with strong billing workflows may keep this under 10%, ensuring cash keeps flowing.

Why It Matters

• Old A/R is unlikely to be collected and signals systemic weaknesses.

Benchmark to Target

• Keep A/R > 120 days below 15 to 20%.

Common Mistakes to Avoid:

• Letting balances sit beyond 120 days without aggressive follow-up.
• Not segmenting by payer, which hides systemic slow-pay issues.
• Working old balances inconsistently, leading to write-offs.

While these practices ensure KPIs drive day-to-day decisions and keep teams accountable, the landscape of billing and revenue management is evolving rapidly. Traditional KPI tracking is no longer enough on its own. Emerging technologies are reshaping how clinics monitor, predict, and act on financial performance. To stay competitive, organizations must look beyond static dashboards and reviews, embracing innovations that make KPIs predictive, proactive, and patient-centric.