Three KPI's that every ambulance CEO should know and the secret to interpreting them.

Welcome to the high-speed, high-stakes world of ambulance-agency management! If you thought managing a fleet of life-saving speedsters was all about flashing lights and dramatic rescues, think again! It’s also about the thrilling world of... KPIs! Yes, today we're diving into the exciting realm of Accounts Receivable, Days Sales Outstanding, and everyone's favorite party topic, the Percentage of Claims with a Payment. Buckle up, CEO superheroes! We're about to navigate the thrilling spreadsheets of success!

The first KPI that every CEO should know is Accounts Receivable older than 90 days ("AR > 90").

AR > 90 is a measure of the proportion of outstanding balances that are older than 90 days relative to all outstanding balances. The reason that this is an important metric is because it tells you if you are doing an effective job at managing the "last 20%" of claims that don't get paid on the first pass. The "last 20%" problem (derived from the 80-20 rule) is one of the thorniest challenges in ambulance collections. It states that the first 80% of claims typically get paid on the first pass. But the last 20% of claims require a mighty effort to recover. The last 20% of claims are at-risk of falling off the cliff.

In terms of measuring AR > 90, consider that an honest reporting process will use the service date to calculate the age, not the billed date. For, there could be great delays in the front-end billing process that are obscured when using billed date.

Keep in mind that AR > 90 can be misleading if there is a sudden change in the front-end process. For example, some EMS agencies hold Medicare claims in the beginning of every year until the patient's deductible has been met. This will cause the AR less than 90 days to increase, and, resultingly, the AR greater than 90 days will look proportionally smaller.

PRO TIP: when looking at AR > 90, remember to remove credit balances. Note that there are advantages to looking at AR > 90 in terms of absolute balances, as well as percentages.

The second KPI that every CEO should know is the percentage of claims with a payment, the paid %.

Paid % tells you how well you are liquidating claims. In other words, are you doing work for free or are you getting paid for your efforts. As a funny illustration, one of my bosses used to characterize a low paid % as akin to “[ambulance services on] Tuesdays are free.” His message was clear. No CEO in their right mind would work for free one day every week. So why would CEO‘s accept mediocre billing performance, which has the same effect?

Paid % is more telling than AR > 90. For, AR > 90 can hide write offs done by billers who have no skin in the game.

When trending paid % month-over-month, you can begin to determine whether your billing team is improving or backsliding. Paid % is a measure similar to collections %, but that ignores whether there is a residual secondary balance on a claim or an underpayment.

The reason that paid % is more useful than collections %, is because collections % is subject to the intricacies of healthcare accounting. For example, a BLS emergency claim billed to a patient might have a value of $1,000 and that same claim billed to Medicare might have a $500 value. In other words, it's the same service with a different net charge. To make it more complicated, claims sent to insurances that are out of network get paid at whatever the insurance company decides is usual and customary. However, looking at collections % in tandem with paid % is critical for a proper assessment of performance.

PRO TIP: When looking at paid %, be careful about how you treat RMA’s or trip records that don’t show any charges. Be sure to break down paid % by payer category for maximal insight. Looking at paid % at different time intervals can help create the fullest picture of your performance.

The third KPI that every CEO should know is DSO (days sales outstanding).

DSO tells you how many days of revenue is sitting in open balances. This is different than AR > 90, because it takes into account ALL of your work, not just open claims. If your revenue cycle is running well, from intake to initial billing, payment posting and follow-up, your DSO will be low. Some modify DSO simply look at days of unbilled inventory. This tells you whether your billers are keeping up with the claim volume.

Now for the secret on how to interpret these KPI's: benchmarking.

Benchmarking is the process of comparing your KPI's to your competitors or your peers. It tells you not just how you are doing today, not just how you did last month or last year, but how you stack up against the industry. The reason that benchmarking is so powerful is that it allows you to see your full potential.

Benchmarking, for example, tells you what how much Medicare AR > 90 is acceptable, or what a good paid % is on HMO claims. If your agency is at 15% Medicare AR > 90 and your top competitors are at 6% of Medicare AR > 90, you know that you have your work cut out for you.

In contrast, if you were only measuring your Medicare AR > 90 against your past performance, you may be smitten with that same 15% of Medicare AR > 90, recognizing that last year you were at 24% of AR > 90. Of course, if you are happy with the un-benchmarked KPI's, you are unlikely to push to achieve your full potential.

And there you have it, the secret sauce to transforming your ambulance agency from "just cruising" to "racing to the top"! Remember, it’s not just about saving lives (though that’s super important); it’s also about acing those KPIs and outshining your competitors. Whether you're tackling the treacherous terrain of AR > 90, navigating the choppy waters of Paid %, or sprinting through the DSO dash, remember: benchmarking is your GPS to greatness. So, keep those sirens wailing and those calculators clicking. Until next time, keep racing towards that top 1% – not just in speed, but in stellar stats! 🚑💨📊

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Not sure how to begin your benchmarking journey? Book a strategy session with Isaac Sobel, Founder of RVNU EMS, to discuss if you qualify for the Claims AT RISK! Program. In the process, see how you rank against your industry competitors.

The RVNU EMS Claims AT RISK! Program helps provide stable and predictable cash flow by focusing on the 20% of claims that are oftentimes neglected. RVNU EMS becomes an extension of your team, working within your billing system so that you have full oversight and control. And RVNU EMS operates on a no win, no fee model. So you only have to pay if RVNU EMS is successful.