Want To Be An Awesome Practice Manager? Learn How To Calculate This Key Performance Indicator

Revenue per encounter is an excellent barometer of your practice’s financial health. There are many things that influence the revenue per encounter and consequently allow you to see the impact of things such as:

  • Are your claims being processed timely?
  • Are your claims being paid properly?
  • Are you being paid fairly?
  • Is your payor mix excellent, fair or poor?
  • Are you following proper CPT coding guidelines?

To determine your practice’s revenue per encounter, you’ll need 2 sets of data. The first is the number for patient visits during the previous 12-months. The second set of data you’ll need is the practice’s total revenue over the same time period. With these two data sets, you can calculate how much revenue your practice generates per visit.

The formula is simple:

Revenue / Encounter = Revenue Per Encounter

If you want to get a bit sophisticated, you can break down the revenue and number of encounters by month. I recommend you go the extra mile on this one. You’ll see why in a bit.

What’s Next? Screen Shot 2015-01-09 at 6.50.29 PM

Once you have the two data sets, you want to set up a simple spreadsheet that looks similar to the image on the right.

You will notice that the Excel sheet mock-up shows monthly variation in the revenue per encounter.

There are multiple explanation for the variance, but generally, it can be explained by the ratio difference between the practice’s sick and well visits.

During the winter months, the practice sees more sick visits and less check-ups while the summer months brings well visit encounters with higher per visit revenue due to vaccines and ancillary services.

Flu season influences revenue per encounter as well. A busy or mild flu season will have an obvious impact on patient encounters.

Want to go a step further? Do the same break-down by provider, by month.

With this simple exercise, the practice is able to estimate the number of encounters and revenue on a monthly basis for the coming year. Moreover, the practice is able to predict its revenue stream in an effective manner and plan for cash outlay such as when the vaccine bills are due.


 

Thanks to the Pediatric Management Institute for providing the majority of the content for this post. 


 

If you found this post helpful, please share it using the social media buttons below.