The most widely used hospital revenue cycle KPIs, with industry benchmarks:
- Net collection rate: Target 95–98%. Measures actual collections against collectible revenue after contractual adjustments. The single most important indicator of overall RCM health.
- Days in AR (DAR): Target under 40–45 days for most health systems. Measures the average time from service to payment. Above 50 days signals cash flow risk.
- First-pass denial rate: Target under 5%. The percentage of claims denied on initial submission. Industry average is 9–10%.
- Final denial rate (write-offs): Target under 1–2% of gross revenue. Represents revenue permanently lost after all recovery efforts.
- Cost to collect: Target under 3% of net revenue. The total administrative cost of collecting a dollar of revenue. Higher percentages indicate operational inefficiency.
- Prior authorization approval rate: High-performing health systems aim for 90%+ first-submission approval rates on prior auths.
- Clean claim rate: Target 95%+. Claims that pass all edits on first submission.
Beyond these headline metrics, best-in-class health systems drill into payer-specific performance — identifying which payers consistently underpay, delay, or deny — and use that data to drive contract renegotiations and process changes.
Squadyen provides monthly performance reporting that benchmarks client metrics against industry standards and highlights the specific payers, departments, or claim types driving performance gaps.