Revenue cycle performance is one of the clearest signals of a healthcare organization's financial health. Small breakdowns in registration, coding, billing, collections, or denial management add up fast, squeezing cash flow and operating margins. Billing teams and front-office staff handle the day-to-day work, but CFOs own the oversight. Reviewing the right metrics monthly helps you catch trends early, reduce revenue leakage, and improve collections.

The stakes are considerable. Kodiak Solutions, which aggregates revenue cycle data from more than 2,300 hospitals and 375,000 physicians, reported that hospitals lost more than $48 billion in net revenue in 2025 to final denials and uncollected patient balances, up from $38.6 billion in 2024.

Understanding the Revenue Cycle

Before discussing key metrics, it is important to understand the scope of the healthcare revenue cycle within your organization. We recommend walking through the organization's revenue cycle process beginning with patient registration and insurance verification and continuing through charge entry, claim submission, payment posting, denial follow-up, collections, and month-end financial reporting. Each step directly impacts reimbursement outcomes and organizational cash flow.

The most effective healthcare organizations recognize that revenue cycle management is not solely a billing function. It requires collaboration among front-office staff, coding and compliance teams, providers, billing personnel, managers, and executive leadership.

Build Monthly Revenue Cycle Reporting Around Key Performance Indicators

For CFOs, monthly reporting should focus on metrics that show operational efficiency, reimbursement performance, and financial outcomes. Treat these benchmarks as reference points rather than pass/fail thresholds. Hospital size, payer mix, service lines, and patient population all shape what good performance looks like, so pair any external target with your organization's own history and goals. Aim to review these KPIs each month:

1. Registration Accuracy & Insurance Verification

Many claim denials begin long before a claim is submitted. Scheduling and registration errors often lead to delayed reimbursement, rework, and lost revenue. Healthcare CFOs should monitor:

Front-office teams should consistently verify patient demographics, date of birth, insurance information, coordination of benefits, outstanding balances, and coverage eligibility at every visit. Organizations that fail to maintain strong registration controls often see higher denial rates and longer collection cycles.

2. Charge Capture & Revenue Integrity Metrics

Accurate charge capture is essential for ensuring services provided are properly billed and reimbursed. Monthly oversight should include:

• Days to posting of charges
• Coding error rates
• Provider coding performance
• Charge reconciliation processes
• Chargemaster review status

Chargemaster Maintenance Matters

CFOs should also review chargemaster maintenance as part of revenue cycle oversight. This includes confirming that charge descriptions, codes, and pricing are current and that updates are incorporated into the organization's charge capture processes. We recommend completing a full chargemaster review every 2-3 years and a pricing update annually. Revenue cycle leaders should also conduct regular chart and denial audits to identify recurring issues and ensure compliance with payer regulations and coding updates.

3. Denial Rates & Trends

Claim denials represent one of the largest areas of potential revenue loss. While some denials can ultimately be recovered, the associated administrative burden increases costs and delays payments. CFOs should review:

Organizations should track denial reason codes and identify root causes. Common denials can include:

• Patient ineligibility
• Incorrect insurance identification numbers
• Invalid CPT codes
• Invalid ICD codes
• Missing NDC information
• Date of birth mismatches

Segmenting denials matters as much as tracking the overall rate. Break them out by payer, denial reason, department, and provider to see where the problem starts. An increase in prior authorization denials, for example, usually points to scheduling or registration rather than billing. Working those claims individually may recover some revenue, but fixing the underlying process is what prevents the next round.

4. Collections Performance

Cash collections remain one of the clearest measures of revenue cycle effectiveness. Healthcare CFOs should closely monitor:

• Net collection rate
• Collection rates by payer
• Point-of-service collections
• Patient collections
• Outstanding self-pay balances
• Bad debt percentage

Effective patient collections include collecting copays upfront, educating patients about financial responsibility, and providing clear payment plan options. Good communication can significantly increase collection rates while improving the patient experience.

Point-of-Service Collections Matter

Organizations that consistently collect patient responsibility at the point of service typically experience lower bad debt expense and fewer collection-related challenges. As a best practice, revenue cycle leaders should establish collection goals and regularly monitor point-of-service collection performance to identify opportunities for improvement.

Patient responsibility is also a growing share of the total. Kodiak reported that the patient share of net revenue rose from 6.8% in 2024 to 7.3% in 2025, while the share hospitals actually collected fell from 45.1% to 42.4%.

Alongside point-of-service collections, monitor estimation accuracy, payment plan utilization, and self-pay balances, and track performance by registration point so leadership can see which front-end locations are working and which need attention. Net collection percentage deserves particular attention, because it measures how much of the reimbursement your organization is contractually entitled to actually reaches the bank. Target 95% or higher, with best-in-class organizations approaching 98%. It is also one of the few measures that surfaces silent leakage; an underpayment rarely generates a denial or a work queue, so it shows up only when collections are tracked against expected reimbursement.

5. Days in Accounts Receivable

A/R days is the most widely used indicator of revenue cycle health. Review:

• Total days in A/R
• Days by payer
• Aging trends
• High-balance accounts needing intervention

Increasing A/R days may indicate:

• Delayed claim submissions
• Denial management issues
• Staffing shortages
• Inefficient collection processes
• Payer reimbursement delays

For context, HFMA guidance puts A/R days at 30 to 40 days, with anything above 50 days worth investigating, and A/R over 90 days should stay under 10% of total receivables. Kodiak's March 2026 State of the Healthcare Revenue Cycle report found top-quartile hospitals averaging 46.4 A/R days in 2025 compared with a median of 52.6 days. Because a single slow payer or one department with charge capture delays can move the organizational number on its own, segment A/R by payer, department, and service line rather than watching the total alone.

6. Revenue Cycle Operational Trends

Beyond individual metrics, CFOs should evaluate broader performance patterns across the organization. Key warning signs include:

• Recurring operating losses
• Declining cash balances
• High bad debt percentages
• Significant payment recoveries from payers
• Large shifts in payer mix
• Changes in patient volume
• Decreasing net revenue per visit
• Increasing denial rates
• Internal billing benchmarks not being met
• Incomplete coding or documentation practices

Looking at trends over time provides valuable context that individual monthly reports may not reveal. Metrics are also best read together rather than as independent scorecards. Rising days in A/R may originate with an increase in denials rather than a payer follow-up problem, and declining patient collections may trace back to eligibility verification or estimation accuracy at registration. Reading the measures as a set helps leadership address the cause instead of reacting to the symptom.

Don't Overlook Staffing & Accountability

Metrics only go so far. Team structure, staffing levels, training, and accountability drive the numbers. Compare your patient accounting, front-office, and business-office staffing against industry benchmarks; resource gaps often drive underperformance.

How Lutz Can Help

Revenue cycle management isn’t just about submitting claims and collecting payments. It requires consistent oversight, meaningful reporting, strong accountability, and a commitment to continuous improvement. Healthcare CFOs who regularly monitor KPIs are better positioned to identify issues before they become significant financial challenges.

Lutz’s healthcare services help organizations strengthen financial performance through data-driven insights, benchmarking, operational assessments, and revenue cycle optimization strategies. We also perform chargemaster reviews and help implement the recommended updates. If you'd like to evaluate your current revenue cycle processes or identify opportunities for improvement, contact us to learn how we can help support long-term financial stability.

• Achiever, Learner, Strategic, Context, Individualization

Julianne Kipple

Healthcare Shareholder

Julianne Kipple, Healthcare Shareholder, began her career in 2008. Over the years, she has built a strong expertise in healthcare accounting and consulting while driving the expansion of Lutz’s services for rural and critical access hospitals. She is actively involved in the healthcare department’s operations, focusing on strategic growth and team development.  

Leveraging her experience in healthcare finance, Julianne focuses on providing outsourced CFO services to healthcare facilities. She provides Medicare and Medicaid cost reporting, software conversion assistance, and comprehensive financial management solutions. Julianne values ensuring the sustainability of rural healthcare facilities, understanding their vital role in their communities. 

At Lutz, Julianne demonstrates what it means to serve beyond expectations by helping healthcare organizations facing complex challenges. Her genuine care for rural healthcare facilities shows in everything she does - from anticipating their needs to finding creative solutions that ensure their success. Through her thoughtful mentorship of her team, she's helped establish Lutz as a trusted partner in the healthcare sector. 

Julianne lives in Bennington, NE, with her husband and four children. Outside the office, she can be found attending her kids' sporting events, running, and cooking on the weekends. 

402.827.2075

jkipple@lutz.us

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• Harmony, Woo, Communication, Maximizer, Achiever

Katie Roberts

Healthcare Director

Katie Roberts, Healthcare Director, began her career in 2015. She has gained specialized expertise in healthcare accounting and consulting while taking on leadership roles in training and development.  

With her experience in healthcare financial management, Katie focuses on providing outsourced CFO services to rural hospitals and clinics. She delivers comprehensive solutions, including monthly financials, budgets, projections, and Medicare cost report guidance. Katie is dedicated to supporting rural healthcare facilities, recognizing their importance as essential service providers and key employers in their communities. 

At Lutz, Katie’s commitment to excellence, combined with her ability to optimize processes, has helped strengthen the firm's reputation as a trusted advisor to critical access hospitals. Through her leadership, the healthcare consulting practice has expanded its reach while maintaining the personalized service that rural facilities depend on. 

Katie lives in Davey, NE, with her husband Mason, son Cooper, dog Cali, and four chickens. Outside the office, she can be found boating, camping at their family’s cabin, golfing, and cheering on the Huskers. 

402.827.2351

kroberts@lutz.us

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