Average Revenue per Square Foot is a metric used in healthcare revenue cycle management to measure the financial performance of a healthcare facility. It is calculated by dividing the total revenue generated by the facility by the total square footage of the facility. This metric is particularly useful for healthcare organizations that own or lease their facilities, as it helps them to understand how efficiently they are using their space to generate revenue. A high Average Revenue per Square Foot indicates that the facility is generating a significant amount of revenue per unit of space, which can be a sign of effective resource utilization and operational efficiency. Conversely, a low Average Revenue per Square Foot may indicate that the facility is not generating enough revenue to justify its size or that there are inefficiencies in the revenue cycle management process. Overall, Average Revenue per Square Foot is a valuable metric for healthcare organizations to track as they seek to optimize their financial performance and improve their revenue cycle management processes.
Average Revenue per Square Foot is calculated by dividing the total revenue generated by a healthcare facility by the total square footage of the facility.
The formula for calculating this metric is: Average Revenue per Square Foot = Total Revenue / Total Square Footage
For example, if a hospital generates $10 million in revenue and has a total square footage of 100,000, the Average Revenue per Square Foot would be:$10,000,000 / 100,000 = $100 per square foot
This metric can be useful in comparing the revenue-generating efficiency of different healthcare facilities, as well as identifying areas where revenue can be increased by optimizing the use of space.
Best practices to improve Average Revenue per Square Foot are:
1. Optimize Space Utilization: One of the most effective ways to improve Average Revenue per Square Foot is to optimize space utilization. This involves analyzing the current layout of the facility and identifying areas that are underutilized or not generating revenue. By rearranging the space and adding revenue-generating services, healthcare organizations can increase their revenue per square foot.
2. Increase Patient Volume: Another way to improve Average Revenue per Square Foot is to increase patient volume. This can be achieved by implementing marketing strategies to attract new patients, improving patient satisfaction to retain existing patients, and expanding services to meet the needs of the community.
3. Improve Billing and Coding Accuracy: Accurate billing and coding are critical to maximizing revenue per square foot. Healthcare organizations should ensure that their billing and coding processes are up-to-date and compliant with industry standards. This will help to reduce denials and rejections, which can negatively impact revenue.
4. Implement Revenue Cycle Management (RCM) Technology: RCM technology can help healthcare organizations to streamline their revenue cycle processes and improve revenue per square foot. This includes automating billing and coding processes, tracking claims and payments, and providing real-time analytics to identify areas for improvement.
5. Monitor Key Performance Indicators (KPIs): Healthcare organizations should regularly monitor key performance indicators (KPIs) related to revenue per square foot. This includes metrics such as patient volume, average reimbursement per patient, and average length of stay. By tracking these metrics, healthcare organizations can identify areas for improvement and make data-driven decisions to optimize revenue per square foot.
In conclusion, by optimizing space utilization, increasing patient volume, improving billing and coding accuracy, implementing RCM technology, and monitoring KPIs, healthcare organizations can improve their Average Revenue per Square Foot and maximize their revenue potential.
.The industry standard benchmark for Average Revenue per Square Foot varies depending on the type of healthcare facility. For example, hospitals typically have a higher benchmark than physician practices or outpatient clinics due to the larger size and higher volume of patients. According to industry data, the average benchmark for hospitals is around $500 per square foot, while physician practices and outpatient clinics have a benchmark of around $200 per square foot.
It is important to note that the benchmark for Average Revenue per Square Foot should not be used as the sole indicator of a healthcare facility's financial performance. Other metrics, such as patient volume, payer mix, and reimbursement rates, should also be considered when evaluating revenue cycle management. However, tracking this metric over time can provide valuable insights into the efficiency and profitability of a healthcare facility.
Revenue cycle software can improve the Average Revenue per Square Foot metric by streamlining the billing and collections process. With the help of automated workflows and real-time data analytics, revenue cycle software can identify areas of revenue leakage and optimize the revenue cycle management process. This can lead to increased revenue per square foot by reducing the time it takes to collect payments and improving the accuracy of billing.MD Clarity's revenue cycle software is designed to help healthcare organizations improve their revenue cycle management process. With features such as automated claims processing, real-time data analytics, and customizable workflows, MD Clarity's software can help healthcare organizations optimize their revenue cycle management process and improve their Average Revenue per Square Foot metric.
If you're interested in seeing firsthand how MD Clarity's revenue cycle software can improve your organization's revenue cycle management process and increase your Average Revenue per Square Foot metric, book a demo today. Our team of experts will walk you through the software and show you how it can help your organization achieve its revenue cycle management goals.