Is your physician practice monitoring days in accounts receivable?
Medical Practice Management
Mar 28

Is your physician practice monitoring days in accounts receivable?

Days in accounts receivable (A/R) represents the average number of days it takes a practice to get paid. The lower the number, the faster a practice is obtaining payment on average. There are several ways to calculate this, but the industry standard is: (Total Current Receivables – Credits) ÷ Average Daily Gross Charge Amount. Days in A/R should stay below 50 days at minimum, but should generally be more in the 30-40 day range.

In addition to providing insight into the efficiency of your revenue cycle management processes, monitoring this metric can help you unearth factors hurting practice finances. For example, when assessing the cause of an increase, you may spot a problem with a certain payer and can then work to resolve it quickly.

The health of your billing cycle is directly correlated to the speed in which you receive payments, so always strive for the shortest time possible when closing claims in accounts receivable.

About Reed Tinsley, CPA

As a top advisor to physicians, I help increase practice profits by delivering hands-on, expert medical accounting/tax support, practice counsel, and revenue-building strategies. Read more →