Do you monitor your physician practice’s accounts receivable days?

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 the Author

Reed Tinsley CPA

This article is written by Reed Tinsley, a Houston, TX-based CPA with over 30 years of experience advising physicians and medical practices across Texas and the United States. Reed holds certifications as a Certified Valuation Analyst (CVA), Certified Healthcare Business Consultant (CHBC), and Certified Financial Planner (CFP), specializing exclusively in the healthcare sector. He is a published author, nationally recognized speaker, and trusted advisor to physicians on accounting & tax, practice management, and financial planning. Schedule a Free Consultation.