Metrics are critical performance indicators that empower practices with the information they need to gain control over operations and profits.
While insightful on their own, metrics are most valuable when analyzed in context, over time, and against relevant benchmarks. So when it comes to data, less can be more when you focus on tracking, understanding, and improving the vital metrics that reveal the most about your revenue cycle.
In continuation of our weekly metrics series, today’s installation dissects the most desirable time frame in which your practice should be receiving reimbursements for services rendered.
Metric #2 – Days in Accounts Receivable (A/R)
What it is – 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.
Calculation – There are several ways to calculate this, but the industry standard is: (Total Current Receivables – Credits) ÷ Average Daily Gross Charge Amount
Benchmark – Days in A/R should stay below 50 days at minimum, but should generally be more in the 30-40 day range.
Why It Matters – In addition to providing insight into the efficiency of your revenue cycle management processes, monitoring this metric can help you unearth factors hurting your 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 at which you receive payments, so always strive for the shortest time possible when closing claims in A/R.
Check back next week for the third installment of our whitepaper review series focusing on the third most important metric to track at your practice: Percentage of Accounts in Receivable > 120 Days.
Do you know what you need when setting up a new medical practice?