Accounts Receivable Formulas

Ever wondered how effective your billing office is? This quick assessment will give you some insight to how your medical practice is performing.

Ratio Formula What Does It Mean?
Days In Receivables Average A/R X Time Period (30 days for month) Charges for Same Time Period Tells how quickly you collect. 30 days or less is great, 40 days is industry average, and over 60 days means issues.
Collection Percentage Collections for Time Period + Contractual Write-offs X 100 Charges for the Same Period Tells what percentage of charges is collected versus written off to bad debt or timely filing. Look at each month.
Revenue Per Visit Collections for a Time Period Patient Visits for the Same Time Period Can be run by insurance company, physician, and office. Look at monthly to quickly spot trends that need addressing.
Profitability Percent Collections for Time Period X 100 Collections + Contractual Write-Offs Takes uncollected charges out and looks at actual profitability on what you did collect. Percentage is not comparable between practices because fee schedules for charges vary.
Profitability Percent – More Accurate Payments on Charges Included in Denominator X 100 Contractual Allowables on All Charges Fee schedules must be loaded in PM system to make this calculation. Note that this calculation compares payments with the charges that generated those charges. Most reports in PM systems show charges and payments for a period.
Bad Debt Percentage Write- Offs Other Than Contractual X 100 Charges If your PM system enables matching write offs with applicable charges, the calculation is more accurate. If not run monthly to track trends.

 

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