Accounts receivable (AR) is one of the key indicator of a practice’s performance; with increasing AR Days causing cash flow concerns for various Medical Practices, and physicians are rightly concerned when the practice’s AR days increase.

Industry Standards State

Typically medical practice’s average Accounts Receivable Days = 52 days

In case of an average AR being 52 days of a medical practice, reducing it to 21 days can add 31 days of cash flow to the practice. Moreover every practice hopes to receive payments as early as possible as the dollar value is more valuable in the present than when received later.

Counts receivable > 90 days- The following table illustrates that more profitable medical practices have more than 85% of their AR collected within 0-90 days.

Accounts receivable of Medical Practices Under
30 days
120 days
or more
  • Well Managed AR %
65% 18% 9% 5% 3%
  • Improvement needed AR %
50% 15% 13% 7% 15%

Collection Probability for both

95% 85% 75% 65% 50%

AR greater than 180 days is generally considered as bad debt.

Managing AR requires on-going collection techniques, regular reporting and monitoring, continuous tracking of - AR, normative receivables ratios and techniques to help achieve lower AR days.

Following are few signs which indicate your AR may require to be evaluated for further improvement -

  • Claims payment first pass rate is lower than 85%
  • Cash collections have dropped in comparison to the previous year
  • Greater than 30% of all charges posted are paper remittance
  • For 2 years or more compliance plan or charge master has not been evaluated or updated
  • AR days are 90 days or more for 35-40% of your AR, of which 75-80% of this is patient co-pay
  • For a year or more payer contracts have not been evaluated

Practices facing high AR days or not comparing favorably to industry standards need to look into their payment and collection processes to understand the problem areas which need to be sorted. This process entails- analysis of payers, reviewing patient co-pays, review of outstanding payments collection process, error calculations and researching new ways of improving billing systems like automation.

Medical practices may involve their billing staff and also seek their suggestions; some also employ a financial counselor or billing partner to help improve their AR.

Reducing your medical practice’s AR days with MBC …

MBC’s AR services help our clients make a difference to their Medical Practice by -

  • Regular key indicator financial reports which include AR aging and days/months outstanding
  • Accurate and complete billing services providing consultation in automation of AR system
  • Error free approach to claims handling that reduces denials substantially
  • Substantially reduced bad debts and write-offs with regular follow ups
  • Reduction in claims resubmission with increase in the number of clean and complete claims
  • Improved claims management operations with lesser lost transactions, duplicate claims and redundancies
  • Innovative workflow management system which helps provide faster cash payment receipts with improved cash predictability to the practice has been assisting in revenue maximization for healthcare organizations for over a decade now across the 50 US States and across varied specialties. Our customized reporting along with a dedicated account manager assures regular, accurate and detailed Account Receivable Management for our clients. MBC is constantly striving to reduce AR days to achieve the right revenue for your organization.

MBC = Billing Quality & Transparency + Proper reporting processes + Updated technology + Data Security and HIPAA Protection+ Constant updates+ Quick follow ups + Cost effective

Practice acquires less than 20 days in AR for most cases!

Published By - Medical Billers and Coders
Published Date - May-29-2013 Back

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