Days in accounts receivable and the net collection rate are the headline measures of revenue-cycle performance. Enter receivables, revenue, payments and adjustments to benchmark collection speed and effectiveness and quantify the cash opportunity.
How it works
Measure revenue-cycle performance: days in accounts receivable, net collection rate, gross collection rate and the cash tied up versus a target.
Days in A/R = Net A/R ÷ (Net patient revenue ÷ Days)
Net collection rate = Payments ÷ (Gross charges − Contractual adjustments)
Gross collection rate = Payments ÷ Gross charges
Cash opportunity = (Days in A/R − Target) × Average daily revenueCommon uses
- Revenue-cycle dashboards and KPIs
- Physician practice and hospital billing reviews
- Working-capital improvement targets
Worked example
The calculator above opens with this example. Change any input to see the results update instantly, or select Reset to return to these figures.
| Net patient A/R | $24,600,000 |
| Net patient service revenue (period) | $168,000,000 |
| Days in period | 365 |
| Target days in A/R | 45 days |
| Payments received | $41,200,000 |
| Gross charges | $132,500,000 |
| Contractual adjustments | $88,900,000 |
| Days in A/R | 53.4 days |
| Net collection rate | 94.5% |
| Gross collection rate | 31.1% |
| Average daily revenue | $460,274 |
| Cash opportunity at target | $3,887,671 |
Reducing days in A/R to 45 would release about $3,887,671 of cash. A net collection rate of 95% or higher is commonly cited as a strong revenue-cycle benchmark.
Interpreting the results
- Use a consistent period for payments, charges and adjustments; lagged payments distort single-month rates.
- Gross collection rate depends heavily on chargemaster pricing and payer mix — trend it, don’t benchmark it.
- Break days in A/R down by payer and aging bucket to locate the bottleneck.
Frequently asked questions
How is days in A/R calculated?
Days in A/R equals net patient accounts receivable divided by average daily net patient service revenue. Average daily revenue is net revenue for the period divided by the number of days in the period.
What is a good net collection rate?
The net collection rate measures payments collected as a share of what was collectible after contractual adjustments. Well-run organizations typically collect 95% or more; lower rates signal denials, write-offs or underpayments worth investigating.
Why is the gross collection rate much lower?
Gross collection rate compares payments with full gross charges, which are far above contracted payer rates. It mainly reflects payer mix and chargemaster pricing, so it is less useful for judging collection performance.
Related calculators
- Days Cash on Hand: Liquidity in days of operating expenses, tested against a covenant.
- Financial Ratio Analyzer: 18 liquidity, leverage, efficiency and profitability ratios from the statements.
- Budget vs. Actual Variance Analyzer: Line-item variances with favorable/unfavorable flags and investigation thresholds.
- Payer Mix & Contractual Allowance Estimator: Expected net revenue, contractual allowances and gross vs. net payer mix.
- Allowance for Doubtful Accounts (Aging Method): Required allowance from an A/R aging, bad-debt expense and net realizable value.