Measure Your Practice Performance

Understanding Net Collections Rate

The Net Collections Rate is a crucial figure for managing your revenue. It represents the percentage of total charges you collect after adjusting for discounts, contracts, and bad debts. It’s like gauging how effective your billing collection processes are at turning chases into cash. A higher rate indicates strong financial performance, while a lower one suggests potential issues with getting paid.

To calculate your Net Collections Rate, you need to go through a process:

1. Adjustments: Start by subtracting any adjustments (like denied claims or write-offs) from the total charges. This will give you the amount of revenue that payers should have paid.
2. Actual Collections vs. Expected: Then, compare the actual amount you’ve collected so far to the expected amount based on your initial calculation. This gives you a ratio of how much you’ve managed to collect compared to what you were supposed to.
3. The Bottom Line: The resulting ratio is your Net Collections Rate. It essentially tells you how efficient your practice is at turning its services into actual revenue.

What’s the Deal with High-Risk A/R?

High-risk accounts receivable (A/R) are like tricky puzzles to solve. They’re more likely to go unpaid or overdue, disrupting your cash flow and impacting your finances. Common causes include denied claims, late payments, and outstanding patient balances. To safeguard your financial health, you need to identify these accounts early, stay on top of them, and take proactive steps to minimize any losses.