Reduce Days in A/R

Days in accounts receivable (A/R) is a critical number for providers to track. As healthcare revenue cycle challenges become more complex, you will need to monitor this KPI to stay competitive, keep up with consumerization trends, and support your overall financial goals. As you make this consideration, you might consider working with some of the top medical billing companies in the USA, but first, we want to help you gain some critical insights.

A/R as a KPI in Accounts Receivable Management Services

First, let’s discuss this type of KPI. It’s important that financial leaders sit down with key A/R KPIs before they make decisions on accounts receivable management services. Having a baseline and knowing where you are as an organization today will be incredibly valuable whether you decide to work with the top medical billing companies in the USA or not. Here is an overview of some of the most important formulas.

Aged A/R as a Percentage of Billed A/R by Payer Group

This formula yields valuable insight and indicates revenue cycle effectiveness in terms of liquidating A/R by payer group.



Billed A ⁄ R by payer group by aging category   =   Aged Trial Balance

Total billed A/R by payer group

Net Days in Accounts Receivable

This KPI is a good indicator of overall A/R performance. It points back to revenue cycle efficiency.



                            Net A/R                                      =        Balance Sheet     

Average daily net patient service revenue          Income Statement

Aged A/R as a Percentage of Total Billed A/R

This formula reflects receivable aging and collectability, pointing to revenue cycle effectiveness at liquidating A/R.


0-30, 31-60, 61-90, 91-120, > 120 days   =   Aged Trial Balance

Total billed A/R                             Aged Trial Balance

Aged A/R as a Percentage of Total A/R (AR-3)

This is another trending indicator of receivable aging and collectability.


Unbilled, 0-30, 31-60, 61-90, 91-120, > 121 days   =   Aged Trial Balance

Total A/R                                         Aged Trial Balance

How to Reduce Days in A/R

Improving your A/R is the low-hanging fruit of improving your revenue. Financial leaders at many healthcare providers are still figuring out how to navigate reduced revenues because of a pandemic, so making progress here can pay fast dividends.

When you are ready to reduce your days in A/R, you should consider all your options in improving your accounts receivable management services. As you do, these tips from industry leaders will help you evaluate your best options [1] [2].

Communicate Well

Providing pre-service estimates can go a long way in turning your A/R around. NYU Langone Health, for example, provides their patients with pre-service estimates for their scheduled visits. This gives patients a general picture of their financial obligation before they come in for services. Their patients also have the options to pay over the phone or when they show up for an appointment.

This proactive communication has paid off. They have improved their pre-service and time-of-service collection rates and have realized an increase in their self-pay collections across their billing process, seeing about 30% of self-pay collections happen at the time of service.

Improve Your Payor Targeting

While you might see A/R scattered across a range of payors, chances are you have just a handful that are causing the bulk of your collections headaches. By focusing on the top payers with the largest billed A/R, you can focus your efforts and get the most out of trends and revenue cycle analysis.

For example, leaders at Dignity Health decided to focus on their top 11 contracted payers with A/R over 90 days from date of service. By taking this focus and rethinking their accounts receivable management services in conjunction with their payor relationships, they reduced A/R over 90 days by $100 million. By the second quarter, that number had risen to $200 million from the start of their efforts. This also helped them develop mitigation strategies to address root causes.

Dive Into Denial Management

Denials are probably a major issue in your A/R, which means a focus here can yield big results. This is because you will likely see repetition and patterns in your denials. For example, if you find an account with a denial issue, this point can be tracked and tagged with codes to create reports for leadership and communicate with insurance reps to address unpaid accounts.

For many organizations, this process requires targeted use of existing talent, rethinking staffing strategies, and consistent ongoing training of analysts. This is why many organizations choose to outsource this type of denial management. Organizations that specialize in this type of A/R work have broad understanding of denials trends, beyond any individual organization, and can help you achieve efficiencies that are not possible with a purely in-house team.

Focus on the Front End

At the same time, being proactive pays off. It is much easier and less costly to get a claim right from the beginning, instead of circling around after a denial or underpayment.

If you are gathering proper information when a patient schedules an appointment, this level of organization will trickle down through the rest of your revenue cycle.

Your staff should be checking details such as insurance (including secondary insurance) contact information, and demographic details. Patients should also be encouraged to provide, verify, and update records through portals when appropriate. Take these steps, and you will be better prepared to verify coverage with payers and clarify their rules. You will also create an opportunity to address outstanding balances that might need to be handled before the time of service.

But all of this is a process. If you need support in deciding where you can see the biggest improvements in your A/R and where outsourcing might be beneficial, contact us today.

[1] K. B. O’Reilly, “8 medical coding mistakes that could cost you,” American Medical Association, 14 July 2021. Available:
[2] J. LaPointe, “2022 CPT Code Set Released, Streamlines Medical Coding for COVID-19,” RevCycleIntelligence, 7 September 2021. Available:
[3] American Medical Association, “Find your COVID-19 Vaccine CPT® Codes,” 2021. Available:
[4] A. Robeznieks, “New voices, perspective sought as CPT Editorial Panel expands,” American Medical Association, 24 September 2021. Available:

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