Yesterday I provided Part I of a summary of key A/R statistics, how to best view them, and what they may indicate about your practice; here is part II:
As mentioned, these statistics represent total accounts receivable and are typically shown in time frame “buckets” (i.e., 0-30, 31-60 etc.). An effective way to review this data is to compare it to prior rolling periods as well as examining it against peer performance. This analysis can assist in determining if old accounts are being worked, if the claims submission process is performing adequately, and in general how the AR team is functioning. In addition, always look at an aging by payor class to determine if you might have collection issues with one or more of your payors.
GROSS DAYS IN AR
This statistic reveals how long on average it is taking the AR team to collect outstanding balances. Generally speaking, the older the account, the less the likelihood of collecting the outstanding balance. This statistic can be compared to peer group performance as well. In most instances, analyzing front end as well as back end collection processes can lead to improvement in this area.
This statistic represents the total amount of surrendered accounts sent to collections. Many practices are unaware of the volume of dollars that may be being turned over too quickly. This can indicate issues in the billing/collection area of your practice such as an overwhelmed or under-trained AR team. Bad debt statistics should be compared regularly to peer performance.
Practices that monitor these statistics consistently are likely to be more proactive in addressing AR issues. Predicting the future instead of reacting to it positions the practice for stronger financial health.