Tracking A/R To Ensure Your Practice's Financial Health

A/R Days is a measurement of your Accounts Receivable that allows you to compare results with practices of different sizes and productivity.

Tracking your A/R Days over time allows you to determine the effectiveness of your billing and collections process. If your A/R Days are higher than average—or increase concurrently with any changes to your billing process—you need to determine the source of the problem.

There are several ways to look at your A/R Days (where "XX" is the benchmark value):

• Your practice's A/R is equal to XX days worth of your average work.
• On average, it takes your practice XX days to fully collect all of the money due on each charge.
• Your office is providing your insurance companies and patients an interest-free loan for the amount of your A/R for an XX day period.

Generally speaking, a practice with a lower A/R Days Benchmark is doing a better job collecting money than one with a higher A/R Days Benchmark. Be careful, though. Capitation will lower your A/R Days, as will prices that are set too low or a collection staff that is not willing to fight for your money.

What is the Pediatric Benchmark for A/R Days?

Please note that PCC clients take advantage of PCC's practice management system for pediatricians, Partner, and PCC's practice management expertise. As a result, the lower A/R Days achieved by PCC clients may not be typical, but it's a worthy goal for all pediatric practices.

How Do I Calculate A/R Days for My Practice?

Begin by picking a sample size that exceeds your expected number of A/R Days. If you do not already have some sense of your A/R Days, we recommend using a quarterly sample, as it will help adjust for typical pediatric seasonal fluctuations and, for most practices, a 90 day sample will exceed their A/R Days.

From that 90 day sample, add up your total charges. Divide this figure by the number of days you sampled (in this instance, 90). This gives you your "average daily charge." Divide your Total A/R by your average daily charge and the result is A/R Days.