Medical Practice Strategy
How To Read Your Practice’ s Billing Reports:
Key Metrics That Highlight Your Financial Health
Outsourcing billing operations allows providers to focus on patient care, the customer experience, and employee satisfaction. But all too often, providers make the mistake of losing touch with the foundation of their practice: the numbers.
In the same way that monitoring patient feedback can help you get ahead of service gaps, your billing reports are vital in addressing financial challenges before things get out of hand. Although the reports sent by your medical billing provider might look like a random combination of numbers, each report provides crucial information about the overall financial health of your practice.
Taking the time to understand just a few key metrics can help you spot problems early, protect your cash flow, and make informed decisions about how to run things. With our guide to billing reports, you won’ t need a finance expert standing over your shoulder to explain the details— you’ ll become just enough of a finance expert to do that for yourself.
In this guide, we’ ll break down some of the most important billing metrics you receive, share what they mean, and show you how to get the most value from each.
Accounts Receivable( A / R): How Long Are You Waiting To Get Paid?
When we mention“ accounts receivable,” we’ re talking about the money your practice is owed after caring for patients. Most providers manage a combination of insurance-based clients and direct-pay clients. No matter where the payment is supposed to come from, it’ s important that it hits your account promptly.
A / R aging refers to how long outstanding balances are sitting unpaid. This metric puts outstanding balances into four buckets:
• 0 – 30 days
• 31 – 60 days
• 61 – 90 days
• Over 90 days
If you’ re a net30 provider— meaning you expect to receive payment within 30 days of providing care— and you have a long list of outstanding balances from 60 or 90 days ago, it’ s a problem. Without cash coming in, you’ re going to struggle to pay your employees, purchase supplies, and so much more.
When it comes to A / R metrics, aim for:
• Less than 20 % of your outstanding balances sitting in the 90 + days bucket.
• An average of less than 40 days in A / R. This ensures that most balances are paid in a timely manner, boosting your cash flow.
Collection Rate: Are You Collecting Funds For Services Provided?
It’ s no secret that between billing codes, insurance providers, and even patients, the money collected for services provided will vary. The Net Collection Rate refers to the amount of money your practice receives for the services you have provided.
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