Days in A/R General or Buckets

June 1, 2008

We went to a billing seminar, and they recommended benchmarks. One of those benchmarks was days in accounts receivable (A/R) calculated by dividing total A/R by 365 days. We were told the result should be less than 45 days. Is this standard?

Question: We went to a billing seminar, and they recommended benchmarks. One of those benchmarks was days in accounts receivable (A/R) calculated by dividing total A/R by 365 days. We were told the result should be less than 45 days. Is this standard?

Answer: The industry standard is to measure in 30-day increments as follows. I also note the percent of accounts you might expect to fall into each bucket, based on median benchmarks for internal medicine from the Medical Group Management Association:

0-30 Days: 65.47%
31-60 Days: 13.45%
61-90 Days: 6.13%
91-120 Days: 11.49%

Why find out how much is in each bucket versus looking at the aggregate? Because more information is better. Say the average is 46 days; to understand it you’d need to dig deeper anyhow. Plus, the majority of accounts should be in before 45 days, but you don’t want to forget about those that are older. Are you making some billing error that is leaving those accounts out there that you can correct moving forward? Are they patient accounts you really should be collecting at time of service?

You can use the data to identify problems and solve them proactively.