Improving Net Collection

October 1, 2008

Our net collection ratio is lower than it supposedly should be - currently 83 percent. Could you please explain exactly what this ratio indicates and what we need to do to improve our percentage?

Question: Our net collection ratio is lower than it supposedly should be - currently 83 percent. Could you please explain exactly what this ratio indicates and what we need to do to improve our percentage?

Answer: Net collections is meant to measure how much you have collected of the amount you are owed (not the amount you charge, but what payers and patients actually owe you). What it indicates is that you need to do more to collect.

And what does that mean? Well, I’d start to sleuth that out by using that number as a benchmark for all your payers and by contrasting all payers to patient receivables. In other words, who owes you the money?

If it’s mostly patients, you can tighten time-of-service collections on past balances, copays, and coinsurances. If it’s mostly payers, start to look at your write-offs and denials. Why isn’t the money coming in? What can you do on your end to improve it? For example, if you are getting timely filing denials, you can obviously file faster.

There are lots of other tips, but hopefully this gives you a sense of how to proceed to pinpoint exactly where the problem is - and fix it.