What is my collection rate? This is a common question often asked by a physician or practice manager and rarely is the answer very clear. There are many methodologies used to calculate a practice’s collection rate but there are only a couple ways that will really tell you what you are looking for.
It is interesting when you hear someone touting their collection rate but when they have no idea how the number was derived. A collection rate’s objective is to point to the efficiency or inefficiency of a billing office. It can identify where the practice is dropping the ball or where system improvements need to be made. An example would be a low collection rate because of a spike in patient receivables. The patient receivables is not an indicator of a poor billing department but only an effect of patients losing their insurance. A new system of prior authorizations or payment plans may need to be established to curb this issue.
There are two different collection rates that every practice has and they are the Gross Collection Rate & Net Collection Rate. Collection rates take your fee schedule, the insurance allowables, write offs, and AR all into account. This means that an accurate calculation of your collection rate can give you a great snapshot of your overall financial performance.