Why Days in A/R Matter More Than Ever
Cash flow is the foundation of any successful healthcare practice. While the top priority is always delivering exceptional patient care, maintaining a healthy revenue cycle ensures your organization has the financial stability to invest in advanced technology, expand services, attract top talent, and continue providing outstanding care.
One of the most important Revenue Cycle Management (RCM) performance indicators is Days in Accounts Receivable (Days in A/R)—the average time it takes to collect payment after services are rendered.
For most healthcare organizations, keeping Days in A/R below 35 days is considered the benchmark of an efficient and high-performing revenue cycle. When this metric consistently exceeds 35 days, it often points to hidden operational bottlenecks that delay reimbursements, increase administrative costs, and negatively impact cash flow.
The good news? Reducing Days in A/R doesn’t require working longer hours—it requires building smarter, standardized workflows that eliminate delays before they occur.
Here’s a proven, step-by-step strategy to help your practice consistently achieve and maintain a Days in A/R below 35.
Step 1: Verify Insurance Before Every Appointment
A healthy revenue cycle begins long before the patient walks through your doors.
Insurance eligibility verification should become a standard part of every patient encounter and include:
Confirming active insurance coverage
Verifying benefits
Checking referral requirements
Confirming prior authorization status
Providing accurate patient responsibility estimates
Front-end accuracy significantly reduces claim denials, minimizes billing delays, and improves first-pass claim acceptance.
Best Practice: Automate insurance eligibility verification whenever possible. Automation improves consistency, reduces manual workload, and helps staff focus on higher-value patient interactions.
Step 2: Capture Accurate Patient Information
Even minor registration errors can lead to rejected claims and delayed reimbursements.
During registration, verify:
Legal patient name
Date of birth
Insurance ID numbers
Current address
Subscriber information
Employer details (when applicable)
Accurate demographic data forms the foundation of clean claims and prevents avoidable payment delays.
Step 3: Strengthen Clinical Documentation
Accurate documentation is important for successful medical billing.
Providers should consistently document:
Medical necessity
Complete encounter details
Accurate diagnoses
Appropriate procedures
Required modifiers
Supporting clinical documentation
Incomplete or inconsistent documentation often results in coding errors, payer requests for additional information, and claim denials, thereby extending the payment cycle.
Remember: Clean documentation creates clean claims.
Step 4: Code Claims Correctly the First Time
Coding accuracy directly impacts reimbursement speed and compliance.
Billing teams should ensure:
Current CPT codes are used
ICD-10 diagnoses are fully specified
HCPCS codes reflect current updates
Modifiers are applied correctly
Payer-specific coding requirements are followed
Routine coding audits help identify recurring issues before they affect revenue and improve overall claim quality.
Step 5: Submit Claims Within 24–48 Hours
Time matters in revenue cycle management.
The sooner a clean claim reaches the payer, the sooner reimbursement can begin.
High-performing practices prioritize:
Daily claim batching
Automated claim scrubbing
Electronic claim submission
Immediate correction of claim edits
Avoid allowing completed claims to sit for several days before submission. Every day of delay directly impacts cash flow.
Step 6: Monitor Claim Rejections Daily
Claim rejections and claim denials are not the same.
A rejected claim never enters the payer’s adjudication process, making quick correction essential.
Create a daily workflow to:
Review clearinghouse rejection reports
Correct errors immediately
Resubmit claims within 24 hours
Track recurring rejection trends
Small delays accumulate quickly and contribute significantly to higher Days in A/R.
Step 7: Build a Structured Denial Management Process
Every denied claim represents delayed revenue—not necessarily lost revenue.
Successful organizations approach denial management strategically by:
Categorizing denial reasons
Assigning ownership for resolution
Tracking appeal deadlines
Monitoring denial trends
Identifying root causes
Rather than simply appealing denials, leading organizations focus on preventing them from happening again.
Step 8: Follow Up on Aging Accounts Consistently
Outstanding claims require proactive follow-up.
Many high-performing billing teams organize their accounts receivable by aging categories:
0–30 Days
31–60 Days
61–90 Days
Over 90 Days
Older balances should receive higher priority since collection rates decline significantly as claims age.
Consistent follow-up—not occasional cleanup efforts—is one of the biggest differentiators between average and high-performing revenue cycle teams.
Step 9: Collect Patient Balances Earlier
As high-deductible health plans continue to grow, patient responsibility represents an increasing share of healthcare revenue.
Improve patient collections by:
Providing upfront cost estimates
Collecting copays during check-in
Offering secure online payment options
Sending automated payment reminders
Providing flexible payment plans when appropriate
The earlier financial conversations occur, the higher the likelihood of successful collection and a positive patient financial experience.
Step 10: Measure the Revenue Cycle Metrics That Matter
What gets measured gets improved.
Regularly monitor key performance indicators (KPIs), including:
Days in A/R
Clean Claim Rate
First Pass Resolution Rate
Net Collection Rate
Denial Rate
Aging A/R over 90 Days
Average Payment Lag
Patient Collection Rate
Reviewing these metrics through a revenue cycle dashboard enables leadership to identify performance trends early and implement corrective actions before financial performance declines.
Why Days in A/R Often Exceed 35 Days
If your organization struggles to maintain a Days in A/R below 35, one or more of these issues is likely contributing:
Delayed claim submission
Coding inaccuracies
Incomplete clinical documentation
Insurance eligibility verification failures
Slow denial resolution
Inconsistent follow-up on outstanding claims
Large volumes of aging accounts
Ineffective patient collection processes
The encouraging reality is that these challenges are highly manageable. Practices that systematically improve each stage of the revenue cycle often experience measurable improvements in cash flow within just a few months.
The Bottom Line
Reducing Days in Accounts Receivable below 35 isn’t simply about hitting a financial benchmark—it’s a reflection of an efficient, patient-centered, and well-managed revenue cycle.
Organizations that consistently achieve this goal typically experience:
Stronger and more predictable cash flow
Faster reimbursements
Lower administrative costs
Higher operational efficiency
Improved patient financial experiences
Greater financial stability to support long-term growth
Revenue cycle excellence doesn’t happen by chance. It is built through disciplined processes, accurate documentation, timely claim submission, proactive denial management, and continuous performance monitoring.
By strengthening every stage of the revenue cycle—from patient registration to final payment—you create a resilient financial foundation that empowers your practice to focus on what matters most: delivering exceptional patient care while achieving sustainable business success.