What's Your Net Collections Rate?

One way to determine if your practice has a healthy revenue cycle is by calculating your net collection rate. In fact, this may be your practice’s most important revenue cycle metric.

 

Find out what your net collection rate is today! 

Please do not include $, %, other symbols or commas in your answers

What is a net collection rate and why is it important?

In simple terms, it tells you what you collect for every dollar billed.

 

So, how do you calculate your net collections rate:

 

  • Start by picking your time period – we recommend using a 12-month timeframe.
  • Calculate the number of payments from your payers AND patients during that timeframe. Subtract any credits.
  • Calculate your charges for the same timeframe. Subtract contractual adjustments.
  • Divide the result from step 2 by the result in step 3.
  • Multiply by 100
  •  

    Here’s is what the calculation looks like -

     

    (payments – credits)/(charges-contractual adjustments) * 100

     

    The Medical Group Management Association (MGMA) recommends a net collection of 95% or higher. That means you are getting .95 cents for every dollar billed. Anything below 95% generally means you have room for improvement and can be an indicator of poor revenue cycle performance.