Consider the following four medical practice collection indicators:
Days Receivables are Outstanding (DRO): The industry norm is 40 to 45 days.
Net Collections Rate (NCR): For each dollar you are allowed to collect, how much to you actually receive. This number needs to be between 96% and 98%.
Accounts Receivable > 120 days (AR > 120): The industry norm is 120: As suggested above, you want to stay within the 12% range on this although you would love 0%! As indicated in the other two calculations, make sure this is an adjusted receivable balance not a gross one.
Cash: This is how much cash you are collecting on a daily or weekly basis. Since all medical practices are different, you can only benchmark this for you own business. You have to make sure the flow is the same or better for each period. The important thing is, if it fluctuates, that you know why and are able to adjust for it and resolve and issue.
Actually, you could probably pretty much manage your medical practice collections by knowing what just these numbers are on a daily basis. Make sure these factors are measured accurately and consistently. If any of these numbers begins to go south, act immediately. Leakage in your accounting operations can really damage your business.