Essential hospital accounts receivable benchmarks

A guide for healthcare billing managers evaluating hospital revenue cycle performance. Discover the core metrics that define sound financial health, maintain steady cash flow, and ensure sustainable operations.

Standard Hospital Benchmarks 

Standard hospital benchmarks for accounts receivable (A/R) set optimal performance at 30 to 40 days, with industry averages typically landing between 45 and 55 days. 

Key A/R and Revenue Cycle Benchmarks

  • Days in A/R (DAR):
    • Top Performing: 30–40 days (some high-performing groups target 30–35 days).
    • Average: 45–55 days.
    • Below Average: 60+ days. 
  • A/R Over 90 Days: Keep under 10% to 15% of total receivables. Higher percentages indicate delayed collections or rising denials. 

  • Net Collection Rate: Opt for 95% to 99% of collectible, allowed revenue. 

  • Clean Claim Rate: Target above 95% to 98% for first-pass acceptances without rework. 

  • Claim Denial Rate: Maintain below 5%; industry averages often drift between 6% and 13%. 

    How to Evaluate Your Hospital:

    • Pull Quarterly Data: Gather your last full quarter of billing and collection metrics. 
    • Categorize Metrics: Group them into speed (Days in A/R), accuracy (clean claims and denial rates), and recovery (net collection rate). 

    • Compare Against Standards: Check your performance using resources from the Healthcare Financial Management Association (HFMA) Medical Group Management Association (MGMA). 

       

      Days in AR by Speciality 

      A/R Days Benchmarks by Specialty (MGMA/HFMA Aligned)

      • Primary Care & Family Medicine: Under 35 days
      • Internal Medicine: Under 38 days

      • Cardiology: Under 40 days

      • Orthopedics: Under 42 days

      • Behavioral Health & Oncology: Under 45 days 

      Why Benchmarking Matters:

      • Cash Flow Stability: Deviations from standard days in AR signal delayed payer processing or internal follow-up breakdowns.
      • Vendor Accountability: Practices outsourcing medical billing use these benchmarks to audit third-party billing company performance.

      • Early Problem Detection: Spikes in specific aging buckets (like 90+ days) reveal whether issues stem from front-desk insurance verification, coding errors, or slow collections. 

       

      Key AR and Denial Benchmarks

      Industry benchmark denial rates typically average 5% to 10% for initial submissions, while best-in-class performers maintain rates under 5%. 

      Key AR and Denial Benchmarks:

      • Initial Denial Rate: Industry average is 6% to 10% (some MGMA and payer data ranges up to 12–16%); top-tier target is under 5%.
      • Final Denial Rate: Industry average is 2% to 5%; top-tier target is under 2%.

      • Days in AR (DAR): Industry average is 30 to 40 days; best-in-class is under 35 days.

      • Clean Claim Rate: Target benchmark should exceed 95%.

      • Cost to Rework a Denial: Estimated between $25 and $181 per claim depending on complexity. 

      Common Root Causes and Codes:

      • Front-End & Eligibility (CO-16, CO-109): Missing or incomplete patient info and coverage/eligibility errors.
      • Authorizations (CO-151, CO-197): Missing or required prior authorizations.

      • Administrative (CO-29, CO-18): Timely filing limit exceeded or duplicate claims.

       

       

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