Reducing Days in Accounts Receivable (A/R) starts with understanding your current DAR performance, identifying the root causes of aging claims, and implementing targeted revenue cycle improvements. For most healthcare organizations, the industry benchmark for Days in A/R is under 40 days, according to the Medical Group Management Association (MGMA).
Days in A/R measures the average number of days it takes for a healthcare organization to collect payment after services are billed. When DAR rises above benchmark levels, cash flow slows, administrative costs increase, and financial stability becomes harder to maintain.
Organizations that consistently maintain low A/R days benefit from stronger cash flow, improved operational efficiency, and greater capacity to reinvest in patient care and growth.
1. Understanding the DAR Calculation Formula
Days in Accounts Receivable (DAR) measures how long it takes to collect payments after services are billed.
DAR=Total Accounts ReceivableAverage Daily ChargesDAR = frac{Total Accounts Receivable}{Average Daily Charges}DAR=Average Daily ChargesTotal Accounts Receivable
Where:
Average Daily Charges=Total ChargesNumber of DaysAverage Daily Charges = frac{Total Charges}{Number of Days}Average Daily Charges=Number of DaysTotal Charges
Definitions
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Total Accounts Receivable: The outstanding balance owed to the practice for services already provided.
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Total Charges: Total billed charges during the measurement period.
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Number of Days: Typically 365 when calculating annually.
Example
If a practice has:
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Total A/R = $300,000
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Annual charges = $3,650,000
Average Daily Charges = $3,650,000 ÷ 365 = $10,000
DAR = $300,000 ÷ $10,000 = 30 days
This indicates the organization collects payments in 30 days on average, which is well within the MGMA benchmark.
Practices should calculate DAR regularly and evaluate it by payer, provider group, and specialty to identify performance gaps.
2. 2026 Days in AR Benchmarks by Specialty
Days in A/R benchmarks vary across healthcare sectors because billing complexity, payer mix, and reimbursement timelines differ significantly between specialties.
For example, hospital billing often involves multiple claims and complex payer contracts, while urgent care centers typically process simpler claims with faster reimbursement cycles.
Organizations performing above these ranges often face systemic issues such as high denial rates, delayed claim submission, poor eligibility verification, or inefficient payer follow-up processes.
Benchmark comparisons help revenue cycle leaders prioritize improvement efforts and allocate resources where they will have the greatest impact.
3. Root Cause Framework for High Days in A/R
When A/R days rise above benchmark levels, the problem rarely stems from a single issue. Instead, delays usually originate from breakdowns at different stages of the revenue cycle.
A structured root-cause framework helps organizations pinpoint where these delays occur.
By identifying which stage is causing delays, organizations can move from reactive collections to proactive revenue cycle management.
4. 12 Proven Strategies to Reduce Days in A/R
Reducing A/R days requires coordinated improvements across front-end, mid-cycle, and back-end revenue cycle processes.
4.1 Front-End Optimization
Front-end accuracy is critical because many claim denials originate during patient registration or scheduling.
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Capture accurate patient demographics
Ensure front-desk teams collect complete patient and insurance information. Digital intake systems can significantly reduce manual entry errors. -
Verify insurance eligibility before appointments
Insurance coverage should be verified 2–3 days before the visit using automated verification tools. -
Obtain prior authorizations when required
Develop payer-specific authorization workflows to prevent authorization-related denials. -
Collect patient payments upfront
Providing cost estimates and collecting co-pays at check-in improves patient payment rates and reduces downstream collection efforts.
4.2 Mid-Cycle Improvements
The mid-cycle focuses on documentation quality and coding accuracy, both of which directly impact claim acceptance.
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Ensure accurate medical coding
Employ certified coders and conduct routine coding audits. -
Improve documentation completeness
Implement structured documentation review processes before claims are submitted. -
Maintain provider credentialing records
Credentialing management systems help track payer enrollments and avoid billing delays.
4.3 Back-End Enhancements
The back-end stage determines how efficiently submitted claims convert into revenue.
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Submit claims quickly
Claims should ideally be submitted within 24–48 hours of service. -
Track and resolve denials promptly
Denial management tools help categorize rejection reasons and streamline appeals. -
Segment A/R by aging buckets
Divide receivables into 0–30, 31–60, 61–90, and 90+ day categories. -
Establish clear write-off and collections policies
Define escalation processes for aged claims to avoid inflated A/R balances.
5. Leveraging Technology and Outsourcing
Technology and specialized revenue cycle partners have become essential for managing A/R efficiently in modern healthcare environments.
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Automated eligibility verification
Real-time eligibility tools confirm coverage before patient visits. -
Clearinghouse claim edits
Clearinghouses identify claim errors before submission, reducing rejection rates. -
Outsourced A/R follow-up teams
Specialized teams focus on aging claims—particularly those over 60 or 90 days. -
Revenue cycle analytics dashboards
Analytics platforms provide visibility into payer performance, denial trends, and aging A/R patterns.
These solutions help healthcare organizations streamline collections while reducing administrative burden on internal teams.
6. KPI-Driven A/R Management
High-performing organizations treat A/R management as a data-driven discipline rather than a reactive process.
Key performance indicators to monitor include:
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Days in A/R
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Denial rate
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Clean claim rate
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Net collection rate
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Aging A/R distribution
Breaking down these metrics by payer, provider, and specialty allows organizations to detect performance gaps and implement targeted improvements.
Claims older than 90 days represent revenue at risk and should be prioritized for follow-up.
7. 90-Day Improvement Roadmap
Healthcare organizations can often reduce Days in A/R significantly within three months by implementing structured improvements.
Organizations following structured improvement plans often reduce Days in A/R by 10–25% within 90 days.
8. Clinician Engagement and Documentation Quality
Clinicians play a critical role in revenue cycle performance, particularly in documentation and coding accuracy.
Healthcare organizations should:
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Train physicians on documentation best practices
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Share denial trends with clinical teams
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Provide feedback on documentation deficiencies
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Encourage collaboration between coders and clinicians
Improved documentation leads to cleaner claims, fewer denials, and faster reimbursement cycles.
9. Case Study
A multi-specialty practice reduced its Days in A/R from 55 days to 33 days within four months by:
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Outsourcing A/R follow-up
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Implementing automated eligibility verification
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Strengthening front-end registration workflows
Results included:
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22% increase in collections
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35% reduction in claim rejections
Conclusion
Reducing Days in A/R requires more than simply pursuing unpaid claims—it requires a disciplined, data-driven revenue cycle strategy.
By understanding the DAR formula, benchmarking performance by specialty, identifying root causes of aging receivables, and implementing a structured 90-day improvement roadmap, healthcare organizations can consistently maintain A/R performance below the MGMA benchmark of 40 days.
Partnering with experienced revenue cycle specialists such as MBW RCM can further accelerate improvement through advanced analytics, denial management expertise, and dedicated A/R follow-up services.
For more insights, visit www.mbwrcm.com or schedule a consultation with our revenue cycle experts by filling the form below.