Key takeaways
- Days in AR = total accounts receivable ÷ average daily gross charges.
- Use the last 90 days of charges for the daily average so one big or slow month does not skew it.
- Many practices aim for under 40 days; under 30 is strong for most specialties.
- Watch the share of AR older than 90 days alongside the total.
What days in AR measures
Days in accounts receivable (AR) tells you how long, on average, it takes a practice to collect what it bills. It is one of the clearest single numbers for the health of a revenue cycle: when it rises, cash is sitting with payers and patients instead of in the bank.
The formula
Average daily gross charges = Gross charges for the period ÷ Days in the periodUse gross charges, not payments, and the same period length every time you measure.
Most practices use the last 90 days of charges for the daily average. A three-month window smooths out a single slow or unusually busy month.
A worked example
A practice has $480,000 in total AR today. Over the last 90 days it billed $1,350,000 in gross charges.
- Average daily gross charges: $1,350,000 ÷ 90 = $15,000
- Days in AR: $480,000 ÷ $15,000 = 32 days
That practice collects, on average, about a month after it bills. Run your own numbers in the AR days calculator.
What a good number looks like
| Days in AR | What it usually means |
|---|---|
| Under 30 | Strong. Claims go out quickly and are paid on first submission. |
| 30 to 40 | Healthy for most specialties. |
| 40 to 50 | Worth a look: slow submission, rising denials or follow-up gaps. |
| Over 50 | Cash is stuck. Usually a denial or AR follow-up backlog. |
These are commonly used ranges, not fixed rules. Specialties with high-cost drugs, authorizations or workers' compensation claims often run a little higher.
Look at AR over 90 days too
Two practices can share the same days in AR with very different risk. The share of AR older than 90 days shows how much may never be collected. Many practices aim to keep it under 15 to 20 percent of total AR.
What pushes days in AR up
- Charges entered or claims submitted days after the visit
- Eligibility not checked, so claims go to the wrong payer
- Missing prior authorizations
- Coding errors that cause denials
- Denials that are not worked, or worked late
- No routine follow-up on unpaid claims
How to bring it down
- Submit faster. Set a target of claims out within 48 hours of the visit.
- Fix the front end. Verify eligibility and authorizations before the patient arrives.
- Raise the clean claim rate. Scrub claims before they go out. See clean claim rate: formula and benchmarks.
- Work denials to the root cause. Fix the pattern, not just the claim. See denial management.
- Follow up on a schedule. Touch every unpaid claim by age bucket.
Frequently asked questions
What is a good days in AR for a medical practice?
Many practices aim for under 40 days, and under 30 is strong for most specialties. Specialties with high-cost drugs or many authorizations often run a little higher.
Should I use gross charges or net charges?
Use gross charges for the daily average and measure the same way every time, so the trend is comparable month to month.
How often should I calculate days in AR?
Monthly, using the last 90 days of charges for the daily average.