Days in A/R is the most quoted and least understood metric in revenue cycle. The benchmark depends on payer mix — a practice heavy in workers compensation and Medicaid managed care cannot hit the number a commercial-heavy practice can — so a single target misleads more practices than it helps.
Days in A/R is the number every vendor quotes and the one most often used badly. It is a real measure. It is just not comparable across practices in the way people assume.
What it measures
Total accounts receivable divided by average daily charges. It answers roughly: at your current rate of billing, how many days of production are sitting unpaid?
Directionally it is excellent. A number that climbs month over month is a genuine warning, and one that falls after a process change is genuine evidence.
Why the benchmark is not universal
Payers pay at different speeds, and your mix determines your floor. A practice weighted toward payers that adjudicate quickly can hit a number a comp-heavy or Medicaid-heavy practice mathematically cannot, without either being run better.
Workers compensation runs on longer cycles by design. Some Medicaid managed care plans are slower than commercial. A practice with a large self-pay share carries balances that behave nothing like insurance receivables.
So "under 40 days" as a universal target is at best a rough gesture and at worst an argument for chasing a number your payer mix will not produce.
How to use it properly
- Track your own trend rather than someone else's benchmark.
- Segment by payer. One slow payer can carry the whole average, and the aggregate hides which.
- Read it beside A/R over 90 days. Days in A/R can look stable while the tail rots, and the second number catches what the first misses.
The right question is never "is 42 good?" It is "why is ours 42, and which payer is making it that?"
Segment by payer before comparing
A blended figure describes your payer mix as much as your process. Split it by payer and the number becomes diagnostic — a commercial payer sitting far above its peers is a specific problem you can act on.
That also protects you from chasing a benchmark that your mix makes unreachable.
Watch the trend, not the level
The absolute figure invites comparison with practices unlike yours. The direction of travel is yours alone, and a number rising three months running is a signal regardless of where it started.
Beware the improvements that are not
Writing off unrecoverable claims lowers days in A/R legitimately. So does a surge in charges, which lowers it arithmetically while nothing improves.
Read the metric alongside net collection rate and the over-90 share, or it can move in the right direction for entirely the wrong reasons.
Common questions
- What is days in A/R?
- Outstanding receivables divided by average daily charges, expressed in days. It approximates how long it takes to convert a service into cash.
- What is a good days in A/R?
- It depends on payer mix. Compare against your own trend and against practices with similar payers rather than a single industry figure.
- Why is my days in A/R high?
- Usually slow payers in the mix, charge lag, or aged claims that will never pay sitting in the denominator. Segment before concluding.
- Should credit balances be included?
- No. They offset outstanding claims and flatter the number, which is why they belong in their own report.
- How do I lower days in A/R?
- Reduce charge lag, work denials faster, and write off the unrecoverable. The third produces an immediate improvement that is honest rather than cosmetic.
Denials Piling Up?
We handle the revenue cycle end to end — coding by certified coders, claim submission, denial management and appeals, and A/R follow-up, with six reported numbers every month.