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Forecasting Practice Cash Flow Without Guessing

Charges are not revenue and revenue is not cash. A forecast built on expected reimbursement per payer beats one built on billed charges every time.

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2 min read · by White Glove Medical Billing
Water passing through a narrowing channel into a smaller vessel

Practices forecast on charges because charges are the number they have. It is also the number least connected to what will land in the bank.

Three different numbers

Charges are what you billed. Largely a function of your fee schedule, which you set, and mostly disconnected from what anyone will pay.

Expected reimbursement is what your contracts say those services should pay. This is the number worth forecasting from.

Cash is expected reimbursement minus denials, minus what patients do not pay, shifted forward by however long each payer takes.

Forecast from charges and you will be wrong by the size of your contractual adjustments — which is to say, badly.

Building one that works

  • Start with expected reimbursement per payer, from your fee schedules. If you cannot produce it, that is itself a finding.
  • Apply each payer's actual lag, from your own history rather than their stated turnaround.
  • Subtract a realistic denial and write-off rate, again from your own numbers.
  • Model patient responsibility separately. It collects at a different rate and over a longer period.

What the exercise reveals

Usually two things. First, patient responsibility is a larger share than anyone assumed and collects far more slowly. Second, one payer is materially slower than the rest and is quietly setting the practice's cash position.

Neither is visible in a charge-based forecast, which is why the forecast is worth building even in a month you do not need it.

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.

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