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Revenue cycleDays in AR tells you how long it takes, on average, to turn care into cash. It's the number your CFO asks about first. Here's how to calculate it, what pushes it up, and the other KPIs that tell you which fix to make.
Days in AR = total accounts receivable ÷ average daily revenue. Average daily revenue is usually the last 3 months of revenue divided by the number of days in those months. If you hold $4.5 million in AR and booked $9 million over the last 90 days, you average $100,000 a day, so you're at 45 days in AR.
The lower the number, the faster care turns into cash. A number that creeps up over a few months usually means one of 3 things: claims are going out late, payers are denying or slow-paying more, or patient balances are sitting.
Days in AR = net AR ÷ (net patient service revenue ÷ days in the period). Nothing you type leaves this page.
Use the same period for revenue every time you run it, and run it monthly. The trend tells you more than any single month.
There are two versions, and mixing them up makes every comparison wrong.
| Version | AR | Daily revenue | Who uses it |
|---|---|---|---|
| Gross days in AR | Gross AR at full charges | Gross charges ÷ days in period | Billing teams tracking workload |
| Net days in AR | AR net of contractual allowances, charity and bad-debt reserves | Net patient service revenue ÷ days in period | Finance, and HFMA's MAP Key FM-1 |
HFMA's MAP Keys define net days in accounts receivable as net AR from the balance sheet divided by average daily net patient service revenue from the income statement. Net AR excludes credit balances and is net of allowances for uncollectible accounts, charity care discounts and contractual allowances (HFMA, MAP Keys, 2023 edition).
Gross days runs higher when your charges are high relative to what payers pay. That's why two hospitals can report very different numbers on the same cash flow.
There isn't one published standard that fits everyone. Payer mix moves the number more than anything else: a practice heavy in commercial plans that pay in 2 weeks will always look better than a hospital with a large Medicaid and workers' compensation book.
The 2 comparisons that hold up are your own trend and a peer group. HFMA members can compare their MAP Keys against similar organizations in HFMA's MAP App.
Days in AR is the headline. These are the numbers underneath it.
| KPI | Formula | What it tells you |
|---|---|---|
| Net days in AR | Net AR ÷ average daily net patient service revenue | How long cash takes to arrive overall |
| AR over 90 days | AR older than 90 days ÷ total AR | How much of your AR is at risk of never paying |
| Discharged not final billed (DNFB) days | Gross charges not yet billed ÷ average daily gross revenue | Whether claims are stuck before they go out (coding, documentation) |
| Clean claim rate | Claims accepted on first submission with no edits ÷ claims submitted | How good the front end and coding are |
| Initial denial rate | Claims denied on first submission ÷ claims submitted (by count or dollars) | How much rework you're creating |
| Net collection rate | Payments ÷ (charges − contractual adjustments) | How much of what you're owed you collect |
| Cash collection as a percentage of net patient service revenue | Cash collected ÷ net patient service revenue | Whether booked revenue is turning into cash |
| Cost to collect | Total revenue cycle cost ÷ total patient service cash collected | What each dollar of cash costs you to bring in |
Read them together. Rising days in AR with rising DNFB days points at coding or documentation. Rising days in AR with a rising denial rate points at registration, authorization or a payer that changed its edits. Rising days with flat denials and flat DNFB usually means follow-up isn't keeping up.
Denial rates have their own benchmark page, and the denied claim cost page shows when a denial is worth working.
Track DNFB daily and clear the coding and documentation holds behind it. A claim that goes out 5 days sooner usually gets paid 5 days sooner.
Fix the top 3 front-end denial reasons first, usually eligibility, authorization and demographic errors. Each one stopped at registration saves a full rework cycle.
Sort follow-up by dollar value, payer and timely filing date. Oldest-first queues let large claims age out while staff chase small balances.
Load contract terms so posting flags short payments. Without that, an underpaid claim looks like a paid one.
Send the first text or statement within days of the payer's adjudication, check for coverage and financial assistance first, and offer a payment plan before the balance goes stale.
A one-time project on accounts over 120 days, in-house or outsourced, can pull the average down fast and show you which payers and denial reasons created the backlog.
Results vary by payer mix and client program.
TSI works the back end of the revenue cycle for hospitals, health systems and physician groups: aged insurance AR through an extended business office, denial management with a root cause on every denial, early-out self-pay in your name and bad debt recovery. The client portal reports aging inventory, denial rates by type and payer, appeal outcomes and collections by placement, so you can see which stage is moving your days in AR.
Days in AR = total accounts receivable ÷ average daily revenue. Average daily revenue is revenue for a period (often the last 3 months) divided by the days in that period.
Use net days to report to finance and compare with peers; it's the version HFMA defines as MAP Key FM-1. Gross days is useful inside billing for workload, but don't compare it with anyone else's net number.
Monthly, with the same revenue period every time. Track it as a 3-month or 12-month trend so one slow month doesn't send you chasing the wrong problem.
The share of claims a payer accepts on the first submission without edits or rejections. It's the best single read on registration and coding quality.
General information, current as of Nov 5, 2026. It isn't legal advice. Rules change and differ by state, so check the sources linked here and talk to your own counsel before you act on it.
The Denials Economics Sprint works one payer and one denial class against your own baseline and reports overturn, cash and cost per claim.
