Collections rate
The percentage of billed charges that you actually collect as revenue. The most meaningful version is net collection rate, which measures collections against the amount you were contractually entitled to collect after contractual adjustments, not the full billed amount.
Why this matters for your clinic
A 3% difference in net collection rate on a $5M practice is $150K per year. That money was already earned. The services were already delivered. You just did not collect what you were owed. Collections rate is the clearest measure of revenue leakage in your practice.
Low collections rates usually have multiple causes: high denial rates, slow follow-up on unpaid claims, premature write-offs, and poor patient collections processes. Fixing collections is not one project. It is tightening every step of the revenue cycle.
How to calculate
Net collection rate = Total payments / (Total charges − contractual adjustments). Gross collection rate = Total payments / Total charges billed.
What good looks like
HFMA MAP Keys set the industry net collection rate benchmark at or above 95%. Anything below roughly 88% net collection typically indicates meaningful revenue leakage from a combination of denials, patient balance write-offs, and inaccurate contractual adjustments. Always track net collection rate separately from gross collection rate — the gross number is misleading because it depends on your fee schedule.
From Sorso
When we rebuild a clinic's collections reporting, the gap between reported gross collection rate and true net collection rate is usually where the owner first realizes how much is being written off quietly.
Founder of Sorso. 18 years in corporate finance. Managed a $450M loan portfolio before building a fractional CFO firm exclusively for healthcare clinics.
Want to see how your practice measures up?
Take the 4-minute financial assessment. It is free, and it will show you where your practice is leaking money.