Days in AR (Accounts Receivable days)
A measure of how many days on average elapse between when a service is billed and when payment is collected. Days in AR is one of the primary cash flow metrics for any healthcare practice. A lower number means money moves faster from claim submission to your bank account. A rising number means cash is getting stuck somewhere in the collection process.
Why this matters for your clinic
Days in AR directly affects your working capital. A practice with $500K per month in collections running at 50 days in AR has roughly $833K tied up in outstanding claims at any given time. At 35 days in AR, that same practice has $583K outstanding, freeing up $250K in working capital. That $250K is not a hypothetical number. It is cash you already earned that is just sitting in the billing pipeline.
Days in AR is a summary metric. When it starts to climb, the diagnosis requires looking at the distribution underneath: which payers have the longest outstanding balances, which providers have higher denial rates, whether the 90+ day bucket is growing. The number alone tells you something is wrong. The aging report tells you where.
How to calculate
Days in AR = (Total outstanding AR) / (Average daily charges). Average daily charges = Total charges over the period / Number of days in the period.
What good looks like
HFMA MAP Keys set the industry target for net days in AR below 40. MGMA DataDive better-performing practices cluster in the 30-35 day range for most outpatient specialties. Above 50 days is a strong signal that claims are not being worked aggressively and revenue is at risk of aging out of collectability. High-performing practices track this weekly, not monthly.
From Sorso
Days in AR above 50 almost always has one identifiable root cause when you dig into the aging by payer. Fixing that one payer relationship can move the metric meaningfully in 30-60 days.
Founder of Sorso. 19 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.