Outpatient Surgery Magazine - Subscribers

OR Excellence Awards 2015 - September 2015 - Outpatient Surgery Magazine

Outpatient Surgery Magazine, providing current information on Surgical Services, Surgical Facility Administration, Outpatient Surgery News and Trends, OR Excellence and more.

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Page 29 of 168

3 0 O U T P A T I E N T S U R G E R Y M A G A Z I N E O N L I N E | S E P T E M B E R 2 0 1 5 How to Measure Your Cash Flow AR days tell you how long it takes to collect on the case. O f all the benchmarks we can track in surgery, AR days might be the most meaningful. Accounts receivable measures the days from the time you see the patient until you collect money for the case. How quickly you turn billed charges into revenue is a true indicator of your facility's financial health. For surgery centers, 28 AR days is a good benchmark. For hospitals, the goal is 40 AR days. Here's a simple formula to compute AR days. Let's walk through this formula. First, to determine your receivables, develop an aging report that shows how much money your business office staff is currently collecting. Next, determine your facility's total charges for the past 4 weeks. Divide your receivables by 4 weeks of gross charges, and then multiply that figure by 30 to come up with AR days. Simple arithmetic Now let's plug in some real numbers to see what cash flow looks like. Say you have $3,693,486 in total receivables and $3,631,469 in gross charges over the last 4 weeks. You get 1.02 when you divide gross charges by receivables. Multiply 1.02 by 30 and you get 30.6, which is the average number of days it takes you to collect on your case. That's a healthy number, but you should strive for less than 30 days. It's also a good sign if you've got slightly more to collect (RECEIVABLES) than you've billed out (4 WEEKS OF GROSS CHARGES). That means that everyone is doing their part, from surgeons dictating op reports between every case to your business office submitting bills within 24 hours of sur- gery. Our business office generates daily AR numbers so we can keep constant tabs on our collections. You'll see patterns. For example, we B U S I N E S S A D V I S O R Stephanie Martin, BSN, RN, CNOR, CASC RECEIVABLES รท 4 WEEKS OF GROSS CHARGES X 30 DAYS = AR DAYS

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