Days in Accounts Receivable (DAR) is one of the most important metrics in healthcare finance. It measures the average number of days it takes to collect payment after a service is rendered. The industry benchmark is 30-35 days. If your practice is sitting at 45, 55, or 60+ days, you have a significant revenue problem — and most of the fix is operational, not payer-related.
Why High DAR Happens
High DAR is almost never caused by a single factor. It's the result of multiple process gaps compounding over time — claims submitted with errors, denials not worked promptly, no follow-up system for claims past 30 days, patient balances left uncollected, and staff overwhelmed with volume without a systematic workflow.
Step 1: Audit Your Current Aging Report
Start by pulling a clean aging report segmented by payer and by age bucket: 0-30, 31-60, 61-90, 91-120, 120+ days. Identify where the bulk of your outstanding balance sits.
Step 2: Prioritize by Dollar Amount and Deadline
Not all unpaid claims deserve equal attention. Prioritize claims based on dollar amount (large claims first), timely filing deadlines (claims approaching cutoffs need immediate action), and payer type.
Step 3: Fix Front-End Issues Causing Back-End Problems
If your 0-30 bucket is constantly high, the problem is upstream — claims being submitted with errors, missing eligibility verification, or authorization issues. Fixing the front end reduces new denials and keeps fresh AR clean.
Step 4: Implement a Payer Follow-Up Schedule
Every payer has typical adjudication timelines. Medicare typically adjudicates within 14-30 days. Commercial payers vary from 15-45 days. Claims sitting beyond these windows without payment should trigger automatic follow-up.
Step 5: Work Denials Immediately
Every denial sitting unworked is a delayed or lost payment. Establish a 24-48 hour turnaround for working new denials — research the reason, gather documentation, correct and resubmit or initiate a formal appeal.
Step 6: Address Patient Balances Systematically
Patient A/R is growing at most practices as deductibles rise. Send statements promptly after insurance adjudication, offer payment plans, and use automated reminders.
Realistic Timeline: Practices that implement this systematic AR management approach with a dedicated team typically reduce DAR by 30-50% within 90 days. Our clients average a reduction from 55+ days to under 35 days within the first quarter of partnership.