Standardizing days in accounts receivable measurement

Area of Science:

• Healthcare finance
• Hospital revenue cycle management
• Financial metrics analysis

Background:

• Hospitals utilize diverse formulas for calculating revenue days in accounts receivable.
• Discrepancies arise from variations in handling Medicare accounts and credit balances, causing significant fluctuations in revenue days.
• This inconsistency hinders accurate benchmarking between healthcare institutions.

Purpose of the Study:

• To introduce a uniform calculation formula for revenue days in accounts receivable.
• To eliminate variables and simplify the comparison of hospital financial data.
• To provide a standardized method for generating comparable revenue day metrics.

Main Methods:

• Development of a standardized formula for revenue days calculation.
• Identification of key variables impacting revenue day calculations.
• Utilizing readily available financial data for the formula.

Main Results:

• The proposed uniform formula standardizes revenue days calculation.
• Eliminates inconsistencies caused by Medicare accounts and credit balance handling.
• Enables more accurate and reliable comparison of revenue days across hospitals.

Conclusions:

• A uniform calculation formula is essential for accurate hospital financial benchmarking.
• Standardization improves the comparability of revenue days data.
• This approach facilitates better financial performance analysis and strategic decision-making.