How to Calculate Your Net Collection Rate in Fifteen Minutes

The three numbers you need

Total charges billed for the period, contractual adjustments, and payments received. All three appear on a standard practice management report. If yours does not separate contractual adjustments from write-offs, that is worth asking about on its own — conflating them hides exactly the losses you are trying to find.

The calculation

Subtract contractual adjustments from total charges to get your allowed amount — what your contracts entitled you to collect. Divide payments received by that figure. The result is your net collection rate. Run it across a rolling quarter rather than a single month, because payments arrive for claims billed in earlier periods and one month on its own is noisy.

Reading the result

Above 96% is performing well; what remains is mostly small balances and genuinely uncollectible claims. Between 93% and 96% is normal with room, usually an untraced denial category or unchecked underpayments. Between 90% and 93% means something specific is wrong and findable, most often aged A/R that stopped being worked. Below 90% is structural rather than performance, and warrants an audit before anything else.

A caveat worth keeping

These bands are industry rules of thumb, not benchmarks for your specialty or payer mix. A practice with heavy Medicaid exposure and one with heavy commercial exposure are not comparable on this metric. The number is most useful measured against your own trend over time, not against somebody else's average.