Net Collection Rate
Percentage of the maximum collectable revenue actually collected after write-offs
What is Net Collection Rate?
Net collection rate is the percentage of the money a healthcare provider is entitled to collect that it actually collects. It shows how effective billing and collection are.
It measures revenue actually captured after contractual adjustments, so it is a key indicator of revenue cycle performance.
How this KPI is measured
- Function
- Finance
- Sub-function
- Revenue Cycle
- Industry
- Healthcare
- Type
- Lagging
- Impact
- Financial control
- Unit
- %
- Measurement frequency
- Monthly
- Formula
- (Net revenue collected / Net adjusted charges) × 100
How to calculate it
Divide net revenue collected by net adjusted charges, and multiply by 100.
For example, if net adjusted charges were 5,000,000 and 4,800,000 was collected, the rate is 96%.
Net adjusted charges are the amount owed after contractual write-offs, so the rate shows what is lost to non-payment.
Where it is used
Assessing billing effectiveness
Track collections.
Finding revenue leakage
Spot uncollected amounts.
Comparing practices
Benchmark performance.
How to improve it
Tips and common mistakes
- Use net adjusted charges, not gross charges.
- Monitor by payer.
- Handle patient billing sensitively.
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