Average collection period in hospitals: how to calculate and reduce it

The average collection period (also known as days sales outstanding) is the average number of days a hospital takes to receive what it billed. In hospitals that depend on health plans and SUS, it is often the main reason cash does not keep up with results: care is delivered and paid for today, and money arrives weeks or months later.

The formula

Average collection period = accounts receivable ÷ average daily billing

Average daily billing is the period's billing divided by the number of days. Example: a hospital bills R$ 9 million a month (R$ 300 thousand a day) and has R$ 18 million in receivables. The average collection period is 18,000,000 ÷ 300,000 = 60 days. Illustrative figures.

Also calculate it by payer: each health plan has its own contractual term, and the hospital average hides who pays in 30 days and who pays in 90.

The full cycle

The collection period measures only part of the path. The cycle from care to cash includes:

1. Care to account close: the time an account stays open after discharge. See unbilled accounts.
2. Close to submission: audit, pre-billing, batch assembly.
3. Submission to payment: the payer's contractual term, plus delays.
4. Denials and appeals: amounts pending until the appeal is decided. See hospital claim denials.

Shortening the cycle requires tackling all four stages, not just chasing payers.

Actions that shorten the period

• Close accounts faster: internal deadlines for each billing stage, tracked daily.
• Submit on time and error-free: pre-billing prevents returns and administrative denials that restart the cycle.
• Reconcile receipts: record payments correctly and identify differences between what was sent and what was paid.
• Chase delays: track overdue amounts by payer and age.
• Negotiate terms: use each payer's collection history when renewing contracts.

Collection period, defaults and payment period

• Defaults are overdue unpaid amounts. A collection period that rises with the same contractual term usually indicates payer delays.
• Average payment period is how long the hospital takes to pay suppliers. When the collection period is much longer than the payment period, the hospital must finance the difference with working capital.

For the full financial view, see financial KPIs with Tasy data and hospital financial BI.

Related questions

What is a normal average collection period for hospitals?

It varies widely with payer mix, SUS and contracts. The most useful approach is to compare each payer with its contractual term and track the trend.

Should SUS be included in the calculation?

It can be, but it is better to calculate it separately: SUS payment follows its own rules and distorts the private payer average.

Do denials increase the collection period?

Yes. Until the appeal is decided, the denied amount stays in receivables, increasing the average period.