# Questions about hospital financial management

> How to calculate the average collection period, denials versus defaults, why hospitals post profits but lack cash, and how to track margin by payer.

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Questions about hospital finance. The guide is in [hospital financial BI](https://clichealth.com.br/en/hospital-bi/financial-bi).

## How do I calculate a hospital's average collection period?

Average collection period = accounts receivable ÷ average daily billing for the period. Calculate it by payer, because each has a different contractual term, and track the trend month by month. See the article on [average collection period](https://clichealth.com.br/en/blog/hospital-days-sales-outstanding).

## What is the difference between a denial and a default?

A denial is the payer's full or partial refusal to pay an account item, for technical or administrative reasons. A default is the late payment or non-payment of an amount that was accepted. Both reduce cash, but they have different causes and solutions, so they should be measured separately.

## Why does a hospital post a profit but lack cash?

Because revenue is recognized when care is delivered, but cash only arrives when the payer pays, often weeks or months later, and part of the account may be denied. Accounts sitting unbilled and long collection periods widen the gap. That is why results and cash need to be tracked together.

## How do I track margin by payer?

Calculate each payer's contribution margin: the payer's revenue minus denials, supplies, drugs and physician fees passed through. Compare in amount and as a percentage of revenue. In Clic Health, the Payers dashboard ranks payers by billing and by margin. See [contribution margin by payer](https://clichealth.com.br/en/blog/contribution-margin-by-payer).

## What is EBITDA for a hospital?

EBITDA is the operating result before interest, income taxes, depreciation and amortization. For a hospital, it shows the cash generated by operations, without the effect of the debt structure and equipment investment. The definition is in the [glossary](https://clichealth.com.br/en/glossary#ebitda).

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