Cost to collect calculator
Calculate your cost to collect from your total revenue-cycle cost and the cash you actually collected — as a percentage and as cents on the dollar.
Updated
Enter your own figures to calculate your cost to collect — what running the revenue cycle costs for every dollar it brings in.
The cost side is wider than the billing team's payroll. Include salaries and benefits for every revenue-cycle function, outsourced and vendor arrangements, clearinghouse and subscription fees, and the software and support the work runs on.
Everything spent running the revenue cycle over the period — staff and benefits, outsourced and vendor arrangements, subscriptions, clearinghouse fees, and system maintenance.
Cash actually collected over the same period, from payers and patients. Not charges billed, and not net revenue.
Enter your figures to see the result and a breakdown.
How it’s calculated
Total revenue cycle cost ÷ Total patient service cash collected × 100
Both figures cover the same period. The denominator is cash actually collected, not charges billed and not net revenue — dividing by a larger number produces a flattering figure for a practice that is not collecting. Decide once which costs are in scope and hold that definition, or the trend measures your accounting rather than your operation.
What this assumes
- Both figures cover the same period. A cost figure measured over a month against collections measured over a quarter is not a ratio of anything.
- The denominator is cash collected, not charges billed and not net revenue. Dividing by a larger number produces a flattering figure for a practice that is not collecting — which is the practice most in need of an honest one.
- What counts as a revenue-cycle cost is your decision, and it is the single largest reason two practices report different figures. Write the definition down and apply it every period, or the trend measures your accounting rather than your operation.
- The result is a percentage; the same figure spoken as cents per dollar collected is identical — 3.5% is 3.5 cents on the dollar.
- The result is the arithmetic on the numbers you entered. It is not compared to a benchmark, because a reasonable figure depends on specialty, payer mix, scale, and above all on which costs you counted.
How to read the result
Read it as a trend against your own history and your own cost definition. It moves for two entirely different reasons — cost went up, or collections went down — and the ratio alone cannot tell you which, so read it beside the collections figure that formed its denominator.
A falling cost to collect is not automatically good news. Cutting revenue-cycle staff lowers the numerator immediately and lowers collections months later, so the ratio improves before it gets worse. Comparisons between practices are weak for the same reason the definition is broad: two organisations rarely count the same costs.
Read the full cost to collect definition