What does the cost-to-collect ratio measure?

The cost-to-collect ratio is a key performance indicator in revenue cycle management that measures the efficiency of an organization’s revenue collection efforts. Specifically, it compares the costs incurred in the collection process to the total revenue collected.

When this ratio is calculated, it provides insight into how much it costs the organization to collect each dollar of revenue. A lower ratio indicates more efficient collection practices, meaning the organization spends less on collection efforts relative to the amount of revenue received. This measure is crucial for healthcare organizations as it helps them evaluate their financial performance and identify areas where operational improvements can lead to cost savings and increased profitability.

Understanding the cost-to-collect ratio allows organizations to streamline their collections process, adjust staffing or resources accordingly, and ultimately improve their overall revenue cycle efficiency.