This article on How to Calculate Practice Collection Rates is Part 5 in our series on Tracking Top RCM Metrics:
Part 1: Seven Most Important RCM Metrics That Every Medical Practice Should Monitor
Part 2: How to Improve Cash for Your Medical Practice by Tracking Days in A/R
Part 3: Why Average Revenue Per Encounter is Important for a Medical Practice
Part 4: How to Calculate Your Denial Rate and Reduce Denied Claims
In this last article of our series on tracking top RCM metrics, we’re focusing on how to define different levels of collections and truly understanding how much of your earned revenue is actually hitting your bottom line.
Practice Collection Metrics:
- Gross Collection Rate (GCR)
- Revenue Realization Rate (RRR)
- Net Collection Rate (NCR)
Each of these KPIs helps medical practices measure the effectiveness of their billing and payment collection processes. When tracked together, they expose inefficiencies, reveal hidden opportunities, and help you build a stronger revenue cycle foundation.
1. Understanding Gross Collection Rate (GCR)
What It Measures
Gross Collection Rate measures the percentage of your total billed charges that are actually collected, before factoring in any contractual or other adjustments. It reflects your ability to collect based on the full dollar value of what you billed, even if you know you won’t actually receive that amount due to payer contracts.
Formula:
Gross Collection Rate = Total Payments ÷ Total Charges
Example:
If you collect $500,000 on $1,000,000 in charges, your GCR is:
$500,000 ÷ $1,000,000 = 50%
Why It Matters
GCR offers a high-level snapshot of how much of your billed services are being paid, regardless of payer contracts or adjustments. A consistently high GCR may suggest that your billed charges are close to payer reimbursement rates—which is not necessarily the best scenario since we always want to make sure we’re charging more than the payer’s allowed amounts.
This metric should never be viewed in isolation. Because it doesn’t account for contractual write-offs or fee schedule variations, GCR is not useful for comparing different practices or even different specialties within the same organization. It is most valuable when watching trends.
If GCR trends downward over time, it may reflect deeper issues in billing, coding, or payer mix that warrant exploration.
How to Use It
Instead of benchmarking against industry peers, focus on tracking GCR internally over time.
If your GCR starts to trend downward, it may signal:
- Billing errors
- Inaccurate charge capture
- A shift in payer mix
- Delays in claim follow-up or collections
Typical Causes for Low GCR
Overinflated charge rates that exceed payer allowables - Payers with low reimbursement schedules in your mix
- High volume of write-offs due to errors or timely filing issues
- Incomplete charge capture
- Delayed patient payments or write-offs due to poor collections follow-up
How to Fix Gross Collection Rate Problems
✅ Evaluate and rationalize your charge master
Ensure charges are in line with what’s typically reimbursed but always above your highest allowed amount for that service, especially for common procedures. Extremely high charge amounts don’t improve revenue—they just distort your metrics.
✅ Improve charge capture accuracy
Audit clinical documentation and billing regularly to ensure every billable service is coded and submitted.
✅ Review payer contracts
If your payer mix includes low-paying plans, consider renegotiation or evaluating the long-term impact on profitability.
✅ Tighten patient collection processes
Use pre-service estimates, point-of-care collections, and payment plans to reduce patient balance leakage.
2. Revenue Realization Rate (RRR)
What It Measures
Revenue Realization Rate tells you how much of your gross charges are being either collected or adjusted off (with a valid reason). This includes insurance contractual adjustments, charity care, and other approved write-offs.
Formula:
RRR = (Payments + All Adjustments) ÷ Total Charges
Example:
If you collected $450,000 and adjusted $249,000 on $700,000 in charges:
($450,000 + $249,000) ÷ $700,000 = 99%
Industry Benchmark: 99–100% (calculated 90 days in arrears)
Why It Matters
RRR is a critical measure of earned revenue efficiency. It tells you whether you’re accounting for your total charges correctly and reconciling them through either payments or valid adjustments. Since it typically takes about 90 days to collect all earned revenue, RRR should always be calculated with that time lag in mind.
Revenue Realization Benchmark: 99–100% (calculated 90 days in arrears)
If your RRR is below 99%, it may indicate:
- Missed charges
- Incomplete follow-up
- Inappropriate adjustments or write-offs
- Typical Causes for Low RRR
- Insufficient staff to handle practice workloads
- Billing and coding errors
- Very long charge lag and/or claims processing lags
- Possible high denial rates that take longer than 90 days to resolve
- Poor or inefficient billing processes
How to Fix Revenue Realization Rate Problems
✅ Improve the efficiency of billing operations
Ensure all revenue cycle processes can be completed and resolved earlier than 90 days.
✅ Find additional resources
Hire sufficient staff to handle the workloads around billing processes. Support from a third party billing services team can significantly improve RCM metrics.
✅ Reduce Charge Lag and Claim Lag
Charge Lag is the number of days between when you render service and when the charge for those services is entered into the system. Claim Lag is the number of days between when you enter a charge and when the claim goes out. In an ideal world these processes happen on the same day.
✅ Reduce your denial rate
Denials delay payment and lengthen to days to resolve. Denials that take longer than 90 days to resolve will affect your RRR. Use smooth RCM processes and up-to-date technology to reduce your initial and final denial rates. Link here for more about how to reduce denials.
3. Net Collection Rate (NCR)
What It Measures
Net Collection Rate shows how much of the allowable, collectible revenue your practice actually receives. It reflects collections efficiency after contractual adjustments and is widely regarded as one of the most accurate RCM KPIs.
Formula:
NCR = Payments ÷ (Charges – Contractual Adjustments)
Example:
If you collected $10.2M on $27M in charges, minus $15.5M in contractual adjustments:
$10.2M ÷ ($27M – $15.5M) = 88.69% NCR
Industry Benchmark: 95%
Top Performer Benchmark: 98%+
Why It Matters
NCR focuses on the revenue that you are legally entitled to collect based on your contracts—not what you billed, but what you’re owed. A healthy NCR is a sign that your revenue cycle operations—from billing to denial management to patient collections—are functioning effectively.
Even small improvements here can have a major financial impact. For example, increasing NCR from 88.69% to 96% could yield over $1M in annual recovered revenue for a midsize practice.
Typical Causes for Low New Collection Rate
- Delays or errors in insurance eligibility verification
- High volume of denied claims with less optimal follow-up
- Missing claim appeal deadlines
- Poor front-end collections from patients
- Coding errors or mismatches
- Low AR follow-up on underpaid claims
How to Fix Net Collection Rate Problems
✅ Focus on denial prevention
Use automated pre-claim scrubbing tools and payer-specific edits to reduce front-end denials.
✅ Create structured follow-up protocols
Ensure all denied and underpaid claims are followed up within 7–14 days of identification.
✅ Improve front-office financial policies
Set clear patient payment expectations at the time of service. Offer online payment options and early estimates.
✅ Police insurance underpayments Compare actual reimbursements against your contracts to identify chronic underpayments.
✅ Monitor NCR monthly by payer
✅ Segmenting NCR by payer can help you spot payer-specific delays or trends that require renegotiation or escalation.
UnisLink's Quick Table for RCM Metrics
| METRIC | TELLS YOU | TARGET BENCHMARK |
|---|---|---|
| Days in A/R | Average number of days it takes to collect payments after a service is rendered | < 40 days (goal); < 30 days (high performing) |
| A/R Over 120 Days | Percentage of outstanding accounts receivable aged over 120 days | < 12% of total A/R |
| Average Revenue per Encounter (ARE) | Average reimbursement received per patient visit | Practice-specific; track trend monthly |
| Denial Rate | Percentage of submitted claims denied by payers | < 5% (best-in-class); < 15% (average) |
| Gross Collection Rate (GCR) | % of charges collected before adjustments | Internal trending only |
| Revenue Realization Rate (RRR) | % of charges accounted for via payments or adjustments | 99–100% |
| Net Collection Rate (NCR) | % of collectible dollars actually received | 95–98% |
Final Thoughts on Top RCM Metrics for All Practices
While GCR, RRR, and NCR all measure different aspects of the revenue cycle, together they offer a comprehensive view of how well your practice captures, collects, and accounts for earned revenue. Monitoring these metrics regularly helps leadership:
- Spot inefficiencies before they become crises
- Benchmark internal trends quarter over quarter
- Make data-driven decisions to strengthen collections
When tracked in tandem with other key KPIs like Denial Rate and Days in A/R, these metrics can transform your RCM strategy from reactive to proactive—helping you optimize every dollar earned.
Need Help Monitoring or Improving Your RCM Metrics?
UnisLink provides smart billing automation tools and real-time KPI dashboards to help independent medical practices optimize revenue reimbursement. Our expert RCM teams are here to help you improve billing processes and maximize your revenue cycle.
Whether you’re looking to improve collections, reduce denials, or build a more profitable billing workflow—we’ve got you covered.
Contact us today for a free quote on our full suite of RCM services.