Days to Pay (DTP) is a key metric in healthcare revenue cycle management that measures the average number of days it takes for a healthcare provider to receive payment for services rendered. This metric is calculated by dividing the total accounts receivable by the average daily charges. DTP is an important metric because it helps healthcare providers understand how long it takes for them to receive payment for their services. A high DTP can indicate issues with billing and collections processes, which can lead to cash flow problems and negatively impact the financial health of the organization. By tracking DTP over time, healthcare providers can identify trends and make adjustments to their revenue cycle management processes to improve cash flow and reduce the time it takes to receive payment for services rendered. Overall, DTP is a critical metric for healthcare providers to monitor and manage as part of their revenue cycle management strategy.
Days to Pay (DTP) is calculated by dividing the total accounts receivable by the average daily charges. The result is the number of days it takes for a healthcare organization to receive payment for its services.
The formula for calculating DTP is as follows: DTP = Total Accounts Receivable / Average Daily Charges
To calculate the total accounts receivable, add up all outstanding payments owed to the healthcare organization. This includes payments from insurance companies, patients, and any other payers. To calculate the average daily charges, divide the total charges for a given period (usually a month) by the number of days in that period. For example, if the total charges for the month of January were $100,000 and there were 31 days in January, the average daily charges would be $3,225 ($100,000 / 31).Once you have both the total accounts receivable and the average daily charges, divide the former by the latter to get the DTP. For example, if the total accounts receivable were $500,000 and the average daily charges were $3,225, the DTP would be approximately 155 days ($500,000 / $3,225). It's important to note that DTP can vary widely depending on a number of factors, including the type of services provided, the payer mix, and the efficiency of the billing and collections process. As such, it's important to track DTP over time and compare it to industry benchmarks to identify areas for improvement.
Best practices to improve Days to Pay (DTP) are:
1. Streamline the billing process: One of the most effective ways to improve DTP is to streamline the billing process. This can be achieved by automating the billing process, reducing the number of manual steps involved, and ensuring that all necessary information is captured accurately.
2. Verify insurance eligibility: Verifying insurance eligibility before providing services can help reduce the number of denied claims and improve DTP. This can be done by using electronic tools to check eligibility and coverage.
3. Submit clean claims: Submitting clean claims that are free of errors and omissions can help reduce the number of denied claims and improve DTP. This can be achieved by ensuring that all necessary information is included in the claim and that it is submitted in a timely manner.
4. Monitor denials: Monitoring denials and identifying the root cause can help reduce the number of denied claims and improve DTP. This can be done by using analytics tools to identify trends and patterns in denials and taking corrective action.
5. Implement a denial management process: Implementing a denial management process can help reduce the number of denied claims and improve DTP. This process should include identifying the root cause of denials, taking corrective action, and tracking the results.
6. Train staff: Training staff on best practices for billing and coding can help reduce errors and improve DTP. This can be done through regular training sessions and ongoing education.
7. Use technology: Using technology such as revenue cycle management software can help automate the billing process, reduce errors, and improve DTP. This can also help identify areas for improvement and track progress over time.By implementing these best practices, healthcare organizations can improve their DTP and ultimately improve their revenue cycle management.
The industry standard benchmark for DTP is typically around 30 days. This means that healthcare providers should aim to receive payment for their services within 30 days of submitting a claim to the payer. However, it is important to note that the benchmark can vary depending on the type of healthcare provider, the payer mix, and the geographic location.A DTP that is higher than the industry benchmark can indicate issues with the revenue cycle process, such as claim denials, coding errors, or slow payer processing times. On the other hand, a DTP that is lower than the benchmark can indicate efficient revenue cycle management practices and a healthy financial performance.Overall, monitoring and improving DTP is crucial for healthcare providers to maintain a steady cash flow and ensure financial stability. By tracking this metric and identifying areas for improvement, providers can optimize their revenue cycle processes and improve their financial performance.
Revenue cycle software can significantly improve the Days to Pay (DTP) metric by streamlining the entire revenue cycle process. With the help of advanced analytics and automation tools, revenue cycle software can help healthcare providers identify and resolve issues that cause delays in payment processing. For instance, revenue cycle software can help providers identify the root cause of claim denials and rejections, which can significantly reduce the DTP metric. Additionally, revenue cycle software can automate the claims submission process, ensuring that claims are submitted accurately and on time, which can also improve the DTP metric. If you're looking to improve your healthcare organization's DTP metric, it's time to consider revenue cycle software. MD Clarity's revenue cycle software is a powerful tool that can help you streamline your revenue cycle process and improve your DTP metric. Book a demo today to see firsthand how MD Clarity's revenue cycle software can help you achieve your revenue cycle goals.