Healthcare revenue to cash
Revenue is earned when care is delivered, and cash arrives weeks later, from different payers on different timetables. This build uses an invented practice network. Slow down one insurer, change the January deductible effect or the supplier's payment schedule, and see which week gets close to the minimum cash level.
What this shows
- A payer waterfall: each insurer pays after its own days and the patient pays after statements
- The January deductible reset, when the patient's share jumps and cash slows
- A receivables roll-forward and days outstanding
- A 13-week cash view with the minimum cash level flagged
How I use it
- Telling leadership when cash arrives, not only when revenue is earned
- Seeing what a slower insurer does to the tightest week
- Linking a revenue forecast to a weekly cash forecast
Explore the model below. It uses an invented company and invented numbers.
Explore the model
Illustrative model · Synthetic dataWide tables scroll sideways: swipe inside a table to see every column.
Sample build: revenue to cash for an invented practice network
Tallowfield Care Network is an invented network of practices that bills patients and three payers once a month. This build follows each month's net revenue until the cash arrives, then shows what the timing does to receivables and to the weeks closest to the minimum cash level.
Invented network and invented numbers for illustration. The payer speeds are not any real payer's.
Start from a scenario, then change any of the settings.
Every payer at its usual speed, a 30 percent patient share in January, and the supplier paid in three instalments.
Cash received, weeks 1 to 13
$1.64M
Billed in the same three months: $1.81M
Tightest week
Week 10
Cash ends at $457K, $32K above the minimum
Receivables, end of March
$972K
$806K at the start of January
Days outstanding, end of March
49 days
Receivables as days of the last 13 weeks of billing
When insurers pay
What to try: raise Insurer B to 63 days and look at week 12.
When patients pay
The statement days count from the day the payer processes the claim. The rest of the balance is paid on a second statement four weeks later.
The January reset
What to try: at 10% there is no reset. The effect then fades over February, March and April.
Growth
More patients mean more billing, more receivables and a bigger supplies bill.
Payments and the cash floor
An instalment that falls after week 13 is outside the view and does not touch these weeks.
Cash from billing arrives in lumps, because claims go out once a month and each payer has its own speed. Payroll goes out every second week. This view lines the two up week by week and flags any week that ends under the minimum cash level.
Tightest week: week 10
What to try: raise the Insurer B days, or press Insurer B slows down, and watch which week drops under the line.
13-week cash, dollars in thousands. Brackets are cash going out. Scroll sideways to see every week.
| Week | 13 weeks | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Month | Jan | Jan | Jan | Jan | Feb | Feb | Feb | Feb | Mar | Mar | Mar | Mar | Mar | |
| Cash at the start of the week | 650 | 564 | 590 | 641 | 521 | 618 | 501 | 654 | 521 | 592 | 457 | 646 | 506 | 650 |
| Cash coming in | ||||||||||||||
| Public program | 0 | 0 | 211 | 0 | 0 | 0 | 166 | 0 | 0 | 0 | 181 | 0 | 0 | 558 |
| Insurer A | 0 | 0 | 0 | 0 | 184 | 0 | 0 | 0 | 146 | 0 | 0 | 0 | 158 | 488 |
| Insurer B | 0 | 130 | 0 | 0 | 0 | 0 | 132 | 0 | 0 | 0 | 104 | 0 | 0 | 365 |
| Patients | 0 | 37 | 0 | 20 | 0 | 22 | 15 | 7 | 13 | 5 | 64 | 0 | 48 | 232 |
| Total coming in | 0 | 167 | 211 | 20 | 184 | 22 | 313 | 7 | 159 | 5 | 349 | 0 | 206 | 1,643 |
| Cash going out | ||||||||||||||
| Payroll | 0 | (140) | 0 | (140) | 0 | (140) | 0 | (140) | 0 | (140) | 0 | (140) | 0 | (840) |
| Rent and software | (40) | 0 | 0 | 0 | (40) | 0 | 0 | 0 | (40) | 0 | 0 | 0 | 0 | (120) |
| Supplies | (46) | 0 | 0 | 0 | (47) | 0 | 0 | 0 | (48) | 0 | 0 | 0 | 0 | (141) |
| Device supplier instalments | 0 | 0 | (160) | 0 | 0 | 0 | (160) | 0 | 0 | 0 | (160) | 0 | 0 | (480) |
| Total going out | (86) | (140) | (160) | (140) | (87) | (140) | (160) | (140) | (88) | (140) | (160) | (140) | 0 | (1,581) |
| Net cash for the week | (86) | 27 | 51 | (120) | 97 | (118) | 153 | (133) | 71 | (135) | 189 | (140) | 206 | 62 |
| Cash at the end of the week | 564 | 590 | 641 | 521 | 618 | 501 | 654 | 521 | 592 | 457 | 646 | 506 | 712 | 712 |
| Above or below the minimum | 139 | 165 | 216 | 96 | 193 | 76 | 229 | 96 | 167 | 32 | 221 | 81 | 287 | |
What moves cash in one week
Week 10 starts with $592,270, takes in $5,040, pays out $140,000 and ends with $457,310.
Cash coming in, by bill
- Patients on Insurer B claims, second statement, November last year bill$5,040
Cash going out
- Payroll$140,000
What Insurer B's speed does to the tightest week
Every other setting stays as you have it. Press a number of days to move the slider there. The 13 weeks only see money that arrives by the end of March, so once Insurer B is slow enough that its January and February money lands after week 13, the tightest week stops moving while receivables stay high.
| Insurer B pays after | Tightest week | Cash then | Against the minimum | Receivables, end of March |
|---|---|---|---|---|
| Week 6 | $501K | $76K above | $830K | |
| Week 6 | $501K | $76K above | $972K | |
| Week 10 | $457K | $32K above | $972K | |
| Week 10 | $457K | $32K above | $972K | |
| Week 12 | $402K | $23K below | $972K | |
| Week 12 | $402K | $23K below | $1.08M | |
| Week 12 | $402K | $23K below | $1.08M |
A bill goes to the payer first. Each payer pays after its own number of days. Once the claim is processed, the patient is billed for their part and pays after the statement days, some on the first statement and the rest on a second one. Last year's bills keep the speeds they were actually paid at, so the sliders change only new billing.
What to try: move the Insurer B and statement sliders and watch the lower bars slide to the right. Then pick June and compare it with January.
The January bill is $594,000. Patients owe 30% of it. Half is in by day 35 and 90 percent by day 77.
- Public program
- Insurer A
- Insurer B
- Patients
| Who pays | Days after billing | Amount | Paid so far |
|---|---|---|---|
| Public program | 21 | $166,320 | 28% |
| Insurer A | 35 | $145,530 | 52% |
| Patients on Public program claims, first statement | 49 | $46,332 | 60% |
| Insurer B | 49 | $103,950 | 78% |
| Patients on Insurer A claims, first statement | 63 | $40,541 | 85% |
| Patients on Public program claims, second statement | 77 | $24,948 | 89% |
| Patients on Insurer B claims, first statement | 77 | $28,958 | 94% |
| Patients on Insurer A claims, second statement | 91 | $21,830 | 97% |
| Patients on Insurer B claims, second statement | 105 | $15,593 | 100% |
Share of the bill collected, week by week
The horizontal axis is weeks after the billing week.
By week 8: 78% of the January bill, against 93% in a normal month. By week 12: 94% against 98%.
Deductibles reset every January, so patients owe a larger share of each bill until they have met them. Patients pay later than insurers, so a larger patient share slows cash. The patient share below falls back to normal by May, and last year's bills (paid by patients at the normal share) are not affected.
What to try: raise the January patient share and watch the January and February bills collect more slowly.
Share of each bill that patients owe
In January patients owe $178,200 of the $594,000 billed. In May they owe $63,000 of $630,000. Within 8 weeks, 78% of January's bill is collected, against 93% of May's.
How much of each bill is collected within 8 and 12 weeks
| Month | Patients owe | Their share | In 8 weeks | In 12 weeks |
|---|---|---|---|---|
| Jan | $178K | 30% | 78% | 94% |
| Feb | $151K | 25% | 82% | 95% |
| Mar | $122K | 20% | 85% | 96% |
| Apr | $93K | 15% | 89% | 97% |
| May | $63K | 10% | 93% | 98% |
| Jun | $64K | 10% | 93% | 98% |
| Jul | $65K | 10% | 93% | 98% |
| Aug | $66K | 10% | 93% | 98% |
| Sep | $67K | 10% | 93% | 98% |
| Oct | $68K | 10% | 93% | 98% |
| Nov | $68K | 10% | 93% | 98% |
| Dec | $69K | 10% | 93% | 98% |
Receivables are what has been billed and not yet paid. Each month they equal the opening balance, plus what was billed, less the cash received. Days outstanding turns that balance into days of billing, using the last 13 weeks of billing.
What to try: slow Insurer B and watch the closing balance and the days outstanding rise, then look at who owes the extra.
Receivables at the end of each month
In January to March the network bills $1,809,000 and receives $1,642,883. Receivables go from $806,141 to $972,259.
| Month | Opening | Billed | Cash received | Closing | Days outstanding |
|---|---|---|---|---|---|
| Jan | 806 | 594 | (397) | 1,003 | 52 days |
| Feb | 1,003 | 603 | (527) | 1,079 | 55 days |
| Mar | 1,079 | 612 | (719) | 972 | 49 days |
| Apr | 972 | 621 | (463) | 1,130 | 56 days |
| May | 1,130 | 630 | (616) | 1,144 | 56 days |
| Jun | 1,144 | 639 | (880) | 902 | 43 days |
| Jul | 902 | 648 | (453) | 1,097 | 52 days |
| Aug | 1,097 | 657 | (630) | 1,125 | 53 days |
| Sep | 1,125 | 666 | (872) | 918 | 42 days |
| Oct | 918 | 675 | (453) | 1,141 | 52 days |
| Nov | 1,141 | 684 | (654) | 1,171 | 53 days |
| Dec | 1,171 | 693 | (908) | 956 | 42 days |
Cash received is shown as a negative because it reduces the balance. March, June, September and December have five weeks, so they collect an extra week of cash, and days outstanding dips in those months because earlier bills have had longer to be paid.
Who owes the receivables
At the end of March receivables are $972,259, or 49 days of billing.
| Who owes it | Owed | Share | Days outstanding |
|---|---|---|---|
| Public program | $195,840 | 20% | 33 days |
| Insurer A | $171,360 | 18% | 33 days |
| Insurer B | $235,463 | 24% | 63 days |
| Patients | $369,596 | 38% | 75 days |
Each line's days outstanding uses only the billing that line will pay, so a slow payer stands out even when it is a small part of the whole.
Everything starts from net revenue: the patients on the program each month, times a net amount per patient. The practices bill each month's revenue in the last week of that month. Each bill is split into the patient's share and the insurers' share. The insurers' share is divided 40% to the public program, 35% to Insurer A and 25% to Insurer B.
What to try: change the patients added each month and watch billing, receivables and the supplies bill move together.
| Month | Patients | Billed | Patient share | Patients owe | Insurers owe |
|---|---|---|---|---|---|
| January | 6,600 | $594K | 30% | $178K | $416K |
| February | 6,700 | $603K | 25% | $151K | $452K |
| March | 6,800 | $612K | 20% | $122K | $490K |
| April | 6,900 | $621K | 15% | $93K | $528K |
| May | 7,000 | $630K | 10% | $63K | $567K |
| June | 7,100 | $639K | 10% | $64K | $575K |
| July | 7,200 | $648K | 10% | $65K | $583K |
| August | 7,300 | $657K | 10% | $66K | $591K |
| September | 7,400 | $666K | 10% | $67K | $599K |
| October | 7,500 | $675K | 10% | $68K | $608K |
| November | 7,600 | $684K | 10% | $68K | $616K |
| December | 7,700 | $693K | 10% | $69K | $624K |
Net revenue is already after discounts the practices agree with payers and after the denials they expect, so every dollar billed here is a dollar expected to be collected. Only the timing is left to model.
With Insurer B paying after 49 days and patients owing 30% of the January bill, cash is lowest at the end of week 10, at $457K, which is $32K above the $425K minimum. Receivables end March at $972K, or 49 days of billing.
Checks that tie the views together
All 14 checks pass at the current settings.
- Each bill is fully accounted for: payer and patient shares add to 100 percentPassLargest gap 0.000000 points
- Receivables roll forward: opening plus billed less cash equals closing, every monthPassLargest gap $0.00
- Running billing less running cash equals the change in receivables since the start of the yearPassLargest gap $0.00
- Closing receivables equal what is still unpaid when each bill is followed on its ownPassLargest gap $0.00
- Receivables split by who owes them add to the totalPassLargest gap $0.00
- Cash rolls forward: each week starts where the last one endedPassLargest gap $0.00
- Cash at week 13 equals opening cash plus all receipts less all paymentsPassLargest gap $0.00
- Receipts by payer add to total receipts, every weekPassLargest gap $0.00
- Weekly receipts add to the monthly cash for January, February and MarchPassLargest gap $0.00
- The list of bills behind each week adds to that week's receiptsPassLargest gap $0.00
- The 13-week totals match the weeks, and net cash equals receipts less paymentsPassLargest gap $0.00
- A week is flagged below the minimum exactly when its cash is under the minimumPassLargest gap 0 weeks
- Supplier instalments add to the agreed total, and the ones inside 13 weeks match the payments shownPassLargest gap $0.00
- No number is missing or infinitePassEvery figure is a real number