One of the most common questions we get from our nursing home clients is, “How does my facility’s bad debt expense as a percentage of revenue compare to industry averages?”
When we put together our recent “Benchmark Report for Skilled Nursing Facilities in Maryland,” we gathered statistics concerning accounts receivable and bad debt. A deep analysis of data from more than 200 Maryland skilled nursing facilities revealed the bad debt expense as a percentage of revenue as a statewide average, as well as by region.
[Click graph to enlarge.]
You will see that the most recent round of data (far right column, 2014) shows the industry average for bad debt expense as a percentage of revenue as 1.70% (equates to lost cash of approximately $1,700 for every $100,000 of revenue earned). The Baltimore and Washington metro regions are experiencing a bad debt percentage that exceeds the statewide average, while the central Maryland, non-metro and western Maryland regions fall below the statewide average when it comes to bad debt expense as a percentage of revenue.
There are all sorts of reasons why one skilled nursing facility’s percentage might differ from that of another facility, even one that’s right down the road. After all, it’s up to the individual facility’s management to determine what and how much gets written off. In other words, collection philosophies vary.
Let’s take a look at what it might mean if your rate is above or below the industry average. This all assumes, of course, that you are properly recording your facility’s projected bad debt expense in the first place.
If your bad debt percentage is above industry averages:
If your bad debt percentage is lower than industry averages:
Contact us online or call 800.899.4623.23 to discuss your skilled nursing facility.
Published on June 27, 2016