Glossary
The Measures, in Plain Language
29 terms that show up in operating reviews, payer conversations and consulting decks, written for a practice owner rather than for a consultant. What it means, how it is calculated, and why it matters.
Money coming in
Net collection rate
Of the money you were actually allowed to collect, the share you did collect. If your payer contract says $200 and you collected $180, that is 90 percent.
Why it matters: Anything under about 95 percent usually means claims are being written off that could have been worked.
Gross collection rate
What you collected divided by what you billed. Because billed charges are usually set well above contract rates, this number moves when you change your fee schedule, not when you get better at collecting.
Why it matters: Useful for trend lines, misleading as a scorecard. Net collection rate is the honest one.
Days in A/R
The average number of days between doing the work and having the cash. Add up what is owed to you and divide by your average daily charges.
Why it matters: Every 10 days you take out is real cash sitting in your account instead of a payer's.
Denial rate
The share of claims a payer rejects the first time you send them.
Why it matters: Denials cost you twice: once in delay, once in the staff time to rework them.
Revenue cycle (RCM)
Everything between a patient booking an appointment and the last dollar for that visit landing in your account: eligibility, coding, claim submission, denials, patient balances.
Fee schedule
The list of prices you bill. Payers pay their contracted rate regardless, so your fee schedule mostly matters for self-pay patients and for out-of-network work.
Payer mix
The split of your volume across commercial insurance, Medicare, Medicaid, and self-pay. Two practices with identical volume can have very different income because of it.
Contract rate / allowable
The amount a specific insurer has agreed to pay you for a specific code. It is negotiable more often than most owners assume.
Money going out
Margin
What is left after every cost of running the practice, including what you pay yourself as a clinician. It is the number that tells you whether the business works.
Overhead ratio
Total operating cost divided by total collections. If you collect $2M and spend $1.3M running the place, your overhead is 65 percent.
Why it matters: Comparisons across specialties are close to useless. Compare your own number to last year.
Cost per encounter
Total operating cost divided by number of visits. It shows whether growth is actually making you money or just making you busier.
Fixed vs. variable cost
Fixed costs happen whether you see patients or not: rent, salaried staff, software. Variable costs move with volume: supplies, implants, some labor.
Why it matters: Fixed costs are why an underfilled schedule hurts so much more than it looks like it should.
Provider compensation model
The rule that decides how partners and employed clinicians get paid: salary, share of collections, productivity units, or some blend.
Why it matters: It quietly determines which behaviors your practice rewards.
Capacity and access
Access
How quickly a patient who wants to be seen can actually be seen. Usually measured as days to the third available appointment.
Third next available
The wait until the third open slot on a provider's schedule. The first two openings are often cancellations, so the third is the honest read.
Panel size
The number of patients who consider a given clinician their doctor.
Utilization
The share of your available clinical capacity that gets used: rooms, chairs, operating time, provider hours.
No-show and cancellation rate
The share of booked appointments that do not happen. Each one is a fixed cost you already paid with no revenue against it.
Throughput
How many patients move through a session without the day running late. It is a room, staffing, and sequencing question more than a speed question.
Ownership and structure
Independent practice
A practice where the clinicians own the business and control clinical and operating decisions.
Private equity (PE) rollup
An investor buys practices in a specialty, combines them, cuts cost, and sells the combined group in roughly three to seven years.
Why it matters: The first check is real. What matters is what your second-bite equity and your daily autonomy look like after.
MSO (management services organization)
A company that owns the non-clinical side of a practice, billing, HR, real estate, contracts, while clinicians keep the clinical entity.
EBITDA
Earnings before interest, taxes, depreciation, and amortization. Buyers use it to price a practice, usually after adding back an assumed market salary for the owners.
Why it matters: Improving operations raises the number a buyer would pay, whether or not you ever sell.
Multiple
The factor applied to EBITDA to set a purchase price. A 6x multiple on $1M of EBITDA is a $6M valuation.
Second bite
The rolled-over equity you keep after a sale, which pays out when the investor sells again. It is a projection, not a guarantee.
How we work
Operational baseline
A measured snapshot of where your practice actually stands today across access, revenue cycle, staffing, capacity, and operations, before anyone recommends changes.
Margin recovery
Finding money the practice already earned but is not keeping: underpaid contracts, unworked denials, unfilled schedule time, avoidable cost.
90-day plan
A short, ranked list of changes with owners, dates, and the dollars each one is expected to return.
Fractional COO
An experienced operations leader working your practice on a set weekly cadence instead of as a full-time hire.
See these measures against your own practice
The Operating Baseline produces every measure on this page for your practice, with a target for each and a 90-day plan for the gaps.