Days sales outstanding: what your DSO is really measuring.
DSO is the average number of days it takes to collect a dollar after you bill it. It is the single clearest early signal of a cash-flow problem forming.
The formula, and the common mistake
Total AR net of contractual adjustments, divided by average daily net revenue, gives DSO in days. The frequent error is using gross billed revenue instead of net, which inflates the number and hides real trend movement.
Use net revenue and a 90-day trailing average so a single heavy or light billing week does not distort the reading.
Benchmarks
Under 35 days is strong. 35 to 50 days is typical for a Medicaid-heavy home-care agency. Over 50 days needs attention, and over 60 days is usually a symptom of stuck denials or unworked AR. These are illustrative industry ranges, not Reeve results.
What drives it by payer
Medicaid fee-for-service commonly adjudicates in 21 to 30 days. Managed-care Medicaid runs 30 to 45. Private pay runs 60 to 90. Your payer mix sets your floor, and comparing your DSO against a single benchmark without accounting for mix will mislead you.
The four things that push DSO up
Submission lag, meaning the gap between service date and claim submission.
Denials and rework, meaning claims that go out, come back, and only pay on the second or third pass.
Unworked denials that never get written off, sitting in AR because nobody has closed them.
Authorization holds, meaning claims that never went out because the auth was not in place at billing.
How to use it
DSO leads a cash problem by 30 to 60 days. It is a warning light. AR aging is the diagnostic that tells you why.
In diligence and lending contexts, Medicaid claims older than about 180 days are usually treated as uncollectable regardless of what the AR report says.
Plain answers, on the record.
Collect is money you never captured. Cover is money a payer can still take back.
Reeve reports the two separately and never adds them together, because only one of them is yours to go and get. The Margin Review reads both on your own export and costs nothing.
One pass over your own export, in your browser. The findings are yours to keep, with no obligation.
The recovery lane. Care you delivered and never billed, units short of what was authorized, lines paid under the published rate.
Everything in Collect, plus the exposure lane. Retired codes, authorizations at the end of their period, care delivered past what was approved.
Month to month, no annual contract. Read-only in every tier. Run the free review.
See what your DSO is really telling you.
The Margin Review reads a closed period against authorization and payer clocks and returns the recoverable dollars driving your DSO up.