Healthcare Practices’ Accounts Receivable Cycles Are Getting Longer, K-38 Consulting Reports
RALEIGH, N.C. — October 13th, 2026 — Medical practices are waiting longer to get paid for the same work, and K-38 Consulting says the trend is accelerating in ways many practices haven’t fully priced into their cash flow planning. According to industry data, Days in Accounts Receivable trended up by 2.4 days at the industry-wide median in 2026, driven largely by Medicare Advantage prior authorization backlogs and claims pending medical record review. The Medical Group Management Association benchmark for healthy Days in AR sits under 40 days, with top-performing practices operating at 30 to 35 days — but national data shows most practices now carry between 35 and 55 days, with the gap between average and top-performing practices widening.
“A couple of days might not sound significant, but multiply that across a full year of billing and it’s real money sitting outside the practice’s bank account,” said Dallas Alford IV, CPA, Founder of K-38 Consulting. “For a practice billing $5 million annually, a 10-day reduction in AR days frees up roughly $137,000 in working capital. The reverse is also true — a 10-day increase ties up that same amount of cash the practice could otherwise be using.”
Why Denials Are Driving Much of the Increase
K-38 Consulting says the primary driver behind lengthening AR cycles is a rising claim denial rate. Initial claim denial rates reached 11.8% industry-wide, up from 10.2% just a few years earlier — and each denied claim adds an estimated 15 to 30 days to the accounts receivable cycle due to rework, resubmission, and payer review delays. That delay compounds specifically in specialties facing the heaviest prior authorization burden: cardiology, orthopedics, and oncology practices absorbed a disproportionate share of the 2026 AR days increase, driven by payers deploying AI-driven audit tools at greater scale.
“A denial doesn’t just delay one claim — it retroactively ages that claim back to the original date of service,” Alford said. “That’s part of why practices can see their AR days creeping up even when their front-office team hasn’t changed anything about how they’re submitting claims. The payer side of the equation has gotten more aggressive, and practices need to respond to that shift directly.”
Why the Average Number Can Be Misleading
K-38 Consulting says a practice’s overall Days in AR figure, even when it looks reasonable, can mask a more serious concentration problem. A practice with a 38-day AR average — comfortably within the MGMA benchmark — can still have 25% of its total receivables sitting past 90 days, if that aging is concentrated in a relatively small number of high-dollar claims. The average tells a practice there’s a problem; an aging report by payer and denial category tells the practice where to actually apply pressure.
“Looking only at the average AR days number is like checking your temperature without knowing where the infection is,” Alford said. “Practices need the aging breakdown, not just the headline number, to actually fix what’s driving the delay.”
Where the Delay Actually Starts
K-38 Consulting says most AR delays originate before a claim is ever submitted, not after. Incorrect or incomplete patient information, failure to confirm insurance eligibility before the visit, and missed prior authorization requirements are common front-end failures that lead directly to denials or rework on the back end. CMS has also tightened operational prior authorization expectations for 2026, adding further complexity to a process that already accounts for a significant share of AR delays.
“The instinct when AR days start climbing is to add staff on the collections side, chasing already-delayed claims harder,” Alford said. “That helps, but it’s treating a symptom. The more durable fix is tightening the front-end process — eligibility verification, authorization confirmation, clean claim submission — so fewer claims end up delayed in the first place.”
What K-38 Consulting Recommends
Based on the patterns it sees among healthcare clients, K-38 Consulting recommends practices:
• Track AR days alongside an aging report broken out by payer and denial category, rather than relying on the aggregate average alone, since concentration in a small number of aged claims can hide inside an otherwise acceptable overall figure.
• Confirm eligibility and prior authorization before the visit, not after a denial, since most AR delays originate in front-end process gaps rather than back-end collections effort.
• Prioritize a formal denial management strategy, tracking top denial reasons and payer-specific patterns, rather than treating each denial as an isolated administrative task.
• Model the working capital impact of AR days directly, translating the metric into real dollars tied up or freed, to make the financial stakes concrete for practice leadership.
• Benchmark against specialty-specific norms, since prior authorization burden and typical AR days vary meaningfully across specialties, particularly for cardiology, orthopedics, and oncology practices facing the heaviest current pressure.
How K-38 Consulting Supports Healthcare Practices
K-38 Consulting’s healthcare CFO services help medical practices build the cash flow management discipline needed to catch AR trends early and connect revenue cycle performance directly to the practice’s overall financial picture. This work is part of the firm’s broader outsourced CFO services, helping practice leadership understand not just that AR days are rising, but exactly where the pressure is concentrated and what it’s costing the business in real working capital.
“AR days is one of those metrics that’s easy to watch drift upward without anyone sounding an alarm, because no single denied claim feels like a crisis,” Alford said. “But the cumulative effect on a practice’s cash position is significant, and the practices that manage it proactively are in a fundamentally stronger financial position than the ones treating it as background noise.”
About K-38 Consulting
K-38 Consulting provides fractional and outsourced CFO services, controller services, and tax strategy — including R&D tax credit and cost segregation services — to startups and midsize businesses across the country. The firm serves clients in SaaS, biotech, healthcare, law, ecommerce, CPG, construction, and real estate, delivering the financial leadership, forecasting tools, and strategic guidance typically available only to companies with a full in-house finance team. K-38 Consulting is headquartered in Raleigh, North Carolina, with clients nationwide.
Media Contact: K-38 Consulting 3809 La Costa Way, Raleigh, NC 27610 (910) 262-4412 (https://k38consulting.com)
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