Cost to Collect
Cost to collect measures what a practice spends to collect its revenue. Formula: total revenue cycle cost ÷ total payments collected, expressed as cents per dollar or a percentage. It captures the efficiency of the whole billing operation — staff, technology, clearinghouse, and outsourced fees — and is a core benchmark HFMA uses to compare revenue cycle performance.
- Formula
- Total revenue cycle cost ÷ total payments collected
- Expressed as
- Cents per dollar collected, or a percentage
- Includes
- Staff, technology, clearinghouse, outsourced fees
- Owner
- Practice leadership / RCM director
What is cost to collect?
Cost to collect tells you what it costs to turn services into collected cash. It rolls up everything the revenue cycle consumes — staff, software, clearinghouse, statements, merchant fees, outsourced billing — against the dollars you actually collected. It is the efficiency counterpart to net collection rate: one measures how much you collect, the other measures what that collection costs you.
How do you calculate it?
The formula is total revenue cycle cost ÷ total payments collected, usually stated in cents per dollar or as a percentage.
Worked example: over a year the billing operation costs $250,000 — salaries, PM software, clearinghouse, statements, and merchant fees — and the practice collects $5,000,000. Cost to collect = 250,000 ÷ 5,000,000 = 5 cents per dollar (5%). Track it annually and trend it, and be sure the numerator captures the full cost so you are not comparing an incomplete figure against HFMA benchmarks.
How do you lower it responsibly?
- Raise first-pass yield. Claims that pay on the first try cost almost nothing; reworked claims are where cost piles up.
- Cut avoidable denials. Every prevented denial removes ~$25 of rework from the numerator.
- Shorten charge lag and A/R days. Faster cash means less follow-up labor per dollar.
- Automate posting and statements so staff time goes to exceptions, not routine keying.
Frequently asked questions
Cost to collect is the total cost of running your revenue cycle divided by the payments you collected, usually expressed as cents per dollar. If it costs $250,000 in billing operations to collect $5,000,000, your cost to collect is 5 cents per dollar, or 5%. It measures how efficiently the whole billing operation converts services into collected cash.
Include the full cost of the revenue cycle: billing and A/R staff salaries and benefits, practice management and clearinghouse software, statement and postage costs, merchant fees, and any outsourced billing or collection agency fees. Leaving out technology or outsourced fees understates the true number and makes comparisons against benchmarks misleading.
Not by itself. Cutting cost to collect by understaffing denial work can raise cost to collect's ugly twin — lost revenue — so read it alongside net collection rate and denial rate. The goal is efficient collection, not cheap collection: a slightly higher cost that lifts net collection rate several points is usually the better trade.
Sources & further reading
Reviewed by the ImmediCare Solutions RCM team
Certified billers and coders handling claims across 50+ specialties nationwide. This entry is reviewed against current payer policy and CMS rules. Last review: Jul 5, 2026.
Stop losing revenue to problems like this.
A free billing audit shows exactly where your practice is leaking money — no cost, no commitment.
