What does ADRR measure?

ADRR, or Average Daily Revenue Rate, is a key metric in the healthcare financial analysis that focuses on the average number of days revenue is held in accounts receivable. This measurement gives insight into the efficiency of a healthcare organization’s billing and collections process. When the ADRR is properly calculated, it helps organizations gauge how effectively they manage their accounts receivable and how quickly they can turn services provided into cash flow.

By measuring the average days of revenue in accounts receivable, organizations can identify areas for improvement in their revenue cycle management. A lower ADRR indicates quicker collection cycles, meaning the organization is effectively converting its services into cash and maintaining better liquidity.

In contrast, the other options measure different aspects of operational performance. The average length of patient stay would relate to hospital capacity and patient care efficiency, while the average number of patients per day does not pertain to revenue collection directly. The average number of days until a patient is discharged is linked to patient care metrics rather than financial performance.