Two numbers came out of the same trace and the distance between them is the whole story.
Across 42,615 appointments at a multi-provider practice, the contracted value of the work was $8,610,169. The expected cash was $5,165,605.
Sixty cents on the dollar.
Why is expected cash lower than contract value?
Because the two measure different points on the path. Contract value is what the delivered work is worth under your payer agreements. Expected cash is what you can reasonably expect to collect once the position of each appointment is accounted for. Work that has not been billed, claims that have not adjudicated, and balances sitting with patients all carry collection risk that the contracted figure does not reflect.
What sits in the gap
Three different things, and practices routinely treat them as one.
Timing. Work delivered and not yet billed is worth its contracted amount and is not cash yet. Nothing is wrong. The gap closes on its own if the process runs.
Risk. A claim in adjudication may pay at contract, may pay short, or may deny. A patient balance collects at a lower rate than an insurance balance. That is not pessimism, it is what the collection curves say.
Loss. Work that will never be billed at all, because the filing window closed or the charge was never created. This portion of the gap does not close and it is the only one that is genuinely gone.
A practice that cannot separate those three is holding one number that means three different things.
Why the ratio is worth watching
On its own, sixty percent tells you almost nothing. Payer mix moves it. The share of self-pay moves it. Where the appointments sit in the pipeline on the day you measure moves it.
What it is good for is comparison against itself.
Run it the same way on the same window shape each quarter and the direction becomes readable. A realisation rate drifting down while payer mix holds steady means something is changing in how the practice converts work into money, and it will show up in that ratio a full quarter before it shows up in the bank.
It also compares across locations and providers. Two sites with the same payer mix and a ten point difference in realisation are running different processes, and the difference is worth finding.
The number most practices watch instead
Collections against charges. It is on every report and it answers a narrower question, because charges are what you billed rather than what you delivered.
Anything delivered and never billed is absent from both sides of that ratio. So a practice with a charge capture gap can post a perfectly respectable collections-to-charges figure while a meaningful share of its work never entered the calculation at all.
Contract value starts from the work. That is the difference, and it is why the two numbers can move in opposite directions.
How other industries carry the same two numbers
Every business that delivers work before being paid runs a version of this and most of them stopped confusing the two numbers a long time ago.
A law firm tracks billable work recorded and cash collected, and treats the distance between them as a managed number with its own name. Nobody in that firm mistakes recorded time for money, and nobody reports one as though it were the other.
A construction firm carries work in place against certified payments. Work in place is what has been built. Certified is what somebody has agreed to pay for. The gap is where disputes, retentions, and unapproved variations live, and a project manager who cannot break that gap into its parts is not managing the project.
Both fields learned the same lesson. One number tells you what you did. The other tells you what you got. Carrying only the second means you cannot see work that never made it into the billing process at all.
A practice measuring collections against charges is carrying only the second number. Contract value is the first one, and almost nobody in healthcare calculates it.
Found, fixed, and held
The find is a valuation exercise rather than a report. Take a closed month, price every appointment at its contracted rate whether or not it was billed, and set that against collections plus what you reasonably expect to collect.
The fix is splitting the gap into its three parts and acting only on the third. Timing resolves without you. Risk is priced rather than fixed. Loss is the only portion that stays lost, and it is usually the smallest of the three and the only one worth an intervention.
What holds it is running the same calculation the same way each quarter. The absolute ratio means little. The direction means a great deal, and it moves a full quarter before the bank account does.
One thing to settle before you start. Decide how you treat patient balances, because they collect at a different rate from insurance balances and a calculation that values both at face is describing something optimistic. Whatever you choose, apply it consistently, or the trend line stops meaning anything.
What this means for you
Take a closed month. Value every appointment at its contracted rate, whether or not it was billed. Then compare that against what you have collected plus what you reasonably expect to collect.
The gap will not be small and it is not supposed to be. What matters is how much of it is timing, how much is risk, and how much is work that will never be billed.
That third portion is the one worth finding, because it is the only part that does not resolve itself.
Grab 30 minutes with us. Prep nothing. We will value your own appointments at contract and show you how much of the gap is permanent.