PRACTICE PLANNING TOOL

REVENUE-CYCLE CASH RUNWAY

See whether your practice can survive the wait for cash.

Model the gap between providing care and actually collecting the money—then estimate the working capital required while volume, billing, payer payments, denials, and patient balances stabilize.

✓Separate payer, denial-recovery, and patient-payment timing.

✓Account for credentialing exposure and services that may not be payable.

✓Find the cash low point before payroll or operating obligations are at risk.

Start with care delivered—not charges billed

Use completed encounters and the amount you realistically expect to collect after contractual adjustments. A posted charge or fee-schedule amount is not cash.

Patient-volume ramp

Completed encounters in month 1 ?

visits

Completed encounters at mature volume ?

visits

Months to reach mature volume

months

Expected net collections

Expected net collectible value per encounter ?

Payer portion of collectible value

Patient-responsibility portion

Payer and patient portions must total 100%.

Reality check: Patient responsibility is still revenue, but it does not behave like payer cash. Higher deductibles and coinsurance can increase both collection lag and write-offs even when the contractual allowed amount stays the same.

Model when collectible revenue becomes cash

Claims that are clean on first submission, claims requiring rework, and patient balances follow different paths. Enter realistic averages rather than best-case turnaround times.

Payer activation and claim timing

Months until payer billing is active ?

months

Payer services expected to remain payable during that gap ?

Average days from service to claim submission

days

Clean-claim rate ?

Average days from clean claim to payer payment

days

Deposit and payment-posting lag

days

Rework, payer leakage, and patient balances

Payer realization after normal write-offs ?

Recovery rate on claims requiring rework

Additional days for rework and recovery

days

Patient-responsibility collection rate ?

Patient collections captured at time of service

Average days to collect remaining patient balances

days

Credentialing caution: A submitted application, verbal estimate, or effective-date expectation is not the same as confirmed billing eligibility. If payable status is uncertain, use a conservative percentage for services delivered before activation.

Protect payroll and the minimum cash floor

Enter the cash that must leave the practice each month and the liquidity actually committed. Do not count hoped-for financing, undrawn investor money, or owner funds that are not available to the business.

Monthly cash obligations

Fixed monthly operating cash ?

Variable cash cost per completed encounter

Monthly debt and equipment payments

Available liquidity and reserve

Unrestricted business cash available at opening

Committed undrawn line of credit ?

Protected minimum cash floor ?

Why the reserve is separate: If a model consumes every available dollar before the revenue cycle stabilizes, one denial spike, payroll timing issue, payer hold, or construction overrun can create an immediate cash crisis.

Review the assumptions before relying on the result

The output is only as useful as the timing and collection assumptions entered. Replace estimates with payer, billing, credentialing, and banking evidence whenever available.

Cash-runway result

Required liquidity$0Modeled cash draw plus the protected floor.

Funding gap$0Compared with cash and committed credit entered.

Lowest cash before credit$0Projected unrestricted cash at the low point.

Sustained positive month—First of three positive monthly cash-flow periods.

Modeled cash draw$0Cumulative operating deficit before the cycle turns.

Month of lowest cash—The point of maximum liquidity pressure.

Collectible A/R after month 12$0Earned collectible revenue not yet modeled as cash.

Mature monthly collections$0Expected cash after modeled collection leakage.

Mature monthly cash flow$0Collections less fixed, variable, and debt cash needs.

Weighted collection lag0 daysApproximate timing across the collectible cash streams.

Month	Completed encounters	Collectible production	Cash collected	Cash obligations	Monthly cash flow	Ending cash before credit

Important: This tool provides general planning estimates only. It is not legal, accounting, tax, lending, credentialing, reimbursement, billing, clinical, or other professional advice and does not guarantee payer enrollment, payment, claim acceptance, denial recovery, collection timing, financing, or business performance. Results depend entirely on the inputs and simplified assumptions and may differ materially by payer, contract, specialty, service, location, billing workflow, patient mix, and applicable law. Confirm payer effective dates and billing eligibility in writing, validate revenue-cycle assumptions with qualified professionals, and maintain appropriate financial reserves. Do not enter protected health information or other confidential information.

Planning references: CMS Claims Processing Manual · CMS Enrollment Roadmap · CAQH Index