Healthcare analytics terms, defined.

AR aging (accounts receivable aging) is a breakdown of a medical practice's outstanding claims by how long they have been unpaid — typically segmented into 0–30, 30–60, 60–90, and 90+ day buckets — used to assess billing health and predict collection risk.

Capitation is a healthcare payment model in which a physician or practice receives a fixed per-member-per-month payment for each enrolled patient — regardless of how many services that patient uses — shifting financial risk from payers to providers.

Collection rate is the percentage of its contractually entitled revenue — net of payer adjustments — that a medical practice actually collects, measuring the overall effectiveness of its billing and collections process.

A CPT code (Current Procedural Terminology code) is a standardized five-digit numeric code maintained by the AMA that identifies a specific medical service or procedure, used by physicians to document what was done in an encounter, trigger a billing event, and calculate the wRVU value of the service.

Days in AR (days in accounts receivable, or DAR) is the average number of days it takes a medical practice to collect payment after services are rendered, calculated by dividing the total AR balance by average daily net revenue — a measure of billing cycle speed and efficiency.

Denial rate is the percentage of medical claims submitted to an insurer that are denied payment — either on initial submission or after appeal — and is one of the primary leading indicators of revenue cycle health when segmented by payer, CPT code, and denial reason.

EBITDA normalization in a healthcare practice acquisition adjusts reported earnings before interest, taxes, depreciation, and amortization for one-time items, owner compensation anomalies, and discretionary expenses to produce a sustainable run-rate EBITDA that reflects what a new owner would actually earn.

EHR data extraction is the process of retrieving structured clinical, scheduling, and billing data from an electronic health record system — through API connections, database exports, or file-based extracts — for use in analytics, reporting, or data integration workflows outside the native EHR interface.

Fee-for-service (FFS) is the dominant healthcare payment model in which a medical practice is paid a separate amount for each service rendered — each office visit, procedure, or test billed individually to the payer using CPT codes.

MGMA benchmarks are national physician compensation and productivity standards published annually by the Medical Group Management Association, used by medical practices and healthcare investors to evaluate physician performance relative to specialty peers and to set compensation plan targets.

Net revenue per visit is the average amount a medical practice actually collects per patient encounter after all payer adjustments and write-offs — a composite metric that integrates reimbursement rates, payer mix, visit complexity, and billing efficiency into a single per-encounter figure.

Payer concentration is the degree to which a medical practice's revenue depends on one or a small number of insurance payers, creating financial and negotiating risk when a dominant payer reduces reimbursement rates, narrows its network, or terminates a contract.

Payer mix is the distribution of a medical practice's patient encounters and revenue across insurance categories — commercial, Medicare, Medicaid, and self-pay — which directly determines the practice's average reimbursement rate and revenue per visit.

Practice EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is the operating cash flow measure used as the primary valuation basis in medical practice acquisitions, calculated from net revenue minus operating expenses and normalized for physician owner compensation adjustments.

Prior authorization (PA) is the process by which a physician or practice must obtain advance approval from an insurer before providing a specific service or procedure — failure to obtain it before the service date typically results in a claim denial that is difficult or impossible to overturn.

Provider concentration risk is the degree to which a medical practice's revenue depends on one or a few individual physicians, creating acquisition and operational risk if those physicians retire, depart, or reduce hours after the ownership transition.

The revenue cycle in a medical practice is the end-to-end process by which clinical services are converted into collected payments — spanning patient scheduling and insurance verification through charge capture, claim submission, payer adjudication, denial management, and final collection.

Value-based care (VBC) is a healthcare payment model that ties physician and practice reimbursement to patient outcomes, care quality, and cost efficiency rather than service volume — shifting financial incentives from how much care is delivered to how well it is delivered.

A work relative value unit (wRVU) is a standardized measure of physician clinical effort assigned by CMS to every CPT procedure code, used as the basis for physician productivity tracking and productivity-based compensation models in ambulatory medicine.

A wRVU benchmark is a specialty-specific standard for physician annual productivity in work relative value units, published by MGMA, used by medical practices and healthcare investors to compare individual provider output against national percentile norms for their specialty.