All adjustments fall into two categories. Knowing which is which helps you separate what’s normal from what’s fixable. Contractual Adjustments These are the discounts you’ve agreed to with insurance companies. They’re built into your payer contracts and are part of the cost of doing business. They can’t be avoided—and they shouldn’t be feared. Think of them as the difference between your retail price and your contracted price. Write-Offs Write-offs are different

Many medical offices glance at their billed charges and assume that’s their income. It’s not. The real measure of your financial health is your Average Patient Charge (APC). Average Patient Charge tells you how much money you actually collect per patient visit, not what you billed. It’s the difference between thinking your practice is profitable and actually knowing it is.

When your “visit” metric mixes provider work with ancillary services, your data stops reflecting reality. Staffing plans, clinician compensation, and even hiring decisions all become distorted.

Beyond revenue and expenses, three often-overlooked factors tell a powerful story about a practice’s financial health: fee schedules, adjustment percentages, and patient cancellations.