This ratio is calculated by dividing the total payments for a specific period of time by the total charges, with the write-offs deducted from the total charges.

The net collection ratio is calculated by taking the total payments received over a specific period and dividing that amount by the total charges, after subtracting any write-offs. This ratio gives insight into how effectively a medical practice is collecting payments on its services and reflects the efficiency of the billing process. It is an important metric because it allows healthcare administrators to assess the performance of their collections and identify areas for improvement.

In contrast, the gross collection ratio does not account for write-offs, and instead focuses solely on the total payments collected in relation to total charges. The accounts receivable ratio typically relates to how quickly outstanding debts are collected and does not involve deductions for write-offs. The cost ratio is concerned with the overall costs associated with delivering services rather than the collection of payments. Thus, the net collection ratio is correct in this context because it accurately reflects the adjusted payments based on actual collections after accounting for any write-offs.