The top 6 reasons dentists have cash flow problems

2016 05 24 14 35 52 802 Mc Kenzie Sally 2016 400

Cash flow issues, unfortunately, are common in dental practices, especially these days. When cash flow isn't what it should be, dentists struggle to make ends meet and can't invest in the products and services that spur practice growth, leaving them feeling stuck and worried about the future.

If cash flow problems are holding your practice back, I can help you turn things around. I've put together a list of the six most common reasons dentists struggle with cash flow, along with tips to help you bring more money into your practice.

1. You haven't set up performance parameters

Sally McKenzie, CEO of McKenzie Management.Sally McKenzie, CEO of McKenzie Management.

I suggest you establish monthly measurements that quickly identify system inefficiencies to improve collections and, ultimately, cash flow in your practice. Put one person in charge of collections and have that team member report on the system during monthly planning meetings.

Not sure what performance parameters to measure? Here's what I recommend:

  • Accounts receivable total compared to net monthly production
  • Percent of accounts receivable over 90 days
  • Collection ratio -- percent of net production that was collected
  • Over-the-counter collections

Keeping track of these parameters allows you to detect small issues before they become major problems, improving collections efforts and increasing cash flow.

2. More than one person handles systems related to cash flow

This is a good way to create confusion among team members and raise your stress level. To ensure consistency, I suggest you make the team member who sets up financial arrangements also responsible for insurance processing, delinquent account follow-up, and billing.

3. Production numbers are down, and overhead is up

Even though you've been treating patients again for a few months now, chances are you haven't reached your preclosure production levels just yet -- and we all know lackluster production leads to an increase in overhead and cash flow issues.

This is frustrating, I know, but there are steps you can take to get production numbers back to or even above where they were. Here are a few ideas:

  • Develop a marketing plan designed to get more new patients in the chair.
  • Designate a treatment coordinator responsible for presenting treatment for all providers. This team member should be trained in sales and expected to obtain at least an 85% case acceptance rate.
  • Adhere to thorough diagnostic practices. This means routinely providing perio probing when performing a complete mouth diagnosis and taking necessary x-rays.
  • Train team members to provide exceptional customer service and to build a rapport with patients. They'll feel connected to your practice, making them more likely to go forward with treatment and to refer you to family and friends.
  • Focus on improving clinical efficiencies while maintaining quality. You'll free up time to take on more cases.
  • Get team members excited about the services you provide. Train them so they know how to talk about and promote your services.
  • Grow the hygiene department by implementing an interceptive periodontal therapy program.
  • Keep more services in-house. Adding services makes current patients happy, attracts new patients, and leads to an increase in practice production.
  • Train your scheduling coordinator to schedule your days to keep you productive. This team member also should monitor and call patients with unscheduled treatment with the goal of getting them on the schedule.

Trust me, making these changes is well worth the effort and will result in a boost in practice production and cash flow.

4. You hired too many people

This is all too common. When tasks aren't getting done, dentists think it's time to bring on a new team member. Usually, though, the problem isn't a lack of people. Rather, it's a lack of direction. There are no job descriptions to guide team members, so tasks fall through the cracks. Hiring a new person doesn't fix that; it just increases your overhead expenses.

Make sure you really need another employee before placing a job ad. Give team members the guidance they need to excel through job descriptions, proper training, and continual feedback. Your current employees will become more efficient and you'll likely find you don't need to add anyone to your payroll after all.

5. You don't offer third-party financing

Money is tight for patients, and many can't afford to write one big check for dental care. Third-party financing options like CareCredit allow patients to pay for treatment in small amounts each month, making it much more feasible. Patients get the care they need, your production goes up, and, instead of carrying balances, you get paid for the work you do right away.

6. Patients aren't aware of your financial policy

Putting together a financial policy doesn't do much good if patients don't know it exists. Use your policy to make it clear when payment is expected, leaving no room for confusion. I suggest you take the time to verbally tell patients about your policy as well as give them a physical copy to sign.

If cash flow problems are keeping your practice from thriving, now is the time to do something about it. Need more guidance? Don't hesitate to reach out. You also can check out my e-book on cash flow management.

Sally McKenzie is the CEO of McKenzie Management, a full-service dental practice management company. Contact her directly at 877-777-6151 or at

The comments and observations expressed herein do not necessarily reflect the opinions of, nor should they be construed as an endorsement or admonishment of any particular idea, vendor, or organization.

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