In my experience advising dental practices, I have found that the most successful practices do not necessarily have dentists with the most advanced clinical acumen or professional designations, but rather those who take most seriously the responsibilities of business ownership.
One of the most crucial indications of success is collections, the gross amount of money your business brings in each year. Certainly overhead, insurance write-offs, discounts, and staff salaries also play a role in your practice's success, but collections are a key component.
Additionally, collecting every dollar owed is crucial as practice owners are furthered burdened by other financial pressures of increased student loan debt and higher operational expenses.
Using data from Sikka Software's collection of numbers from more than 12,500 U.S. dental practices, we have been able to track this key metric. The takeaway message is that uncollected accounts receivable continues to grow, while the amount of money uncollected longer than 90 days has fluctuated.
|Average amount of accounts receivable per U.S. practice
|Average accounts receivable above 90 days per U.S. practice
However, rather than spend time on variables that are outside of our control, such as government intervention, education expenses, insurance networks, legislation, and others, here are five tips you can use today that can help mitigate this trend in your practice.
1. Make proper estimations of the patient portion at time of service
Many practices make the mistake of underestimating the patient's portion and consequently spend time chasing small balances that are cost-prohibitive for your practice and additionally create tension in the patient relationship.
By slightly overestimating the patient portion, you actually reimburse the patient for the difference. The psychology of patients getting paid by their dentist for treatment compared with ones that have to pay is an important distinction. Patients who get refunds are happier than those who get bills.
2. Collect the patient portion at time of service
If you do not ask, you shall not receive. Even when poorly implemented, this simple policy can move staggering amounts of bad debt into your current cash column.
Asking for payment is a mindset as well as a physical best practice. Your patients pay for everything else at the time of service. Why do you allow your business to be excluded? If you don't make the decision to ask, the patient makes it for you and walks out without paying.
3. Use third-party financing tools
“Your team will be relieved not having to chase payments from patients.”
I recommend to my clients that they have a variety of options available to accommodate patients with both good and poor credit scores, such as CareCredit, GreenSky, LendingClub, Docpay, and others.
If you choose options that allow you to automatically charge a patient's credit card or draft their checking account, it becomes out-of-sight and out-of-mind for both parties. You are helping your patients improve their health and accept your treatment, and your bottom line also will be rewarded. Your team will be relieved not having to chase payments from patients, and your billing expenses will decrease.
4. Consistently bill patient balances
Daily is best then weekly for billing. At the minimum, patients should be billed on a monthly basis. Any account on your accounts receivable list depreciates daily regardless of the reason. This clock starts ticking as soon as the patient walks out the door.
Develop a protocol that includes a series of steps and consequences if a patient chooses to not pay. Then take the time to ensure these best practices are implemented systematically. If your patients are not consistently reminded and motivated, they will quickly forget and will move onto other perceived higher priority activities.
I recommend having set, blocked times on the calendar for your team for this crucial activity. If you do not have the resources or the desire to do this in-house, consider hiring a company to do it for you.
5. Use incentives with your staff to achieve collection objectives
We all do things that drive us toward pleasure (financial reward) or away from pain (asking for money). If your staff has an incentive, then asking for money is easier. Once learned, it's like any other habit in that it becomes intuitive.
If you have the right people in place, share the success with your team. Paying this small investment has yielded large dividends for my clients.
Do you know what your collections look like? What does not get measured does not improve. Like hidden caries, an exam is required to find out where you stand.
Andy Cleveland has been working with individual and group practices on improving their revenue cycle for nearly 20 years. His websites are www.andycleveland.com and www.dentalpracticeninjas.com.
Please note that the data should be used for comparison only.
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