Personally, I have never walked into a dental practice that also doubled as a bank or shared any office space with a bank. However, in seeing some of the biggest mistakes that dentists have made since I came into the industry in 1999, treating a dental practice just like a bank has been by far one of the biggest blunders I have witnessed.
Your patient walks in for an implant. You do the work and charge him or her $3,000. At the front desk, he or she puts down $500 and walks out still owing you $2,500. You put it on the books and get monthly payments from the patient. Eventually, after six months, you have all of the money you were owed at time of service.
As the old Geico commercial says, “That’s not how this works. That’s not how any of this works.”
You see, your dental practice was created as a business to help improve the oral health of your patients. It was not created to be a business where patients owed you money for extended periods of time. That’s why CareCredit and other patient financing services were created. These businesses help your patients afford the care they deserve if they are having financial difficulties. Your job is oral health. Their job is financing.
Yet so many dental practices seem to be in the financing business. There’s nothing wrong with taking pity on a patient who can’t pay for everything all at once. There is something wrong with letting him or her walk out the door without having a solid plan to have the money paid in a very quick manner.
Your account receivables tell a story. It tells how big of a bank your dental practice has become, especially when you look at the amount of money that is owed to your practice after more than 90 days.
Those are the numbers we’re going to look at in today’s article. So what is the amount of A/R that the average dental practice has on its book for more than 90 days? How does the average practice’s A/R compare to its gross production? To find this out, we took data from Sikka Software over the last seven years. The data we are using for this comparison has been collected by Sikka Software from more than 12,500 dental practices from around the United States.
Here are the numbers…
A/R above 90 days
2011 — $41,111.14
2012 — $48,579.92
2013 — $51,584.39
2014 — $52,571.54
2015 — $49,598.06
2016 — $47,736.21
A/R to gross production
2011 – 78.29%
2012 – 85.28%
2013 – 92.98%
2014 – 98.66%
2015 – 101.27%
2016 – 94.79%
Do you know what your A/R is for more than 90 days? Do you know how it compares to your overall gross production? These are key numbers for any dentist to know. After all, they directly affect the health of your business.
So how can dentists cut down on the A/R in their practices? Andy Cleveland, dubbed as the A/R Ninja, has some advice. Below, he gives 10 pieces of advice to help you reduce your A/R.
- Pre-estimate insurance but do so by overestimation. If a practice is going to make a mistake, make it on the higher end so that the practice is sending refunds instead of statements. Who doesn’t like to get paid by their dentist?
- Offer a prepaid discount. Offer a discount if patients pay when they schedule the appointment (prepaid) or give a discount if they pay by check or cash so they don’t have merchant card fees. Make it appealing for the patient to pay ahead of time. Even if you lose a little profitability, it is nominal compared to what you will lose by having uncollectible A/R on your books.
- Ask for payment in full at check out. Regardless, ask for the balance in full at check out, regardless of your staff’s perception if the patient has the money or not. You will be amazed at how many people will pay just by asking and it gets easier with each occurrence as the patient realizes payment is expected at the time of service. Furthermore, you can incentivize your staff to do so by giving them an incentive based on collections or key metric if you like. Just saying thank you and communicating to your staff how much you appreciate them can be a game-changer too.
Note: If you’d like a sample script, drop me a line at arninja@andycleveland.com.
- Offer different forms of financing. Use two or three different companies to help finance the patient but also prepare to make a payment plan with patients in-house as they may not qualify for traditional financing. Doing this selectively will create patient loyalty and allow them to accept the treatment that they need boosting your case acceptance. By doing this, you are elevating the patient’s needs over your own and they are more likely to stay with you and refer too.
- Bill frequently, the more the better. Consider billing on a net 15 or net 10 basis instead of the customary, waiting 30 days. The squeaky wheel gets the grease and by being more top of mind than all their monthly obligations you will naturally get more payments.
- Consider contacting your patient on their preferred medium. Some prefer paper, call, text, etc. Each patient and practice are different. Do what is most convenient for the patient. Also, having a payment portal on your website is a huge bonus, allowing patients to pay you 24/7 without having to call in or always forgetting to mail a check. No embarrassment just payments.
- Have different staff call your patient. If your patient relates really well to the hygienist, or a front desk person, insurance coordinator, etc., use those resources to call patients, connect with them and get paid. Different patients will react better to a different personality type so utilize this to your advantage.
- Hire a company (like ours) to do a lot of the contacting for you so you are not the “money-hungry” dentist. If you find your staff is contacting your patients frequently, it’s time to outsource and let someone else be the bad guy and let the office do what they do best. There are a million things that they can do with their time that is more profitable than constantly chasing money.
- Connect emotionally with the patient and relate to them intimately. If they see you as family, a friend, or as an integral part of their healthcare regimen they are more likely to pay you rather than you just being classified as another vendor or company that they owe.
- Smile and be friendly. Kindness goes a long way. Emphasizing with care to the patient and talking to them placing value on the relationship will have a tremendous effect on your bottom line.
Note: Want to learn more about what Sikka Software can do for your practice? Practice Mobilizer is the free app that lets you send HIPAA-compliant video messages, track patient arrival times, provides zip code specific fee data and more. Learn more here: www.practicemobilizer.com.
This article was originally published September 26, 2017 in DentistryIQ. You can view the original article here: http://bit.ly/2xxOynW
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