Dental Tribune U.S. Edition

By Sally McKenzie, CEO Six steps to financial solvency Remember the good ol’ days? You know, the ones in which your schedule was booked for months, the patients were flowing like champagne from a fountain and you were rolling in the green — or at least you thought you were. Then came the recession; it put a cork in the bubbly, made Swiss cheese of the schedule and as for cash flow, accounts receivables went from so-so to “uh-oh!” The truth is you probably have little or no idea what your receivables were before the economy hit the skids because you were most likely racing through your days too quickly to give nary a glance at the figure. And after all, enough patients were paying up front and in full. Ah yes, the good ol’ days. By the time 2008 rolled around, practices had come a long way in edu- cating patients about payment expec- tations. Gone were the days of patient- dictated payment plans, “I would like to pay $50 a month on my $1,200 bill, that way I’ll have it paid off in just two years. No problem, right?” Practices put their collective feet down and said goodbye to the banking business. Polices were not only adopted, they were actually implemented. Business staff became more confi- dent at explaining financial policies to patients and patients were more will- ing to accept them. Then economic circumstances changed and dental teams panicked. Three years later, it’s time to hit the pause button on practice panic and pay attention to what I’m about to tell you. We all know that the economy has undergone a series of changes and challenges over the last several years. That being said, the expec- tation remains: practice collections should yield 98 percent for treatment currently being performed. Should you be sensitive to your local economy? Absolutely, but not at the expense of the practice’s financial solvency. It’s time to issue a “col- lections correction” and get your accounts receivable back on track. But before you dig out, you have to dig in — into key practice reports that is. These are your guides to cash in the bank. Accounts receivable aging report All credit balances and all debit bal- ances should be included in this report. It is vital to understand how many dollars are outstanding at 30, 60 and more than 90 days. Because prac- tice costs for tracking and collecting old balances can far exceed the actual value of the account itself, this report should be printed monthly. Outstanding insurance claims report This identifies how many dollars in outstanding claims there are in each category: current, 30, 60 and more than 90 days. This report is crucial because the longer dollars remain outstanding in claims, the more costly it is to the practice. Print this report monthly. Many of today’s software systems allow you to track daily. Accountant earnings report This details exactly how many dollars are being written off in each category: accounting adjustments, insurance plan adjustments, professional cour- tesies, pre-payment courtesies, etc. This report should be monitored daily and monthly. Production by provider report This one allows you to track individ- ual provider production for each den- tist and hygienist. It is important to track individual production numbers to determine productivity. Typically, hygiene production should produce approximately 30 percent of the total production in an office. However, if exams are not included, the number tends to be lower. Production by code report This report gives you an opportunity to track how many times a specific procedure is done. This can be used to determine productivity, treatment acceptance rates and much more. Also, if the practice is utilizing spe- cial techniques, tracking the produc- tion by code will help to determine effectiveness, i.e., tooth whitening, periodontal aides, crowns, bridges and implants. Treatment plan report This identifies how many dollars are being presented to patients. Using this report effectively can identify your success rate in treatment acceptance. The formula for this is: dollars recom- mended divided by dollars accepted equals case acceptance rate. Your case acceptance percentage should be at least 85 percent. Once you’ve carefully reviewed these key practice financial reports, you’ll have a much better understand- ing of where your practice financials stand, and you are ready to follow the “Six Steps to Solvency.” Step No. 1: Revisit the financial policy A plan that is too rigid will not be effective in any economy. However, that doesn’t mean that you return to the days of patient-dictated financial plans. Pay attention to what patients are telling you, and if necessary, make adjustments. Consider incorporat- ing the following: • Establish a relationship with a treatment financing company, such as CareCredit. • Allow patients to build a balance on their account before begin- ning major treatment. • Allow patients to pay for larger cases in two or three installments over a specific period of time. • Offer a 5 percent discount if the case is over $500, paid in full and will not be submitted to insur- ance. • Make arrangements to bill the patient’s credit card on a recur- ring basis until the treatment has been paid in full. Orthodontic practices do this routinely. Step No. 2: Maximize over-the- counter collecting Before their visit, patients should be made aware of what is to be done and what fees they will be charged so they’ll be prepared to pay. Your financial coordinator/busi- ness administrator should be pro- fessional, matter-of-fact, positive and friendly, and should follow a well- rehearsed script in explaining the services, the charges and the pay- ment options. Additionally, a printout of services provided — along with anticipated insurance payment as well as amount of patient payment — should be given to patients at every visit. If a patient does not pay, give him or her a return envelope and say, “This will make it easy for you to mail us your check when you get home.” Step No. 3: Send bills daily rather than monthly Every statement should include a due date that is two weeks after the statement date. Make sure that there is a space for the responsible party to write in a credit card number and expiration date as a means of payment. A self-addressed payment envelope should also be provided. Step No. 4: Track insurance More specifically, track available ben- efits as well as uninsured procedures to calculate the anticipated insurance payment. Collect the patient portion at time of dismissal. After your soft- ware performs a validation process on each claim, claims should be sent electronically on the day of service. Each week generate a delinquent insurance claim report grouped by carrier so that one call can be made per carrier to check on all claims that are 30 days delinquent. Cash flow can be enhanced by tracking and processing secondary insurance; keeping signatures on file so that after EOB (explanation of ben- efits) is received, the patient portion may be calculated and a credit card automatically processed; auditing submitted claims and automatically aging them until they are either paid off or written off. Step No. 5: Follow up on delinquent accounts Delinquent account calls should begin one day past the due date on the first statement. The manner and tone used will greatly influence the effectiveness of the call. Therefore, set the tone as “working together to resolve this situation.” The caller’s key question should be, “When can we expect payment?” Enter highlights of the conversa- tion into the computer to keep a record of collection attempts. On the same day, follow up the phone con- versation with written confirmation. Finally, address the most critical col- Practice Matters DENTAL TRIBUNE | May 20118A (Image/Tasosk,www.dreamstime.com)