Friends and Family and your Accounts Receivables
“The love of family and the admiration of friends is much more important than wealth and privilege.”- Charles Kuralt
One of the most important reports in evaluating the performance of a dental practice is the Accounts Receivables report. This report shows in detail the patients’ names and the amounts of money owed to the practice as estimated insurance payments and as patient payments. The goal of healthy accounts receivables is to have less than 10% of monies owed aged into 90 days. However, this percentage is often higher due to the sensitive nature of collecting money from people - especially friends or family members of the dentist or staff members. These amounts often sit on the report and age well past 90 days, making the report burgeon into a convoluted mess.
Because every friend or family member on the report has a story associated with the balance, it is impossible to hire a service to formally collect what is owed. If the practice has a Business Coordinator who is familiar with the people on the report and knows who to send a statement to or who to leave alone, it works for the time being… but what happens when that person is no longer there and the new hire looks at the report in angst?
“Don’t send statements until we go over the list. There are special circumstances and I don’t want some people receiving a collection call or a statement,” warned Dr. Niceguy. In Dr. Niceguy’s practice there were senior discounts, there were family member discounts, there were professional peer discounts, there were church member discounts and there were reduction in fee discounts for payment in full at the time of service. There was also unlimited free dentistry to all staff and their immediate families. When added to the write-offs for in-network insurance patients, the adjustments on the accounts were in the thousands monthly. It wasn’t any wonder that Dr. Niceguy struggled to make payroll every pay period.
There are many problems associated with discounts, but the biggest is not to collect in full from those that are receiving a discount (or reduction in fee). The purpose to providing a “discount” is to give an incentive to buy and pay at the time of service. Sending statements to people who have been given substantial discounts is counter to a sound collection system. If there isn’t an agreement in writing for how the debt is to be paid, do you really expect the debt to be paid?
Friends and family may expect a discount, but the communication needs to include that you expect to be paid for your services. Before considering giving discounts (reductions or adjustments) have your current standard fee schedule analyzed to determine if the fees are considered usual, customary and reasonable for the procedures provided and by the geographical area. If your fees are below what is being charged in the area, then you are already providing discounted dentistry. If you are an in-network provider for any preferred provider organizations, you are also providing discounted dentistry - so no additional financial courtesies are to be awarded to these groups. Placing a yearly cap such as $1,000 for each employee insures that everyone is receiving the same dollar value dental benefit and the practice is able to manage this expense.
If there are people on your accounts receivables report that you have no intention of collecting from, then adjust it off and decide if this is what you want to continue to do in the future. It is already certain that you cannot afford to give thousands away each month. If you do not bring value to the services that you provide no one else will either.
If you are giving multiple types of “discounts” consider limiting it to one standard “reduction in fee” based on the total of the treatment with payment at the time of service. If your fees are within UCR, a 5% reduction in fee is recommended. The possibility of giving a reduction in fee off of larger cases or doing a “no charge” adjustment on certain services is always a possibility when negotiating a “win win” situation. Using financing such as CareCredit with the 6 to 12 month interest free option is popular with patients, and you are paying the interest for the period they choose.
Want to learn how to set up systems at your front desk to insure patients are happy and you are getting paid? Call today and sign up for the Front Office Training or the Office Manager Training and learn the skills to get your accounts receivables under control.Forward this article to a friend
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