Get paid for what you do!
Dr. Brent Loftin– Case Study #410
Many dental offices are struggling right now with treatment acceptance from their patients. Dr. Loftin contacted McKenzie Management to indicate that not only was case acceptance down, but so were his collections. Computer reports were generated and the following was reviewed:
Dr. Loftin’s practice statistics
Why Are these Statistics Important? A healthy practice should be collecting 98% of “net” production. Net production is your total charges to the patients less any adjustments that affect these charges, such as courtesy adjustments, insurance adjustments, bad debt write-offs, etc. Net collection is your total revenue paid from the insurance companies and the patients, less any refunds or NSF checks that are uncollectible.
Net Collections / Net Production = 98% or better. Dr. Loftin’s is 87%. A healthy practice should have an Accounts Receivable to Net Production Ratio of 1:1 or less. It is imperative that this report NOT include credit balances, as it inaccurately reduces the balance, illustrating a false total. Accounts Receivable / Net Production = 1.0 or less. Dr. Loftin’s is 1.63. Accounts Receivables over 90 days should be 12% or less. Dr. Loftin’s is 20%.
If the A/R Report is generated without the credit balances, the last line of the report should accurately “age” the balances, showing the percentage that is 90 days or more old. Over the Counter Collections – for a family practice that accepts insurance assignment, the revenue that is collected at the time of service should be around 45% of net production.
To more specifically determine what Dr. Loftin’s practice should be collecting, he divided his total payments less the insurance payments by the total net production. This reflects the amount that should be collected when the patient is in the office that the insurance does not pay. $23,625 / $87,500 = 27% - should be 45%. With this information, Dr. Loftin is now able to determine that his Schedule Coordinator is not collecting enough money at the time of service. Therefore, it is affecting all the benchmarks mentioned above.
When a practice elects to accept the “assignment of benefits,” it becomes necessary to determine to the best of the Financial or Schedule Coordinator’s ability how much the insurance is going to pay without wasting the time to send a pre-authorization. This step only delays the schedule process with the patient, and think about it, when is the patient going to be the most motivated to schedule a crown? The day they see the large crack on the intraoral camera or two weeks later when you call them with the insurance information?
With this understanding, placing calls or requesting the information from the insurance company’s website is necessary to determine the patient’s deductible, limitations, waiting periods, maximum, etc. Along with the fee that is allowed, if the plan is a PPO, an estimate can be made of how much the insurance will pay.
A Financial Arrangement Form must be completed for the patient’s next scheduled appointment. This form should include the following information:
This signed form should be scanned or copied and placed in the patient’s chart. An appointment note should be made indicating how much the patient has agreed to pay and a note made in the Guarantor/Account notes in the computer for reference.
When the patient is dismissed to the Financial/Schedule Coordinator for their next scheduled appointment, a review of the procedures, fees and patient’s portion should be reviewed and the FA form should be completed at that time. In addition, the expected amount of payment from the patient should be written on the back of the appointment card as another reminder.
The use of the FA form eliminates any confusion over what the treatment is or how much the patient is to pay at the time of service. The patient also understands that this is only an estimate and once the insurance remits their payment, any additional balance will be requested or a refund check will be issued. Therefore, when the patient is checked out the amount of payment has already been discussed and the patient understands how much they are responsible for.
Within six months, Dr. Loflin’s A/R was reduced to less than 1x his net production, his over 90 days accounts were reduced to 11% and his over the counter payments were increased to 42%. His collections to production percentage was over 100%, as his Financial Coordinator was now collecting past due balances as well as the appropriate amount from the patient at the time of service.
If you find that you are still staying productive chair-side but the revenue isn’t coming in as it should, look at the above statistics in your office and implement a Financial Arrangements Form for each patient visit. Watch your revenue skyrocket!
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