Job Descriptions - Why Does It Really Matter?
Dr. Jamey Gleason – Case Study #211
One of the twenty-plus business operational systems of a dental practice is “Accounts Receivables” - the money that all your patients owe you, including their outstanding insurance claims.
Dr. Gleason was under the impression that his A/R was okay, understanding that “industry standards” indicate that if your A/R is no more than 1x your “NET” production, you are good to go.
Upon closer study of his report, this is what he learned:
Lesson #1 – Do Not Include “Credit” Balances
Be careful when reviewing an individual patient’s account within an account. The patient could have a credit balance and another family member could have a debit balance that offsets the credit. Most software programs will make the transfers between family members automatically and some must be performed manually. This transfer should be conducted as soon as the credit balance is noted.
Why is it important to eliminate the credit balances? Because the credit balances REDUCE your true A/R! See example below for Dr. Gleason:
A/R balance including credit balances: $151,500
Dr. Gleason’s monthly net production was $149,000 so he assumed that his A/R to net production ratio was $151,500 / $149,000 = 1.02. In actuality, his true A/R to net production was $181,500 / $149,000 = 1.22 or $32,500 higher than it should be!
Lesson #2 - Balances Over 90 Days
First – clear payment arrangements should be made with the patient to manage their treatment investment. If the patient has the assistance of an insurance “supplement,” his Financial Coordinator should “guestimate” the patient’s portion, inform the patient when the appointment is scheduled and ask for this payment when the treatment is completed. Yes - patients will fail to pay even when they promised! Now they have a balance and the treatment has been completed.
Next - this is when your verbal skills are tested! A commitment date should be established with the patient for receipt of the promised payment. A task or reminder should be created in the software to remind you to contact the patient if the payment has not been received. A call is placed to the patient with a statement such as, “Mrs. Jones, this is Nancy at Dr. Gleason’s office. I didn’t receive your promised payment on June 20. Is it possible that I overlooked it?” Ask the patient to commit to another date or better, offer to take their payment over the phone with a credit card.
Lastly – if attempts have been made to collect the past due debt, you should have a relationship with a collection agency to assist in collecting delinquent accounts. Prior to sending the patient to collections, I would recommend that you send the patient a letter indicating that you will offer a 5-20% bookkeeping adjustment if the patient will pay their account in full within 15 days. Be sure to flag the account for payment in advance for future treatment.
How to Avoid Falling into the A/R Trap
Take your Accounts Receivable’s temperature and see if yours is healthy. After 6 months, Dr. Gleason’s is!
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