10.29.10 Issue #451 info@mckenziemgmt.com 1-877-777-6151 Forward This Newsletter
 


Nancy Caudill
Senior Consultant
Printer Friendly Version

2 Tricks That Treat Your Cash Flow!
By Nancy Caudill, Senior Consultant McKenzie Management

Dr. Abbott contacted McKenzie Management with concerns about her practice’s cash flow. She felt that she was staying busy, she had adequate numbers of new comprehensive patients, but for some reason that she could not put her finger on, the cash flow was not indicative of her hard work. She asked that we visit her practice and work with her for six months to find the “leaks in the bucket.”

Dr. Abbott’s practice statistics:

  • She was working 4 days a week, 8 - 5 and lunch from 12 - 1
  • 6 Hygiene days working the same hours
  • 5-year old practice
  • 20 New Hygiene Patients/month

The statistics above were facts that Dr. Abbott was aware of, but there were other facts about her practice that she was not aware of. Below are two tricks that Dr. Abbott learned about her practice that increased her revenue and put more money back into the practice. As a result, she was able to increase the salaries of her team, introduce computers into all the treatment rooms and go “chartless” and take more money home for her family.

Trick #1 - Collect a “Guestimated” Patient Portion At The Time Of Service
Collecting a percentage of net production is determined by how much money comes into the practice that is insurance vs. patient payments. The amount that is collected from the patients is called “over the counter” collections. Every office’s OTC goals are different, depending on the number of patients that use dental insurance to assist them with their visits.

To determine what % of OTC should be expected in Dr. Abbott’s office, we performed the following steps:

  • Generated the Payment Report for the past 12 months that indicated the $ that came into the practice from insurance payments
  • Determined the Net Production for the same 12 months by subtracting the production adjustments from the Gross Production
  • Subtracted the insurance payments from the Net Production, leaving the $ that should be collected from the patients
  • Divided the Patient Portion by the total Net Production to arrive at a % that should be considered OTC

Example:
            Net Production = $800,000
            Ins. Pmts            $500,000
            Patient Pmts       $300,000

            $300,000 / $800,000 = .375 or 37.5% to be considered OTC

Now that Dr. Abbott knows how much should be collected on average every month OTC, she can implement a system that will allow her Schedule Coordinator to reach this goal.

1. When an appointment is made for a patient that requires a “patient portion,” ALWAYS guestimate the patient’s portion and inform them of the amount that will be due at their next appointment.

2. Write this amount on the back of the appointment card as a “friendly reminder.” Here is the script: “Mrs. Jones, just as a reminder, I will write down your portion due at this appointment on the back of your appointment card.”

3. Include this amount in the appointment note in the computer. This will serve as a reminder when the patient is checked out on how much to ask for (assuming that nothing changed clinically) and also allows another team member to check out the patient should the Schedule Coordinator be away from her desk or out of the office.

Notice that I said “guestimate” the patient’s portion. There is no guarantee how much the insurance carrier is going to pay, so we are asking the patient to pay an amount with the understanding that if the insurance pays something different, we will inform them.

I have found, in over 30 years of working in the dental field, that patients want to know how much they are expected to pay. They understand, when informed properly, that it is a “guestimate” and they are responsible for any remaining unpaid balance. I have also found that it is not necessary, in most cases, to explain all the details involving deductibles, downgrading of composites to amalgams, fee schedule differentials, etc.  They just want to know how much they need to be prepared for at their next visit.

Trick #2 - Stay On Top Of Unpaid Insurance Claims
It appeared that in Dr. Abbott’s practice, the “Outstanding Insurance Claims” Report was not being generated monthly. The Financial Coordinator was printing all the statements for the month and reviewing each one. If she saw that a claim was pending, she was throwing away the statement.

A healthy Accounts Receivable in a family dental practice that accepts insurance assignment would be no more than 1x the monthly Net Production. Dr. Abbott’s A/R was 1.85x. The means that she had over $56,000 on her Accounts Receivable that should have been collected. Upon further review, after printing the Outstanding Insurance Claims Report, over $40,000 of that amount was outstanding claims over 60 days!

To avoid Dr. Abbott’s loss from happening to you, ask your Financial Coordinator to run the Outstanding Claims Report every month and all claims that are over 30 days (15 days if they are submitted electronically) should be reviewed and the insurance carrier should be contacted to check on the status of the claims. Ask for the contact’s name and make a note on the claim itself of the results of the call. Stay on top of this. 

Here is hoping that these two tricks will serve you well. Happy Halloween!

If you would like more information on how McKenzie's Consulting Coaching Programs can help you IMPLEMENT proven strategies, email info@mckenziemgmt.com.

Forward this article to a friend.

McKenzie Newsletter Information:
To unsubscribe:
To discontinue receiving the Sally McKenzie eManagment newsletter,
click on the link at the very bottom of this page for instant removal,
To report technical problems with this newsletter or to request technical help,
please send a descriptive email to: webmaster@mckenziemgmt.com
To request services, products or general inquires about The McKenzie Company activities
please send a descriptive email to: info@mckenziemgmt.com
If you would like to have any of your dental practice concerns answered personally by Sally McKenzie,
please send a descriptive email to her at: sallymck@mckenziemgmt.com
Copyrights 1980-Present The McKenzie Company - All Rights Reserved.