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08.19.05 Issue #180
   
Accounts Receivables – No Surprises


Sally McKenzie, CEO
The McKenzie Company
sallymck@mckenziemgmt.com

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You don't always get what you want, and, contrary to what Mick Jagger's been telling us for years, or should I say decades now, you don't always get what you need either. But one thing typically holds true, you usually get what you pay for, from software, to supplies and equipment, to dental materials, etc. And you don't want any surprises. You want to feel that whatever it is you are plunking your hard-earned cash on is worth the investment.

Your patients are no different. When the collections coordinator tells Mrs. Murphy that she owes $225 dollars for today's fillings, and Mrs. Murphy responds by bellowing across the waiting room, “TWO-HUNDRED AND TWENTY-FIVE DOLLARS FOR A DRILL AND A FILL?!”, it's pretty clear that Mrs. Murphy is somewhat surprised. What's worse she doesn't really have any idea what she is getting for her money. Minimizing surprises for your patients is a matter of educating them on the treatment and establishing value. What's more, it can go a long way in reducing accounts receivables as well. Let me explain.

Although clinical teams give it little if any thought to it, they play an essential role in lowering the practice's accounts receivables. Clinical teams are responsible for building value with the patient by clearly explaining the treatment they will be delivering and what is involved. For example, upon seating Mrs. Murphy, Carol the assistant doesn't just say, “So, Mrs. Murphy, looks like you're in for a filling today, huh?” Rather, Carol welcomes Mrs. Murphy and explains clearly to her that today the doctor will be restoring four surfaces on two of her teeth, the procedure will involve the use of medication as well as anesthetic, and the patient can expect the treatment to last for approximately 40-50 minutes. Then Carol asks Mrs. Murphy if she has any questions or concerns, etc.

Clinical teams should approach the explanation in a manner that they are most comfortable with, but the key is to educate the patient and simultaneously maximize the value of the treatment - not minimize it. If the patient appreciates the extent of your specialized care, she's more likely to understand the value of your services. In other words, she knows what she is getting for her money.

Now when Mrs. Murphy walks to the front desk, the well-trained Financial Coordinator knows exactly the treatment the patient has received because the clinical team has communicated this essential detail to the front desk. The Financial Coordinator underscores the value by reiterating the treatment that Mrs. Murphy has received and confidently requests payment. “Mrs. Murphy, Dr. White performed fillings on two teeth, which entailed four surfaces, plus medication and anesthetic. The fee for today's dental treatment is $225 will you be paying by cash, check, or bankcard?” Don't leave the patient wondering what they are getting for their investment in your dental care, and they will be less likely to wonder if they should pay you now, later, or never.

At the same time, don't leave yourself wondering what your accounts receivables are at any given moment. You absolutely must know this number, and it should never be more than one month's production. In other words, if you typically produce $70,000 per month, patients should never owe you more than that amount at any given time, and preferably, they owe you less.

Generate an aged accounts receivable report monthly that lists every account with an outstanding balance and date of last payment. Total all monies over 90 days delinquent. The percentage should not be over 12% of your total accounts receivable.

Examine the charges in the "current" column of the report. These are uncollected monies produced in the past 29 days. Because the practice should have a minimum of 45% over-the-counter collections for the month, there should be no more than 55% in the current column awaiting insurance reimbursement.

Always run the report with credit balances because credit balances need to be added back to the total accounts receivable. If the total exceeds your monthly production, it's a red flag indicating problems in one or more of the following areas:

  • Insurance system
  • Billing system
  • Financial policy
  • Presentation of financial arrangements
  • Consistent inability of the Financial Coordinator to ask for money.

Next week, when it comes to accounts receivables, it's time you made a statement.

Want to enhance your knowledge about Reducing Accounts Receivable? Take Sally's On-Line Training Course NOW!

If you have any question or comments, please email Sally McKenzie at sallymck@mckenziemgmt.com.

Interested in having Sally speak to your dental society or study club? Click Here.

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2005 Location Sponsor Information Topic Speaker
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Oct. 14 Riverside, CA Riverside Implant Study Group 951-279-7847 Top Issues Sally McKenzie
Nov. 18-19 Griffin, GA Endo Magic Root Camp 877-478-9748 Top Issues Sally McKenzie
Dec. 1 Cincinnati, OH Cincinnati Dental Society 513-984-3443 Breakdown Sally McKenzie
 

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