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08.26.05 Issue #181
   
Accounts Receivables too High? Make a Statement


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

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In her book, Optimal Thinking, Rosalene Glickman, Ph.D., talks about the difference between optimistic or positive thinking and optimal thinking. She finds that many positive thinkers believe that “their dreams will be realized by a magical, divine process that is triggered by the intensity of their hopes, wishes, and faith. …Their positive thinking is often no more than wishful thinking.”

Now this is not to discourage any of you “power of positive thinking” types out there but, when it comes to addressing issues with accounts receivables, there are many optimistic dentists who have convinced themselves that all that money owed the practice will show up one day. Maybe next month, maybe next year, but that cash is a comin', if they just keep a hopin' and prayin'. Yep, and it will probably be dropped in your lap in a silk purse made out of a sow's ear.

In the meantime, let me suggest you help things along by implementing a policy and following a few steps just to ensure your practice isn't financed primarily on wishful thinking.

First, a clear and consistent financial policy is a must for every practice, regardless of size, location, or the socio-economic status of your patient population. Next, the person asking for payment must understand it is their job to collect from patients and be accountable for their results. If timid Mary can barely request money to cover the cost of morning coffee, she is going to require training in order to handle her collections responsibilities. Otherwise, once you see what happens to accounts receivables, you'll be wishing to put a fast end to your pain and suffering.

In addition, use your statements not as gentle reminders but as collection agents of sorts. Ideally, your practice is collecting the majority of monies owed the practice at the time of treatment because your collections coordinator is well trained and you have a clear financial policy in place. But for the remaining small percentage of statements that must be sent to patients, take these steps to encourage prompt payment.

  1. Each statement should have a due date by which patients are expected to submit payment. Every other bill they receive has a required payment date and consequences if they don't. If they slip up on their credit card payment, they will likely owe an extra $25 bucks to the credit card company. I'm not suggesting that you assess a penalty fee, but do assign payment deadlines. It can be 10 days or two weeks from the statement date.
  2. Format the statement on your computer so that, if the patients choose, they can pay by writing in a credit card number.
  3. Each statement should include a payment envelope that is self-addressed to the office. You want to require as little effort as possible on the part of the paying patient.
  4. Customize the message on the statement, and I don't mean a message that thanks the patient for their patronage when they've had an outstanding balance for 60 days. Patients respond to messages that are directed at them personally. For example, “We did not receive our payment on July 15 th as requested. If you are experiencing financial difficulty, please contact our office. Otherwise, we would appreciate payment in full no later than August 6.” No one likes to see themselves as having financial difficulty.
  5. If not daily, bills should be sent out at least weekly. Don't wait to send bills once a month.
  6. When it comes to handling insurance, file insurance claims electronically and immediately. Electronic claims submission significantly improves the payment turnaround time. The Financial Coordinator should know the amount anticipated from the insurance company. However, the patient should be expected to pay the bill and receive reimbursement from the insurance company. Too many practices that accept assignment of benefit do not bill the patient until after the insurance company pays. This implies to the patient that they are not fully responsible for their bill – wrong message to send.
Make it standard procedure to collect the entire fee today unless specific financial arrangements – only for more costly procedures over $300 – have been made in advance and according to the practice financial policy. Nothing cuts receivables faster than collecting today, and with money in the bank you'll have the resources to do more than a little wishful thinking.

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.

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