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How to Handle Collections and Grow Profits
By Sally McKenzie, CEO

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Developing a sound financial policy and clear collection protocols are important steps to growing practice profits. If you’ve come that far, you’re on your way to true practice success and profitability – but you’re not done. So what comes next? Here are other factors to consider, all designed to help you create a steady cash flow in your practice.

1. Hire the right person to handle collections. The truth is, not everyone can handle this position. It’s important to find someone who is assertive, polite, tactful, goal oriented and confident. The team member tasked with collections must understand it’s his or her job to get payment from patients.

Remember that this won’t happen without your support. Provide this team member, usually known as the Financial Coordinator, with the training, tools and scripts needed to succeed. In addition, resist the temptation to make exceptions for family and friends when it comes to payment polices. You might feel good helping loved ones out, but trust me, this does nothing but undermine the practice’s ability to develop an effective financial policy.

Train your Financial Coordinator to make effective collections calls. The calls should never be confrontational – the goal is to work with the patient to resolve the situation and collect payment.

2. Hold your Financial Coordinator accountable. You don’t want more than one person handling collections in your practice. Hire the right person and then make this team member accountable for collecting money, generating accounts receivable and following up on delinquent accounts.

3. Look at the status of your accounts receivable. The thought of this puts many doctors into a cold sweat. If your practice is struggling, you know the numbers could be pretty ugly. The last thing you want is to find out you have $175,000 or more in uncollected fees eating into your bottom line – money that could be used for equipment upgrades, team training, raises, even your retirement. Yes, the numbers could be pretty depressing, and we all know ignorance is bliss. Unfortunately it’s also expensive. As painful as it might be, you have to know what’s happening with your accounts receivable.

Ready to face the numbers? Here’s what you need to do:

• Every month, generate an aged accounts receivable report that lists every account with an outstanding balance and date of last payment. The accounts receivable report also should “age” the receivables showing the “current” column, which is revenues produced in the last 29 days that have not been collected. It should also give you a breakdown of accounts that are 30, 60 and 90 days past due.

• Total all monies more than 90 days delinquent. The percentage should not be more than 10% of your total accounts receivable.

• Examine the charges in the report’s “current” column. 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.

• Remember to always run the report with credit balances. Why? Credit balances need to be added back to the total accounts receivable.

Did your totals exceed monthly production? If the answer is yes, there’s a problem in one or more of the following areas that it’s time to address:

Billing. Don’t wait to send patient bills out once a month, and remember to include self-addressed envelopes when you do. It’s also important to include the payment due date. And remember, you might receive payment faster if patients can pay online. Consider adding electronic billing as a convenient option for your patients.

Remember the best way to communicate is by making a phone call to collect first. While putting a delinquent message on a statement is easy, getting an answer or a credit card number over the phone brings faster results.

Insurance System. Your Financial Coordinator should know how much of the bill the insurance company is expected to cover. The patient should be expected to pay the bill and receive reimbursement from the insurance company. Make sure patients understand this when you’re explaining treatment costs.

4. Communicate the policy. Keep your financial policy updated and don’t stray from it. Make sure both patients and team members are aware of and understand the policy.

Patients expect to pay you for services rendered. The ones who don’t pay promptly are typically patients who cancel at the last minute or don’t show up at all, mainly because they don’t understand the value of the care you provide. Educate your patients about the importance of maintaining their oral health, and make sure they’re aware of your payment policies in advance. That way they know exactly what to expect, and are happy to promptly pay you for the exceptional care you and your team members provide.

For additional information on this topic and more, visit my blog: The Lighter Side

Interested in speaking to me about your practice concerns? Email sallymck@mckenziemgmt.com
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