12.3.10 Issue #456 info@mckenziemgmt.com 1-877-777-6151 Forward This Newsletter

Six Steps to Solvency
by Sally McKenzie CEO
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Here we are, closing in on the final weeks of 2010, and although faint rumblings of a recovery percolate on the financial horizon, we have been seeing a disconcerting return to high accounts receivables and well-oiled financial polices put on the blocks. Now is not the time to abandon effective practice protocols. However, a few adjustments may be in order. Follow these steps toward achieving financial solvency in your practice.

Step #1 - Revisit the Financial Policy
A plan that is too rigid will not be effective in any economy. However, that doesn’t mean that you should return to the days of patient-dictated financial plans. Pay attention to what patients are telling you, and if necessary, make adjustments. Consider incorporating the following:

  • Establish a relationship with a treatment financing company, such as CareCredit
  • Allow patients to build a balance on their account before beginning major treatment
  • Allow patients to pay for larger cases in two or three installments over a specific period of time
    Offer a 5% discount if the case is over $500, paid in full, and will not be submitted to insurance

Step #2 - Maximize Over-the-Counter Collecting
Patients should be made aware (prior to their visit) of what is to be done and what fees they will be charged so they’ll be prepared to pay. Your financial coordinator/business administrator should be professional, matter-of-fact, positive, friendly, and should follow a well rehearsed script in explaining the services, the charges, and the payment options. Additionally, a printout of services provided – along with anticipated insurance payment as well as amount of patient payment – should be given to patients at every visit. If a patient does not pay, give them a return envelope and say, “This will make it easy for you to mail us your check when you get home.”

Step #3 - Send Bills Daily Rather Than Monthly
Every statement should include a due date (two weeks from statement date). Make sure that there is a space for the responsible party to write in a credit card number and expiration date as a means of payment. A self-addressed payment envelope should also be provided.

Step #4 - Anticipate Insurance Payments
Track insurance, specifically the available benefits as well as uninsured procedures, to calculate the anticipated insurance payment. Collect the patient portion at time of dismissal. After your software performs a validation process on each claim, claims should be sent electronically on day of service. Each week, generate a delinquent insurance claim report grouped by carrier so that one call can be made per carrier to check on all claims that are thirty days delinquent. Cash flow can be further enhanced by tracking and processing secondary insurance; keeping signatures on file so that after EOB (explanation of benefits) is received, the patient portion may be calculated and credit card automatically processed; auditing submitted claims and automatically aging them until they are either paid off or written off.

Step #5 - Follow-Up On Delinquent Accounts
Delinquent account calls should begin one day past the due date on the first statement. The manner and tone used will greatly influence the effectiveness of the call; therefore, set the tone as “working together to resolve this situation.” The caller’s key question should be, “When can we expect payment?” Enter highlights of the conversation into the computer to keep a record of collection attempts. On the same day, follow up the phone conversation with written confirmation. And finally - address the most critical collection obstacle…

Step #6 - Train Your Team
The number one reason for poor collections in most any practice is a lack of training. Provide results-oriented training designed to meet the following practice objectives: A 98% collection rate should be maintained for treatment being performed currently. For practices accepting assignment, over-the-counter collections should range between 40-45% of total production. Since it is feasible for a hygienist to treat 10 patients in one day, from whom the practice will collect zero dollars because insurance will pay 100%, it is essential that these measurements be averaged monthly to adjust for the ratio of insurance payment of benefits and patient payment. Practices that do not accept assignment should strive for 85-100% collections over the counter. Accounts receivable should be no more than 1 x monthly production. Finally, accounts receivable over 90 days should not exceed 12% of total accounts receivable.

Interested in speaking to Sally about your practice concerns? Email her at sallymck@mckenziemgmt.com. Interested in having Sally speak to your dental society or study club? Click here.

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