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

Sally McKenzie, CEO
The McKenzie Company

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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

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Monitoring Hygiene Daily While You Work

Jean Gallienne RDH BS
Hygiene Consultant McKenzie Management

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Do you know what you produce per day, per week, per month, or per year for your practice? You should know. I know a lot of you may be thinking to yourself, I am a Hygienist not a businessperson. Why do I care what my production is per day? All I care about is providing quality of care to my patients. I am not here to make the doctor money. I am here to take care of my patients. Unfortunately, I have heard these words and many more along the same line spoken by many Hygienists.

Well you should care about the business side of hygiene. One thing you will discover the minute you do care about the business side of hygiene is that you will begin providing the quality of care your patients deserve. This is also what determines raises. If you are not producing, how can you expect a raise ?

The best thing that ever happened to the patients I care for and myself was to monitor my production. I used to go into work, clean my patients and leave, not anymore. It actually matters to me how much I produce in the time that I spend at the office. Oh, then you say, I am already pressed for time, I don't have time to do this. I will need more time per patient. Not true. It takes about 30 seconds to make the notations on a sheet.

I know exactly how much I produce per hour and per year for my practice. Yes, my practice. Yes, I work for the doctor, but my production matters to me as if it were my practice, just as your production should matter to you. There is nothing worse than working on a team with somebody that just comes into work, cleans teeth and goes home. Believe me I have worked with people like this before, and it makes for a long day for those of us that care. I constantly found patients that should have had x-rays taken at the previous appointment or I found myself constantly picking up the slack of my fellow Hygienist. Not a good way to win friends on your team.

Monitoring your daily production is as easy as making a sheet that has:

  1. How many hours you were paid for that day.
  2. All time increments should be based on 10-minute units. So, a 60-minute appointment accounts for 6 units.
  3. The date.
  4. Place for CA's and NS's (Patients that cancel or no show the appointment less than 24 hours before their appointment time).
  5. Open time (Time that was never booked by the front desk).
  6. Procedures charged out of hygiene.
  7. Column for the fee for everything the patient had done that day.
  8. Patients name so you can cross-reference charts if need be.
  9. A place for the total daily amount produced that day.

Now all you have to do is check off what you did on each patient and total it up for that day. To find out what you produced that day per hour, add up your total production for that day and divide by the hours you were paid, not the hours you saw patients. If you work an eight hour day and only saw seven patients that day you will take the total daily amount, let's say it is $1000.00 and divide it by eight if you were paid for eight hours even though you only saw seven patients. Therefore, your hourly production for that day is only $125.00 an hour instead of more. The office lost money in two ways during that open hour. First, it lost money because of the lost production. Second, because of the salary paid to you during that open time.

If you look at the industry standards that the hygienist should produce three times his or her salary to be a profit center for the practice. You may find that you have not been succeeding at being a profit center if you make more than $42.00 an hour and producing less than $125.00 an hour.

You will become a profit center by selling more ancillary products to the patients when they need them. Fluorides, x-rays and periodontal therapy will be provided on a regular basis according to office protocol. Basically you will be providing the quality of care your patients deserve to have every time they sit in your dental chair.

Jean conducts 2 day Hygiene Performance Enrichment Programs for The Center for Dental Career Development and McKenzie Management in La Jolla/San Diego, CA. Contact her at or call 1-877-777-6151 for more information on her Advanced Hygiene Training Programs.

Interested in having Jean speak to your dental group? Email us at or call 1-877-777-6151

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Sally's Mailbag

Note from Sally:

The August 4 th and 11 th articles on Embezzlement sparked a lot of interest from our readers. While I received many emails from doctors who had experienced such trauma in their practice, the following I chose to share with our readers. Many thanks to all who were willing to share their stories with me.

Dear Sally,

I have been reading your articles on embezzlement and I thought I would share my experience with you because there are a few critical things that I missed that might have saved me thousands of dollars.

My practice was apparently not producing what it should.  I was chronically short of money.  I was having trouble paying bills.  Lab bills would come in and I'd say that it was going to be fine because Thursday John Smith would come in and leave a check for $1000.00 and I'd pay the bill. Somehow when it came time to pay the bill the money wasn't there. I'd check John Smith's account and find that he had paid his bill and assume I'd spent the money on other bills.  I blamed busyness, high supply bills and adjustments for insurance.  I never thought that my front desk person could be stealing checks.

One evening I was scanning the day sheet and checked a number that I usually didn't pay much attention to.  My philosophy had never been to work to a goal but to produce as much as possible every day.   The number I saw was the year to date collections.  I was stunned.  In twenty seven years, I had never collected that much money.  With that number, things shouldn't be tight, they should be pretty loose. 

I use QuickenT for my checkbook and all the proceeds from the practice go to one account.  All I had to do was pull up the year to date deposits and there it was.  In twelve weeks, she had diverted $12,000.00 and that was just the tip of the iceberg.  I was stunned.  I began to check my deposits.  I have always used duplicate deposit tickets and keep a mirror computer system at my house so that if my office server goes down I just have to switch machines and I am back up and running.  I began running the deposit tickets from that computer and the first four that I ran had checks on them that were not on the duplicate deposit tickets.

I was furious with myself and blamed myself for not checking the duplicates against the printout daily.  Of course I trusted my front desk person implicitly.  She never took much time for lunch and always left after me.

Reprinting the deposit sheets was beginning to be too much like work.  I thought why not just get the day sheets that were filed in the office and go from there.  Here came epiphany number two.  To my surprise the original deposit sheets agreed to the penny with the deposit tickets.  She had worked out a couple of systems.  If, first, for example, the patient paid by check on March 1, she would take the check and generate a receipt.  When the patient left she would delete the payment. The payment would not show up on the day sheet or deposit slip.  She would then enter the payment the next day but backdate the payment to March 1.  The account ledger now agreed with the receipt that had been given and the payment would not show up on the March 2 day sheet or deposit slip because it was dated March 1 and of course the March 1 day sheet had been filed the previous day. If you checked everything every day, you would never see the problem.

She followed a similar scam with checks that came by mail but just held the checks for a day or so before entering them.  Checking for outstanding balances or insurance claims was fruitless because they would be settled before suspicion could be raised.

To find this, it was necessary to check the transaction audit trail to find payments made to a previous date or transactions that had been changed.  Alternatively running a list of the deposits from two months ago and checking them against the actual deposits will turn up the same information.  It is necessary to check not sooner than two months back.  By this time any payments that were made and not recorded would generate too much interest so the thief has to keep things up to date.

So, what did she do with the checks.  She had a stamp made "For Deposit Only" to her personal checking account with her name and my name on the stamp.  Although I was not on the account and had never had an account with that bank, they accepted this 348 times. So much for checks and balances in the banking business.

I hope this information can help other dentists.  I don't actually believe that my front desk person worked this out on her own.  I think she was coached and did not know when to stop.  I probably would never have caught her if she hadn't got out of control.

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