2.1.13 Issue #569 info@mckenziemgmt.com 1-877-777-6151 Forward This Newsletter

Transitioning or Running for the Exit?
By Sally McKenzie, CEO

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Dr. Damon called me this week in a panic. He and his wife, also a dentist, had recently purchased a practice from “Dr. Comfortable.” The young couple have been practicing for about five years. Their newly purchased office is located in an affluent area of town in a midsize city, which is often described as a “big small town.” So why the alarm?

The seller had been in practice for 30 years. As is common practice, he introduced the new owners to patients via a letter before the New Year. Most of the patients had been with Dr. Comfortable for several years. Although they appreciated the kind words that Dr. Comfortable used to describe the new owners in his letter, Drs. Damon and Damon were an unproven commodity. Being new to the area, the Damons didn’t have an established reputation in this “big small town” where everyone knows everybody or someone who does. It gets better - or worse as the case may be.

Shortly after patients learned the news, the phone began to ring - not to schedule or congratulate staff, but rather to cancel and request that records to be sent elsewhere. The employees weren’t exactly trying to talk patients out of their decisions either. Unfortunately, they were blindsided by the news. In fact, they learned about Dr. Comfortable’s retirement by accident when his wife let the news slip at the office Christmas party. Within days, the office manager and one of the longtime assistants gave their two weeks’ notices.

It is an unfortunate example of how common transition procedures can create challenges for purchasing doctors. Drs. Damon and Damon had no opportunity to meet patients, establish relationships, and most importantly build trust before Dr. Comfortable’s abrupt exit. One day he was there, the next he was retired. He didn’t stay on for a few months to build goodwill between the new doctors and existing patients or staff. Patients in the middle of treatment plans were simply expected to let one of the new doctors complete them.

 At a minimum, Dr. Comfortable should have hosted an open house at his practice in which patients could come meet the new doctors. While the introductory letters are common, they can raise more questions than they answer. If a letter is the only option, make sure you know what the selling doctor is saying in it, and include your own letter welcoming patients to your practice. Better yet, send them one of your new practice brochures outlining your excellent credentials and your commitment to them.

Sadly for the Damons, these challenges were only the beginning. Dr. Comfortable had scaled back to three days in the office in the years before retiring. While the purchasing doctors were a little concerned, they were assured by the fact that Dr. Comfortable did have nearly 3,000 patient records on file, 2,700 in fact, many of which they were hoping to reactivate. The problem: only 35%, 945 patients, were active, and many of the remaining records were years old. Two doctors and 945 patients, you do to the math.

Too often, well-meaning doctors make major life and work decisions based on faulty or limited information. They may not want to spend the money on outside consultants and advisors who can help ensure that they don’t make a tragic and costly mistake. Yet oftentimes, newer dentists don’t understand practice numbers or which reports are most important. They want to trust the selling doctor, who may be well intentioned but also poorly informed. The buyer may not feel comfortable questioning practice statistics. Few dentists fully understand overhead ratios and fewer still have a good sense of where accounts receivables should be. They don’t understand how to evaluate key management systems, such as recall, patient retention, new patient numbers, etc.

Drs. Damon and Damon realized they had made a huge mistake in not seeking outside counsel before purchasing the practice. However, it is in an excellent location near the town’s main shopping and restaurants, close to family neighborhoods and good schools. There is potential here, but as the initial patient exodus and anemic patient base demonstrate, there are no guarantees. The Damons have much work to do.

Next week, you have a new practice, now what? 

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

Interested in speaking to me about your practice concerns? Email sallymck@mckenziemgmt.com
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Belle DuCharme, CDPMA
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And the Oscar goes to...the Successful Collection Call
By Belle DuCharme, CDPMA

Oscar night is soon to be here and I am one to never miss it. The nominations are being made for best picture and actor, and many of us (including myself) are trying to see them all before the big night. 

Often your job as Business Coordinator will mimic a big drama as you rehearse and practice what you are going to say when making those dreaded collection calls.  Collection calls are the end result of poor financial arrangements in the beginning stages of the relationship with your patients. Setting up sound financial arrangements includes why they are paying, when they are paying and how they are paying. Communicating to the rest of the team in the morning huddle which patients will be paying their co-payments or fees prior to seating will alert the clinical staff not to seat the patient until collections are successful. The same goes for patients who wish to pay at dismissal. The clinical staff should be made aware of this so that they can direct the patient to “wait for Betty, the Business Coordinator to check you out.” This prevents the “slip out the door to avoid payment” routine.

After years of experience working with staff whose primary responsibilities are financial arrangements and follow-up, the evidence points to certain temperament types or personalities being more comfortable in this arena than others. Personalities that are introverted and feeling in nature look at financial arrangements and collection systems as confrontational and will avoid this task. If patients are leaving without a written financial agreement and are being told they will receive a statement after insurance is billed, it is a prescription for delinquent accounts.

Studies show that if you do not ask, you will not receive. Patient perception is that you don’t need the money and are probably over-charging anyway. This mindset will prevent the best patient from paying, even after you have sent several statements in the mail. Having the wrong personality type making collection calls will not reap the best results, and will perhaps make things worse if there is not a written script and a plan to follow. Never “wing” a collection call, because something will be left out. The best personalities for this job are extroverted logical types, who understand the rules and can stay on focus and not be taken off track by an emotional plea or display.

The following script with Bob the Delinquent Patient and Betty the Business Coordinator will help even the most reluctant collector:

Bob:  This is Bob, who is calling?
Betty:  Bob, this is Betty B calling from Dr. Needdough’s office. How are you today?
Bob:  I am fine, thank-you.
Betty:  Bob, have you been receiving our statements?
Bob:  I think so, yes, I believe so.
Betty:  Great, because I need your help with your statement. It is showing you are two months past due and our accountant has asked me to call you. Can you please tell me when it will be paid?
Bob:  Well it will be paid as soon as I can, Betty. 
Betty:  Bob, the balance is already two months overdue. We really need to be paid now. I can take a credit card number over the phone to expedite this quickly.
Bob:  Betty, we are in a cash crunch since Christmas was just last month. Don’t you worry; we will pay it as soon as we can.
Betty:  I understand, Bob, and I appreciate you being candid with me, but I must receive something from you today. I can take a credit card number now or if you want to send a check today for a partial payment, say half by check or credit card and half in a couple of weeks?
Bob:  Okay, Betty, let me get my credit card. We will do half on the card and hopefully I can do the other in a couple of weeks.
Betty:  We really do appreciate your payment, Bob. I will let the accountant know of our arrangement. Thank you and have a great day.   

The key is to be firm but friendly. Getting the debtor on the phone with the first call is the best time to get paid. If you are unsuccessful in getting paid or getting an agreement on that first call, the chances of reaching this person on the phone again drop significantly because they will not answer your call.

Want to know how to prevent making collection calls? Call McKenzie Management today at (877) 777-6151 to arrange for Dental Business Training which includes role playing and scripting for successful collection calls.

If you would like more information on McKenzie Management’sTraining Programs  to improve the performance of your team, email training@mckenziemgmt.com

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Nancy Caudill
Senior Consultant
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Those Nasty Credit Balances
By Nancy Caudill

As a practice owner, one of the scariest reports that you can review in your office is the “Credit Balance Report.” There are different ways to run this report depending on the practice management software that you are using, but you should take a look at it and create a game plan to deal with the “red hole” of balances.

First, let’s review how you accumulated these balances in the first place. The most common way is that the business team “guesstimated” the patient’s portion at the time of service, which is good, and fortunately for the patient, the insurance company paid more than anticipated. Now the patient has a credit balance on their account. Second, the patient paid a sum of money for treatment based on a treatment plan and the treatment plan changed, reducing the total charges for the patient and creating a credit balance. Third, a credit was given to the patient due to failed treatment (such as a root canal and the tooth fractured shortly after). There are also times when a patient will simply pay on their account for future treatment, either as a down payment or they are anticipating dental treatment and want to start setting money away.

Let’s review the most common scenario - the insurance paid more than anticipated.  Doctors and the business team often ask: “Is it better to bill the patient after the insurance pays so we are collecting the right amount, or should we collect an estimated amount and then see what the insurance pays?” I think we can all agree that the patient would much rather receive a check from us due to an overpayment opposed to sending them a bill!

Can you accurately determine the patient’s portion with your practice software? If you have the PPO fee schedules and deductibles, maximums and percentage of benefits then you can get close, but there is never a guarantee when it comes to the insurance company’s reimbursement for services. They can easily deny a claim or downgrade it to a different service with a different fee. This is why we always recommend the patient be informed that even their printed treatment plan illustrating the insurance reimbursement is an “estimate.” Unfortunately, as we all know, patients don’t seem to hear this part of the presentation.

What to do with these balances? First, check with your state board. I am guessing that most dental board or state associations have guidelines on when these credit balances must be refunded to the patient. In California, it is within 30 days. You review your report and find balances for patients that you have not seen in years. How in the world are you going to deal with this? And let’s not forget that refunding this money is like paying bills. You received the over-payment years ago, not last month. Follow these steps for an organized way to approach the clean up and establish a protocol moving forward to avoid the mess again.

Step 1
Clean up the small credit balances that are less than $20 for patients that are inactive.  Patients should not be inactivated if they still have a balance. Create an adjustment code such as “Small credit balance adj-no ck issued” and clean these up first.

Step 2
For balances over $20, attempt to call the patient. It is a great marketing tool and gives you a reason to reach out to them. This can be in the form of a call, email or letter. I would prefer a call because the goal is to reschedule the patient.  A script would be: 

“Mrs. Jones, this is Nancy at Dr. Smith’s dental office. I know that it has been a while since we saw you and I am calling with some great news! We have discovered that you have a credit balance of $55 here in our office and we would love to welcome you back. You can use this credit balance toward any work that may be needed as well as our “Welcome Back” gift card. Would a morning or afternoon appointment be best for you?” 

Of course, it is possible that Mrs. Jones has found another dentist and does not want to return. In that case, refund her credit balance and sleep better knowing that you just gave someone cash that they didn’t know they had.

Step 3
Let’s say that you can’t get in touch with the patient, even after a letter was sent and returned. At this point, there is no way to refund the money so create another adjustment code indicating that the patient was not located. Example: “Credit balance adj-not located.”

We find that some patients actually do return. Some even say that they are aware of the credit and just keep it on their account but don’t want to schedule. In this case, make a note on the patient’s account so you don’t contact them again. Some patients will thank you and request a refund. This is the reason why it’s a work in progress. You don’t want to overload your cash flow with thousands of dollars worth of refunds, so take the process slowly.

Protocol for the future - as soon as a credit balance occurs on the account, contact the patient with the good news. Most will simply request that you keep it on their account, but you need this instruction from them. Issue the refund immediately should the patient become inactive, unless there are other family members that the credit balance can be transferred to.

If you would like more information on how McKenzie's Consulting Coaching Programs can help you IMPLEMENT proven strategies, email info@mckenziemgmt.com

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