Determining the Practice’s Patient Financial Options 

There are many options to choose from, and when researching which options your practice will offer, you will likely come across practice owners who have had much success with certain methods and others who have had negative experiences with the same systems. To sort through all of the opinions and choices, it is best to conduct your research locally. Demographics play a huge role in the types of payment plans and options that will work best for your practice. Talk to colleagues in your area about the dental benefit plans they accept, the payment options they provide and above all, what has worked and not worked for them. Certain financial considerations, such as the deposit amount to require from patients, the decision to offer credit card payment plans, the application approval success with third-party financing, and the decision of which dental plans to accept will vary dramatically from one area to another.

Once you have done your research, you must then decide on the financial policies and options that you are comfortable offering. Dental practice owners are under no obligation to extend credit to patients and may require all payment before or at the time of service. Other practices will accept deposits for larger cases and work with the patient to pay the remaining balance over the course of treatment. Some practices have success with checking patients’ credit scores before “reserving” treatment time for larger cases. While other practices are comfortable offering “phased” dentistry in which treatment is spread out over time to allow the patient to pay for treatment in comfortable installments.

Unfortunately, many practitioners determine their financial policies the hard way — through trial and error. But, if you conduct research specific to your area and your patient base, you can create successful financial systems from the beginning. Keep in mind — you want to make treatment possible for your patients but not at the cost of the practice’s financial security.

Common Payment Options and Financial Considerations

Some practice owners and staff find it challenging to explain policies to patients out of fear that patients will become defensive or disgruntled by the “rules.” This fear can be eliminated if the practitioner and staff view the policies as a necessary system in the practice that allows the practice to provide the best possible care to patients.

Doctors fear that they will lose patients when policies are set, but in fact, most patients will appreciate and abide by the policies. When sharing the policies with patients, try not to refer to them as “policies,” but rather convey to patients the advantage the policies provide to them. For example, instead of saying to a patient, “Our policy is that we require a 25 percent deposit before scheduling that appointment,” say to a patient, “We would like to reserve our doctor’s time specifically for you, so he has ample time to perform this procedure and answer your questions. To make this reservation, we do need a 25 percent deposit.”

There is a multitude of financial policies to consider, and it is easy to see why the new practice owner can become overwhelmed by the choices. Below are many of the more commonly applied policy options. These will vary by geographic region, practice discipline, doctor philosophy, staff ability and training and patient demographics.

• Missed Appointment Fee. Most practices will establish a fee for a missed appointment. The fee will typically range anywhere from $25 to $75, although some practices will apply a fee based on a percentage of the treatment cost for larger cases. Other practices will not state a specific fee but rather will require a deposit to reserve the appointment a second time for the patient who missed the first appointment. It is important to know that many benefit plans limit the fee a contracted provider may collect for missed appointments and may prohibit collecting a deposit to reserve a second appointment. It is important with missed appointment fees that the practice policy is included on the financial consent form or the financial agreement that the patient should sign in advance either as a new patient or with a new treatment plan. It usually is not effective to apply the fee to new patient consultation, as the new patient will likely go find another practice. Instead, with new patients, practices will request deposits to hold the appointment for new patients who cancel and want to reserve another appointment. Again, the message should be, “We are happy to reserve the doctor’s time for your new patient consultation. To do this after a missed appointment, we do need a deposit to hold the appointment.”
• Payment is due before or at the time of service. Most practice owners have heard nightmare stories from other dentists who did not collect most or the entire treatment fee before or at the time of service. As a best practice, do not put yourself in this position unless you are considering the treatment as a charitable donation to that patient. Train your staff to always collect, at the least, the fee that covers your up-front costs (records, lab fees, initial exam and first treatment appointment). While it is best practice to collect upfront or at the time of appointment, benefit plan contracts may limit a network provider to only collecting the patient’s copay upfront. For patients who do not have the cash or credit to pay for larger cases at the time of service, there are options. Do not put yourself in the position of having to collect payment after services are rendered. In most cases, you will lose money even if you are successful in the collections process, as it takes significant time and effort.
• Third-party financing. It is common to see some form of outside financing available in practices. There are several companies that offer this financing, all with various services and benefits. Although some practice owners will claim that it is challenging to gain application approval for patients who need financing, it is a safe and comfortable way for practices to offer payment plans. When offered as a primary option, rather than a “last resort,” application approval will likely increase, and the practice can utilize this option more frequently. If a patient’s application is declined for the full treatment fee, many practices will try gaining approval for a lesser dollar amount and ask if the patient can pay a portion of the fee with cash, check or credit card. Some practices will argue that the processing fee the third-party financing companies charge to the practice is too high of an “adjustment,” however, if you compare the cost of a collection agency (30–50 percent of the fee) versus the third-party financing fee (roughly 10 percent), the answer is clear. It is important to remember that the concept of offering third-party financing to your patients is to provide them with many financial options to make treatment possible. If you focus only on the small financial “adjustment,” you will lose sight of the benefit this option offers to patients, which in turn, benefits the practice.
• Credit cards. The question for your practice should not be whether to accept credit cards, but instead, should be how to set up a system in the practice to best utilize credit cards. Some practices will offer credit cards for payment in full before or at time of service. Other practices will divide the total treatment fee into two or three credit card payments with an initial payment that covers the up-front costs and the remaining payments charged at subsequent appointments, with payment received in full by treatment completion. Often practices, usually for orthodontic treatment, will accept a 25–30 percent deposit and allow, with authorization, an automatic credit card charge for monthly payments, again with payment in full by treatment completion. The decision to accept credit card payment plans should be considered carefully and is not a comfortable option for every practice. Please evaluate your patient demographics and payment options being offered by other practices and businesses in your area before making this offer. Ultimately, the decision falls on you to decide whether you are comfortable offering some controlled financing to your patients.
• Virtual Payment. It is an era where almost everyone carries a smartphone with numerous “virtual payment” apps such as Apple Pay, Google Pay, and PayPal, to name just a few. Offering virtual payment options is a great option to increase patient collections at the time of service.  The age-old patient excuse of, “But I forgot my wallet” no longer applies when your practice offers multiple payment options, including virtual payment through a digital wallet or QR code.  To set up virtual payment in your practice, check with your credit card processing merchant to see if the company offers a virtual payment processing option.  If the company does not offer a virtual payment option, there are numerous virtual payment merchant choices for small business owners.

Courtesies, Discounts and Accounting Adjustments

Many practices will offer a courtesy or “accounting adjustment” on the cost of treatment for patients who pay in full before or at the time of service. The courtesy generally ranges from 5–10 percent. This is a win-win arrangement for both parties, as the practice does not have the expense and effort of collections and patients benefit from the fee reduction. This is usually only offered to patients without dental benefits, as patients with dental benefits must submit a copayment, and courtesies on treatment for patients with dental benefits must be applied to the entire treatment fee billed to the plan, not just the patient’s portion.

Other common courtesies, discounts and adjustments practices could offer include:

• Senior citizen courtesy. Usually 5–10 percent off the cost of treatment.
• Family courtesy. Usually 5–10 percent. This is generally offered for orthodontic treatment, third molar extractions or any other large, one-time procedure in which multiple family members have the same treatment plan. The courtesy is offered to subsequent family members after the first family member has been through treatment. This courtesy should be shared with the first family member in treatment as an incentive for subsequent family members to come to the practice for the same procedure.
• Courtesy to existing patients when a practice is no longer participating with a dental benefit plan. The courtesy will vary depending on the amount the practice was previously adjusting when contracted with the plan. For example, if the practice was adjusting 20 percent as a participating provider, the practice may offer patients with the plan a similar fee schedule. The primary goal of this courtesy is to retain patients with the plan, so they do not leave the practice for a participating provider. The practice then can explain to those patients that they can continue coming to the practice and still file claims with their dental benefit plan and receive reimbursement.
• Whitening program/discount with continuing care. This has become a popular incentive to encourage patients to keep their routine continuing care appointments. The practice will get the patient started with at-home whitening and offer a gel refill at each continuing care appointment.
• Discounts on certain services for new patients. Many practices offer discounts on services to new patients to generate more traffic into the practice. When offering a new patient discount, be sure to offer a promotion to your existing patients as well. You would not want an already loyal customer to feel unappreciated by learning of a new patient promotion in your practice.

Collections Systems

Like the financial consultation, it works best to have one staff member primarily manage the practice’s accounts receivable. You may have multiple staff who are trained to accept and post payments; however, you should have one staff member who manages the process and ensures the other staff is following the proper protocol. With this said, please note, due to the high risk of practice embezzlement, a practice owner must check the financial reports and “spot check” the cash coming and going from the practice. Just like you have one person who is ultimately responsible for managing the schedule, the staff member in charge of billing and collections will be more accountable when given this as a primary responsibility. Some practices will be able to combine this role with the role of conducting the financial consultation or with other front office tasks. While other practices will have this independent role depending on the number of active patients and the practice’s level of participation in dental benefit plans.

Creating the System — Benchmarks and Considerations

It is the practice owner’s responsibility to decide the process and training for collections in the practice. This decision should be structured by the owner or likely staff will come up with their own system, which may or may not match the owner’s philosophy. The practice’s collection to adjusted production (after write-offs) percentage should be at least 97 percent, with 85-90 percent of accounts received within 60 days (this includes dental benefit balances). The standard benchmark for a practice’s accounts receivable is to not exceed the amount equal to one month’s production. However, more recent practice management trends indicate that total A/R should be approximately half of a month’s production with advancements in electronic claims filing and a multitude of outside-patient financing options. Regardless of the industry benchmarks, the goal for any practice should be to reduce A/R and collect account balances within 60 days.

• When creating a practice financial agreement, collections and A/R system, the practice owner should consider the following questions:
• When will payment be required? It is recommended that the financial agreement be signed by the patient at the treatment consultation and that payment be received before treatment is performed (either at the consultation or at the beginning of the treatment appointment).
• What will be the policy if a patient does not submit payment at the time of service? Will you reschedule or will you allow the patient to pay later?
• When will billing statements be sent? Will your practice only provide “walk-out” statements, or will statements be generated for patients with balances at 30, 60 and 90 days?
• How many statements will be sent before further action is pursued?
• Will your practice conduct collection calls? What will be the message on these calls? Who is responsible for making these calls? How many days overdue must an account be before a phone call is made?
• Will your practice send collections letters? Again, what will be the message in these letters? Will the letters include a copy of the financial consent and agreement signed by the patient? Will the letters be sent via certified mail to ensure they are received by patients?
• What action will you take, if any, when your practice has not been successful at collecting the overdue balance? Will you work with the patient to offer a payment plan? Will you send the balance to collections or report the patient to a credit bureau?
• How will your practice handle families with a delinquent account for one family member? Will you continue to treat other family members or require the entire family to be in good financial standing to see any family member?
• How will your practice handle patients who are still in treatment with delinquent accounts (a common issue with orthodontic treatment)?

If a participating dental benefit plan provider or if your practice accepts the assignment of benefits, how will your practice handle patients who have a balance remaining after the dental benefit plan reimbursement is received and is lower than the estimated amount? Will you keep a credit card on file to charge the unpaid balance or send out a statement? Will you write off the unpaid amount if under a certain dollar amount? What if the dental benefit plan reimbursement is higher than estimated? Will you send the patient a refund check or offer to keep a credit on the patient’s account?

Common Elements of Practice Billing and Collections

The following provides information regarding the common elements involved in practice billing and collections:

• Billing statements. The goal for most practice owners is to send out as few billing statements as possible. Again, this goal correlates with setting strong payment policies and adhering to those rules. However, when a patient is unable to pay at time of service, despite your efforts to communicate the payment policies, the practice should be prepared with an alternate method. The first statement is usually in the form of a “walk-out” statement. On the “walk-out” statement, it is important to include the patient’s balance and a due date. If a patient misses the due date from the “walk-out” statement, then the practice needs to decide if a follow-up statement will be generated. One common mistake that practices make with generating statements is waiting until the end of the month to generate all statements for overdue accounts. Accounts receivable should be managed daily, and statements should be generated each day. It is much more effective to take a few minutes each day to generate several statements rather than having to perform a large billing cycle at the end of the month. When a patient’s account balance hits 31 days, a statement is mailed. This also allows for the most accurate billing. Not to mention, a practice has the best chance of collecting the monies owed within the first 60 days. The collections success rate drops significantly for accounts over 60 days and drops even further for accounts over 90 days. If statements are generated once a month for patients in the 30–60 day delinquent category, there will be some patients with accounts 31 days overdue and some with accounts 59 days overdue (depending on when the patient was seen in the previous month). The difference between 31 and 59 days in accounts receivable can be significant. The practice owner must also decide how many statements a patient will receive before further action will be taken. Typically, a practice will send one or two statements until an account is between 60 and 90 days overdue, at which point further action, such as collection calls or letters, will be implemented.
• Collection calls. No one enjoys making collection calls, but in most practices, it becomes a necessary evil of conducting business operations. To alleviate the stress on the part of your financial coordinator, it helps to write out bullet points or a script for these calls. You may want to have one script for the first call, in which you gently remind the patient of his balance and then a second script for subsequent calls that are more direct and inform the patient of the practice’s financial policy for delinquent accounts. With collections calls, it is important to tell the patient the next step should he or she not submit payment for the delinquent balance. For example, does the practice send the balance to a collections agency or report the delinquency to the credit bureaus? This can be phrased in a non-threatening manner, such as, “As you are aware from our financial consent form, Mr. Smith, the practice’s policy is to send delinquent accounts when 120 days overdue to an outside collections agency. Our accountant requires me to forward all accounts at 120 days to his attention and I would hate to put you in that situation”.
• Collection Letters. Collections letters usually follow the first attempts to send billing statements or make telephone calls. Often the letter is sent by certified mail to ensure the patient receives the notice of the delinquent account balance. It is wise to include the patient’s billing statement, along with a copy of the financial consent form that the patient signed, to reiterate the policy that the patient was made aware of. The letter should clearly state a date in which the patient must respond to prevent further action, such as the account being turned over to a collection agency, or reported to the credit bureaus or small claims court.

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