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