Dental practice collections carry a lot of weight.
Combined with your dental practice production, it’s a core KPI worth tracking (with Jarvis Analytics :)).
Much of your budgeting process relies on the number of collections you’re taking in. It’s essential to stay in tune with the direct cash flow you experience from patient payments.
The unique relationship between dental collections and dental production
Production gets an amount of “press.”
Because it’s defined by the amount you charge for an appointment, treatment, and/or procedure.
As you know, collections (on the other hand) is more of a bottom-line financial KPI. Your collections reflect the amount that hits your bank account.
Collections give you the perspective necessary to calculate your dental practice or dental organization’s profit margins.
Keep the gross and net income effect in mind also. You get a clearer picture of your production by remembering this:
- Gross production impacts your metrics
- Net production impacts your practice
The adjustments and write-offs you apply will give you a more accurate measurement of the collection that ultimately fuels your dental practice or DSO.
What percentage matters?
Apply some essential math to the equation and you’ll arrive at a benchmark percentage.
Divide your adjusted production amount by the amount collected
This formula will provide your practice/organization collections percentage. It’s important to gauge your revenue stream according to somewhat of a target collections percentage.
On average a good collections percentage should be in a range from 91% to 98%. It’s preferable to aim toward the higher end of that scale (e.g., 98% on average).
”The average dental practice is losing 9% of their production to uncollected revenues. This means if you are producing $60,000 per month, you are losing an average of $5,400 per month! That’s almost $65,000 per year of lost revenue. It is best to run your collection percentage each month, quarter, and year.”
Also, keep in mind that insurance reimbursement delays have an impact on your collections percentages. The standard seven to 14 business day delay can skew the timing of those numbers.
Delayed payments and related fluctuations create the need to deploy specific strategies for your production to collections analysis and to achieve your desired results.
How to increase your dental practice or dental organization collections
Get paid upfront
Time of service payments eliminates much of the issues associated with collections. Also, your front-office business team will expend less energy on follow-up.
Remember that a pay-at-service standard will require clear and advanced communication with your patients. Surprising a patient with the news that fees are due up-front can create negative barriers in your patient experience.
- Communicate your fee arrangements when the patient inquires and/or schedules their appointment
- Include your insured patients in this conversation as well. Clarify any co-pays and in-advance fees they are responsible for.
Provide flexible payment options
Your patient relationships will thrive as you offer them financial solutions. Communicate your flex-pay options and include the following:
- A payment pre-treatment/appointment with full or partial balance paid at the time of service/appointment
- Payment with cash, check, or credit card at time of treatment/appointment or relative to the agreed-upon fee(s) toward balance due on a set timeline
- A set monthly payment using outside (third-party) financing or your agreed-upon internal financing arrangement
Automate your payment process
Use technology to your and your patient’s advantage. Your team will appreciate the automated workflow efficiency and your patients will value the convenience of electronic payment access.
An easy payment process gives your patients less reason to delay or forget their financial commitment.
Electronic billing has some key advantages.
- Patients can have secure, log-in access to their accounts. They can monitor amounts paid and be reminded about their remaining balance.
- Patients have a convenient payment option when it comes to mind and/or according to their personal/household budget.
- Your front-office/business team will appreciate not having to create, print, and mail statements. They can channel their energy into other patient-facing tasks.
Incentivize up-front payments
Payment for a procedure lifts your practice/organization’s cash flow. And many patients can (and will) pay upfront – especially when you give them additional motivation for doing so.
- Adjust the fee for advanced payments
- Clarify that it’s not a “discount.” Instead, express strong appreciation for payments at the time of service. It establishes a “norm” that might be repeated for each appointment/treatment.
Keep your team aligned with your collections strategies
It’s essential that your team be trained and in agreement with your payment processes. Their understanding and buy-in will flow into their related patient communication about payments.
- Clarify your practice’s/organization’s narrative about payments. And train your team to be confident presenting financial arrangements.
- Make sure each new team member is on board with your financial communications. Also, provide a refresh on occasion to keep your team on-point.
- Designate a team member as a financial point person. Task them with monitoring, improving, and reporting on practice financial protocols.
Stay front-of-mind with patient follow-up
Collections are on your mind. But that doesn’t assure that a payment is on the mind of your patients.
A strategic follow-up process is vital to keep your collections flowing in a positive direction. Remember to include insurance providers in your follow-up systems as well.
”Research shows that after 90 days, an account loses 7% of its value each month it is overdue. Past 12 months, you lose more in labor, stamps, and supplies than the amount a patient owes you.”
- Start with an immediate current statement sent to patients post-appointment/treatment.
- Follow a 30-60-90 day reminder process. Increase the payment urgency with each reminder.
Your dental practice’s or dental organization’s profitability doesn’t have to be at the mercy of your collections. But you do need a specific strategy to assure your revenue stream experiences as few interruptions as possible.
Data analysis helps drive your financial and payment systems
The Jarvis Analytics platform helps assure that you’re tracking the important metrics and staying on track in your daily workflows, financial systems, and overall practice or DSO goals.
- Integrates seamlessly with your chosen practice management software/platform
- Presents the metrics you want and need in an easy-to-view dental dashboard that reduces data complexity for growing dental practices, dental groups, and DSOs
Experience Jarvis in action. Request a demo today!
Contact us for more information about data tracking that leads to profitability.
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