I remember when my family relocated to a new city and I applied for a job at a dental practice closer to home. This practice had been open for a little more than a year and seemed to be thriving. However, as the months went by, I realized that this practice had no systems in place â¦ and it was especially noticeable in the collections. After about three months, the doctor told me that that month was the first month since the practice opened that he was able to draw a paycheck. This was a collection problem. Over my 20 years of experience in the dental office, I have learned that collecting money is a task that all financial coordinators will master in their careers, but achieving cash flow is an even greater skill to master. We all strive to achieve a collection rate of 98% of our production so when we have that monthly team meeting to review the numbers, we can sit glowing at our accomplishment. However, as a practice owner, improving the cash flow can be a much bigger achievement. It is vitally important for every dental practice to create systems that will significantly improve cash flow, even if collections aren’t increased.
Here are three pieces of advice to improve cash flow in your dental practice. I have personally seen these tips work, and I believe they can work for you.
1. Use your PPO fee schedules in your practice management software. I understand that many consultants will disagree with me on this one, but I believe that the efficiencies to your front desk and cash flow to the office far outweigh the need for the patient to see the write-off. If you use your PPO fees for treatment planning and billing to the patient, your front office team will be able to increase the over-the-counter collections exponentially â¦ and we all know that payment on the day of service is worth its weight in gold. The front office team can collect more over the counter because they will not have to get out the calculator and manually calculate the patient portion.
2. Send statements in real time. When you use your PPO fee schedules for billing the patient, you will be able to send patient billing statements in real time. What do I mean by sending statements in real time? To improve cash flow, you need to be sending patient statements to ALL your patients who owe you money. Even if the patient has an outstanding insurance claim, send that patient a statement. Many practices currently don’t do this because they are billing full fees to the patient and they have to wait until the insurance payment comes in, make the PPO adjustment, and then send the patient statement. This is a huge loss in time and cash flow. In my opinion, patients don’t care about seeing the adjustment on their statements. All they want to know is the bottom line.
3. Change your tradition. Most of you are sending your patient billing statements once a month. After all, this has been a tried and true tradition for decades. However, I want you to throw out this tradition and send your patient billing statements twice a week. Why? It will improve cash flow! If you are sending statements out several times a month, you are still sending out the same volume of statements, but in smaller increments at a time. This greatly increases the chances of your office receiving payment during your next bill pay cycle. Also, with this technique, patients still receive just one statement within a 30-day period, but everyone is on a different cycle. Money is coming in more often, and this increases your cash flow.
Do some research with your practice management software and see if it can provide the tools necessary to implement these new protocols. Remember, your monthly numbers meeting might not be any different because your overall collection rate probably won’t change. However, your doctor and accountant will definitely be able to see a difference in the checkbook.