How streamlining adjustments reports can benefit your dental practice

The adjustments report is one of the most emotion-inducing reports to read and analyze. It may even be the most depressing one, but it certainly is necessary.

The adjustments report is one of the most emotion-inducing reports to read and analyze. It may even be the most depressing one, but it certainly is necessary.

Before we dive into the specifics, a few ground rules should be established. First, I’m assuming you are submitting your full fees on dental claims and using fee schedules to post production amounts to the patient account. My second assumption is that you and your team are using passwords for adjustment entries. Almost every dental management software program has the ability to meet both of these requirements.

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If you are not in the habit of running this report and are not sure what your adjustments are, don’t worry. It’s a new day, and now you will be aware of how much revenue floats around your practice. I say “floats around” because the interesting aspect of credits and debits is that they’re intangible and so can be easily ignored. When cash flow slows down, the first place we look is at our aging reports (insurance and accounts receivable), but do you ever look at the adjustments? Let’s start with the frequency of this report.

As a business owner, you should be aware of your adjustments on a daily basis. This means asking for and reading the end-of-day report. Not only are you looking for production and collection numbers but also pay attention to your credits and debits. A few questions may arise if this is your first time looking at this information:

1. Why did we give that patient a courtesy?

2. A courtesy plus a credit card payment? How much am I losing here?

3. This patient seems to always receive a credit-why?

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For the sake of clarity, I recommend you itemize your adjustments as much as possible. It’s important that you see more than just “insurance credit”or “courtesy discount.” Not only are they not descriptive enough, but they are also large categories that could contain questionable transactions.

When adjustments are clearly labeled, the staff member will be able to pick the accurate one and not the one on the top of the selections. Examples of clearly labeled adjustments would be “Chamber of Commerce courtesy,” “insurance refund request,” “copayment estimation courtesy” or “Smile Club courtesy.” Notice that in all of these I said courtesy not discount. Discount is one of those words that have no place in the dental office-along with “oops” and “wow!”

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Paying attention to your daily transactions will help you spot timely errors and correct them. Perhaps your last patient should not have received a five percent courtesy because you decided to stop offering it. Does that statement surprise you? Maybe it’s time to rethink that old standard discount. Audience feedback in my classes tells me this is not as common as it once was. The revenue manager in me echoes that sentiment!

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Include adjustments as part of your monthly review of production and collection metrics. After all, your true collections number is not accurate until you’ve factored in the amount of money you’ve “discounted.” The conventional wisdom in our industry is that your collection total should be 98 percent of your production amount. This is where the first assumption comes into play; I’m not counting the difference between your full and contracted fees. If we counted that, it would be a truly emotional report as you’d see 30- to 40-percent write-off amounts.

What if you find alarming items on the adjustment report? This is where you’ll be thankful my second assumption is in place. Passwords for adjustments are essential. Tracking down suspicious transactions to find out if there is a bigger pattern at play is not a fun activity, but don’t turn a blind eye.

Your adjustment report can give you clues to how well your team estimates copayments, how much money you actually forgive and if any team members attempt to steal funds. The information is in your system, but you have to take the time to run and analyze the reports. 

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About the author

Teresa Duncan, MS, FADIA, FAADOM, is an international speaker who focuses on revenue, dental insurance and management issues. She is a Fellow of the American Assn. of Dental Office Managers. Her memberships include the American Academy of Dental Consultants, National Speakers Association and the Academy of Dental Management Consultants. She was recently named one of the Top 25 Women in Dentistry. Teresa received her master’s degree in healthcare management. She can be reached via email at