Dental Practice Know How: Reducing Average Collection

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When owning a successful dental practice, business operations are as important as dental operations. One key part of reaching your bottom line is reducing average days your patient Accounts Receivable are in collections.

The average number of days between the date of a credit sale and the date money is collected averages 30 to 45 days for most dentists. Uncollected payments of 90 days or more are considered bad debts by most account receivables departments. More importantly, account receivables over 90 days cannot be used in evaluation of sales of a dental practice, when it comes time to sell your Dental Practice Assets.

So, just how do you reduce the average number of days between the date that a patient receives a dental service and the date the money is received from the patient? Managing member of Schiff Dental CPAs, Mr. Allen Schiff provides three recommendations for improving collections. These three points from the Dental CPA and the founding member of the Academy of Dental CPAs are as follows:

  1. Ensure your dental practice has a clear financial agreement between dentist and patient

Why is this so important? Because dental patients and dentists don’t want surprises when it comes to financials.

To accomplish clear financial agreements, Mr. Schiff noted it is imperative to hire a good financial coordinator for your dental practice. The purpose of a dental financial coordinator is to relay the doctor’s wishes and the doctor’s treatment plans and clearly articulate the cost to the patient who is receiving the services and how the expectations on how those services will be paid.

  1. Understand the payer mix (insurance vs. self-pay)

Insurance companies always have an agenda to either deny a claim or delay a claim that has been submitted. This means that a practice with a payer mix that weighs towards private payers will collect reimbursements at a higher and faster rate, which consequently affects your cash flow in a very positive way.

If your the payer mix of your dental practice skews towards insured, documentation can be key to improving insurance claims that have been submitted to the insurance company. Schiff noted that it can be important to include dental x-rays with the insurance claim, submit proper documentation, and code appropriately when submitting a claim, in order to expedite the claims process.

  1. Consider self-financing

Many dental practices are using self-financing as a way to improve average collections of their patient accounts receivable. Self-financing is a practice whereby the dentist will extent a credit to the patient in exchange for a payment schedule, a payment schedule that the patient agrees to and signs off on.

However, it is critical to understand the default risk with this plan. If the patient fails to pay the monthly schedule plan that has been agreed upon prior to the initiation of treatment, the self-financing agreement no longer helps reduce average collection and you may need to seek legal counsel in resolving the breech.

 


In addition to the three points outlined above, technologies such as accounts receivable software can assist in improving your dental practice’s financial health. The account receivable management and debt collection TSI is one example of effective software for dental practices to reduce average collections.

Thanks for Mr. Allen Schiff’s expert advice. He can be reached at [email protected].  As you can readily see from the above, you can take actionable measures to improving your dental practice collections of its accounts receivable knowing how to reduce the average days of your practices collections.

Have another insider-tip for reducing average collections? Share in the comments.

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