7 Steps to Successfully Managing Your Accounts Receivables
As a consultant, I was privileged to observe different dental practices and their collection systems. I was always amazed at the office’s accounts receivables; some are great, and others make me wonder how the doctor stays in business. I watched a financial coordinator set up a payment plan for 48 months with no finance charges and no signed agreement. The patient was going to pay $25 a month! Another time, I helped an office run 500 statements for a one-doctor practice with over $700,000 owed to the doctor. In this economy, a practice cannot survive doing business like this. The following steps I have used in the office are the keys to successfully managing accounts receivable, increasing collections, and managing financial arrangements.
Credit Guidelines
The best foundation for every collection system is great written credit guidelines. It is impossible to have black-and-white policies in dentistry. As a team with the doctor, you should go through a credit guideline checklist and discuss different situations and how they should be managed. Review the checklist and see what the team knows about your collection guidelines. Determine what your guidelines will be as a team. Then, a written copy of the guidelines should be created and given to everyone on the team. The team needs to know how to collect money and stay within the office policies to manage different scenarios without discussing them with the office manager or doctor. Your guidelines should include things such as how children of divorced parents are managed, what about college students covered under their parent’s insurance plan but live in another city or state, and handling patients who want an appointment and owe the office money.
Inform Before Performing Treatment
Your patient must know what is expected from them. Collecting money from a surprised and angry patient is difficult. The patient needs to understand the need for treatment, the cost of the treatment plan, and the different payment options available. Even in the case of an emergency patient who has agreed to treatment, the finances need to be discussed before treatment is started. Sometimes, we might have to collect the fee in full and give the patient the claim to file independently if insurance cannot be verified. We have all had to make those collection calls to those patients who forget they agreed to pay the doctor for relieving their pain. Those calls could be a more pleasant part of the job.
Handling Insurance Estimates
You want to help your patients understand their insurance coverage, but be careful to avoid becoming the expert on their insurance plans. Let them know that since the contract is between their employer and the insurance carrier, they need help understanding what the contract allows and all the details. We give the patient a printout of what we get from their insurance carrier and let them know this is all the information we must use to estimate their treatment. We can only offer an estimate based on the information the insurance carrier shares. The patient should be presented with the full fee and the insurance estimate so they understand the treatment’s cost in case insurance does not pay what was estimated. Ensure you let the patient know the insurance portion is only an estimate. Sometimes, it is best to offer to do a pre-treatment estimate if the patient wants an exact copayment amount. A pre-treatment estimate can be sent electronically and returned quickly; ensure the patient is scheduled and doesn’t fall through the cracks. The patient must see the value and what they will get for their money.
Collect the Payment
It sounds simple, but the team is afraid to ask for money. We need to collect what is owed for the treatment. The patient should know what is expected of them, and most should be prepared to pay. As a young office manager, I remember hearing Linda Miles say, “Imagine that your paycheck is pasted on the patient’s forehead, and if they walk out the door without paying, then your paycheck also just walked out the door.” This visual reminder helped me understand that I had to collect to pay the bills and team what was owed to them. One of the questions we ask in the credit guidelines questionnaire is how the team feels about the fees. If the team doesn’t understand the treatment’s fee and cost, it is hard for them to present treatment. If they think the fees are too expensive, they hesitate to show that treatment and payment.
Offer Payment Options
The offices that have outstanding accounts receivables are the ones that partner with the patient to find a payment plan that works with the patient’s budget. There are many options for offering the patients a payment plan without the office becoming a finance company. I have never seen a bank that provides dental services, so dental offices should not try to be banks. So many legal issues must be covered; let the professionals handle that. Companies such as Care Credit and Sunbit can do credit checks and manage collection issues if they decide not to make payments. The best part of working with an outside financing company is you can get paid within 24 hours.
Do the Proper Paperwork
Hopefully, you are not making in-house financial arrangements and won’t need to do paperwork. If you have ever borrowed money from a bank, did you have to sign a lot of paperwork? This is the most crucial step in suitable financial arrangements. If a patient will make three or more payments, regardless of how often (monthly or weekly), you need to have a Truth in Lending document. This legal agreement states how the office is getting paid, who will pay, and what the contract terms are. Ensure the patient and the person presenting the financial arrangements sign the document. It is hard to take collection action on a past-due account if you have nothing to show they promised to pay.
Follow Up
It is essential to have a tracking system to follow up on past-due accounts and missed payments. If you offer in-office financing, pick two due dates for the payment, such as the 10th and 20th. On the 11th and 21st, run a report to see who missed their monthly payments and contact them. Make sure you send out billing statements on a regular schedule. Keep count of how many statements you send. If you send over 50 statements, divide the task into weekly batches using the alphabet. This keeps the cash flow going all month and cuts down on some phone calls. Make sure to have a system for sending out past-due collection letters. Don’t wait six months to take action on these accounts. Make sure you understand the collection laws. In the past few years, there have been many changes in sending medical/dental accounts to collection agencies.
Managing the Accounts Receivables is a full-time job. You must talk with the patient, document the details, and follow up to ensure the office is getting paid. It would help if you made time to stay on top of your accounts receivables, schedule weekly time in your schedule, or assign the task to one office member. Your account receivables should be one-half of your monthly production; if yours is higher, now is the time to take steps to get things moving in a different direction. Be consistent with your follow-ups and arrangements.
About the Author
Marsha Pilgrim, MAADOM
Marsha has over 35 years of experience in the dental office, both as a dental assistant and an office manager. Originally, she trained as a dental assistant while serving in the US Navy.
During her 35 years in dentistry, Marsha has managed her husband’s practice, worked as a dental consultant (15 years), and worked as a certified trainer for Dentrix (15 years). She is a lifetime member of AADOM, a Certified Consultant with Bent Ericksen & Assoc., and a member of the Academy of Dental Management Consultants. Marsha will be inducted into the 2023 class of AADOM Masters (MAADOM) in September.
