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Collecting Your Due: Clear Financial Policies That Keep Your Patients Coming Back Rhonda R. Savage, DDS, CEO, Linda Miles and Associates

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Collecting Your Due:
Clear Financial Policies That Keep Your Patients Coming Back

by Rhonda R. Savage, DDS, CEO, Linda Miles and Associates

People who owe you money do not like you. It’s true. They feel guilty if they’re late with a payment and burdened that they’ve procrastinated. They know it’s not your fault, but they feel pressured and unhappy. Today, patients are more stressed than ever before about finances. Your patients can be extremely upset if they’re faced with a financial surprise. It is wise to remember that surprised patients will first be embarrassed patients, and then they will become angry patients.

The purpose of this article is to help you clearly outline a financial policy that will decrease your patients’ stress. Most case acceptance falls down with the financial presentation. Clear financial policies are a very real part of customer service, especially when they’re presented by a warm, empathetic, knowledgeable staff. In addition, for a policy to be effective, it must be well understood by staff and backed up by the doctor.

Determine the Health of Your Accounts Receivables
As a basic guideline, your accounts receivable (AR) balance should not exceed one half to one month of your production.
  • Run a “clean” AR report that does not include credit balances and analyze the 60-daysand- over column, as well as the 90-days-and-over column. The 60-days-and-over column should not be more than four to six percent of what your patients owe you. The 90-days-and-over column should not be more than two to four percent of your AR.
  • Make certain to run a past-due insurance report. Claims should be filed daily for the services of the day. Any claim 30 days past due requires a follow-up call from the team member responsible for this department.
  • The doctor’s role is to hire, train and provide oversight for your financial health. Even with the finest office manager, the doctor is still involved and should be the leader in the practice. Have you ever been stressed out, burned out or frankly just tired of the everyday grind? You will notice that if you lose interest in your practice, your practice could go into a decline. Even in today’s economy, there are some practices that are still growing! There are many ways to invest in and revitalize your team through the use of team training, DVDs, books and CE courses. The financial health of your practice should be a team effort.
  • The doctor should review the AR and past due insurance reports on a monthly basis if these areas of the practice are healthy; weekly if these areas of your practice need attention. Many offices have a policy that “everyone does everything.” With a more systematic approach, the doctor can oversee those accountable for particular areas. In addition, your team members will know whom to ask for what. They will also know which staff person should speak with a particular patient. Designated front-office responsibilities with clearly defined goals and expectations will decrease stress and increase professionalism in your office.

    If your AR balance is less than one half of your monthly production, your financial policies might be too firm and staff may be unintentionally running patients off. On the other hand, for your established patients of record, you might consider a little flexibility in payment if the patient has demonstrated a good history. If you do offer financial options, however, do not extend them for more than three months and have a re-bill policy or inform the patient of interest due after or during the three-month period.
  • Check with your state law regarding interest regulations and present a written policy to the patient. Be careful of extending credit: If there is no interest charge or rebill fee, your bill could be going to the bottom of the pile!
  • Do you have old accounts on your AR that have been turned over for collection? Adjust these off so you have a true AR that is collectable. Enter the adjusted amount into the patient’s clinical record and keep a separate ledger file for this activity.
If you’re working on a bonus plan within your office that includes production or collection, add this total adjusted write-off back into your statistics for the month as it will artificially lower your monthly goal amount. Front-office staff are often uncomfortable adjusting off an uncollectable amount as it may impact the monthly bonus. Many offices have “years-old” uncollectable amounts that skew the true AR balance. Consider cleaning up your ARs and not penalizing your current staff for past issues within your practice.

Develop Your Financial Guidelines
Doctors and team members need to sit down together and write out the office’s financial guidelines. Truly, the collection of the money owed is the responsibility of the entire team. The entire team creates the guidelines and then the doctor needs to stand behind them. Have you ever noticed that some patients will try to go around the front staff and ask the doctor for a discount or professional courtesy? Or maybe they’ll ask the kind-hearted doctor if they can pay “over time” instead of paying as the treatment is completed?

Doctor, this will undermine the patients’ trust and respect of your front-office staff if they are allowed to “do an end-run” around your front-office team. One such kind-hearted doctor told me recently, “There’s no end-run involved. I just plow right through my front-office staff, give the discount up front to the patient and I know I’m the problem!”

Discuss the philosophy of your practice with your team. Each office is different. In my private dental practice, I loved to give dentistry to those in need, especially the school children. There was an “adopt a school” program in which I participated heavily. The school would bring a child who had an emergency, but had no means to receive dental treatment, and I would also adopt the brothers and sisters. In my office, rather than give courtesies or discounts, my patients knew that we adopted many families in need instead of giving discounts. What is your office policy regarding courtesies, aka discounts?

If you feel compelled to give a courtesy, consider a professional discount limited to $50 rather than extending a courtesy on a percentage basis.
  • Does your office offer a cash courtesy? If so, it legally should only be offered to those paying fully in cash. If the patient has dental insurance, you are required, by law, to offer the same courtesy to the insurance company. The cost of courtesies to dental offices can be quite significant. Keep in mind that dentistry is a business and should be treated as such. All of your costs are up-front costs: lab, staff, supplies and many more overhead categories that impact your bottom line significantly. You must treat many more patients to recover from a routine cash discount.
  • It is advisable to craft a “change of policy” letter regarding your position on cash courtesies or changes in financial policy. For a sample of my “change of policy” letter, e-mail me directly at rsavage@harbornet.com. I would not recommend mailing this letter. Do not surprise the patient. Remember that a surprised patient is an angry patient! Do allow the prior courtesy level and let the patient know, in a friendly, warm and caring manner, why you’ve had a change in courtesy policy. And then, the new courtesy level would apply for all future treatment.
  • Doctor, reinforce the efforts of your front-office team. If an old friend asks for a courtesy, let him know that your staff will handle all the financials for the two of you. If you shoot down the financial coordinator, she might not want to enforce the policy again! Doctors who make arrangements contrary to office policy create stress for their staff and ultimately can create spoiled patients who will continue to go around the staff. Spoiled patients are created by nice, caring doctors who want to bend over backwards for their patients, especially early in practice. These patients become quite demanding and are often rude to the front office, dictating when they’ll come in, when they’ll pay and how much they’ll pay.
Criteria for Financial Options
Mrs. Chen, a patient, is prepared by the assistant or hygienist as she is escorted to the front. “I’ll be walking you up front to Marcia, who will write you a receipt for today’s visit and make your next appointment,” says the assistant who means that the patient needs to pay.
  • Marcia says, “Thank you, Mrs. Chen: Your fee for today is $375. Will that be cash, check or bank card?”
  • If the treatment is extensive, consider breaking the patient’s portion into three segments, with one third due at the beginning appointment, one third halfway through the treatment and the balance at delivery. If the appointment is done in two procedures, then collect either the entire amount to begin, or split into two payments if the patient requests. For well-established patients with a great track history, consider half down and the balance in 90 days. Never perform until you inform. During financial arrangements, present the patient with a written treatment estimate, have the patient sign one copy and keep one copy in the patient’s record, whether you are chartless or not.
  • What is your position on fees involving lab work? Many offices require the full fee upon the prep date, especially for milled restorations created in the office (CEREC, E4D).
  • Insurance co-pay policy: Collect co-pay and deductibles that are due at the time of service. Collect slightly more than the patient’s portion if you are not certain of the fee schedule the insurance utilizes, assuming you accept assignment of benefits. Or, another option is to have a credit card on file for the after insurance balance. The after-insurance balance is the most difficult portion to collect. Patients are resentful because they paid what you asked at the time of treatment; you received the insurance payment, and now you want more?!
  • What is your cash courtesy policy for patients who pay with credit cards? What is your policy for “professional discount” if the patient has an insurance you are billing? I do not recommend extending courtesies in either of these situations.
  • Consider a source of outside financing, like CareCredit or ChaseHealth. I personally worked with CareCredit for 16 years. Some attendees in my audiences would often ask, “Dr. Savage, why do practice management speakers like outside financing when they don’t like us joining a PPO?” My answer was always, “Outside financing will pay you up front and cover your expenses up front. Yes, a PPO will take a percentage, but it will be after the fact. Also, outside financing is a “win-win” for the patient and the doctor. If the patient pays their percentage off prior to the end date, there is no interest to them. The win for the dental office is that the costs are covered up front in full for the entire case.”
  • What is your policy for emergency patients? Consider having emergency registration office visit fee collected before seating.
These are some of the guidelines you will need to define with your team. There is much more to consider: verbal skills, past due insurance, past due accounts receivables or past due recall, and how to connect with the patient, expressing warmth, empathy and concern. Our goal and intention is that you keep the patients you have and get the new patients you deserve. Firm, consistent financial policies are one layer of the customer service that our patients today deserve and expect. I would challenge you to have an open, honest, productive team meeting and look at your financial policies. How healthy is your practice?
Author's Bio
Dr. Rhonda Savage began her career in dentistry as a dental assistant in 1976. After four years of chair side assisting, she took over front office duties for the next two years. She loved working with patients and decided to become a dentist. Dr. Savage graduated with a BS in biology, cum laude, from Seattle University in 1985; she then attended the University of Washington School of Dentistry, graduating in 1989 with multiple honors. Dr. Savage went on active duty as a dental officer in the U.S. Navy during Desert Shield/Desert Storm and was awarded the Navy Achievement Medal, the National Defense Medal, and an Expert Pistol Medal. While in private practice for 16 years, Dr. Savage authored many peer-reviewed articles and lectured internationally. She is active in organized dentistry and has represented the State of Washington as President of the Washington State Dental Association. Dr. Rhonda Savage is the CEO for Linda L. Miles and Associates, known internationally for dental management and consulting services. Dr. Savage is a noted speaker who lectures on practice management, women’s health issues, periodontal disease, communication and marketing, and zoo dentistry. To speak with Dr. Savage about your practice concerns or to schedule her to speak at your dental society or study club, please e-mail rsavage@harbornet.com, or call 877-343-0909.
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