The Collection System

Well-run dental practices rely heavily on the systems in place for each critical area of operation (i.e., scheduling, case acceptance customer service, etc.) The better those operating systems are designed, the more effective and productive the dental practice will be. There is now extensive evidence in dental practice management literature that systems have a direct impact on practice production, which is the best indicator of practice success. In other words, high production equals financial success.

Collections are one of those systems and must be managed effectively. When collections fall behind, patients will default on paying balances and become lost to the practice.

To maintain their viability, generate sufficient revenue and keep stress under control, modern dental practices must establish robust financial management systems to collect what they are owed. Consider the following principles of collecting money that will help any practice to perform at the highest level:

Understand the correlation between collections and a patient’s perceived value of the treatment they receive. Most dental practices do not spend much time communicating value to patients. Patients who value the practice and the recommended procedures are much more likely to willingly pay their balances on time. The longer a patient goes without paying the balance, the more likely they are to develop remorse as a rationalization for not having or wanting to pay the balance. Building value is about using scripting to educate patients on why dental procedures are beneficial. For example, many practices refer to hygiene appointments as “cleanings.” This term dilutes the value of a hygiene appointment, which is really a periodontal maintenance, preventative, and diagnostic exam that is essential for keeping one’s teeth for a lifetime. The word cleaning simply does not do justice to a hygiene appointment. This can affect the frequency with which patients will schedule hygiene appointments, but it also affects how they feel about their copayment for hygiene.
Establish strict payment policies and use scripting to communicate them clearly to patients in advance. One of the most important factors in creating a smooth and efficient collection system that does not create customer service issues is communication. All practice systems relating to the collection of fees should be detailed in writing. This should then be translated into scripts that the financial coordinator—as well as other staff members who may discuss money matters with patients—can use to acquaint patients with their obligations. Scripts not only make it easier to discuss what for some is an uncomfortable subject but also assure greater consistency in what patients are told. Some practices are uncomfortable talking about money or asking for money; however, a dental office is a business with expenses that must be paid, and patients know that. Patients must understand upfront that they are expected to follow certain office policies, and those policies should be clearly explained in a positive and nice manner. Scripting improves the communication abilities of all staff members. Consider the following script:
“Mrs. Jones, we do request payment at the time of the service. Your balance due at the next appointment will be $150.“
Mrs. Jones is now very clear on the amount that is due at the next appointment, and the script is pleasant and in no way offensive. Every practice should establish collection policies that address payment due dates, copayments, and patient financing and financial options. The practice will also need to set up a follow-up system for patients who have not paid their balance to avoid uncollectible accounts. Understanding how to set policies, communicating those policies to patients, and following up as necessary are all essential elements of running a highly efficient and effective dental practice.
Offer a wide range of payment options to patients. Good customer service means allowing patients to pay for your services in various ways. Such flexibility also helps protect you against collection problems. When patients choose the convenience of paying with credit cards, you avoid billing and collection labor while eliminating the risk of non-payment. For larger fees, offering a discount (when permissible) for payment up-front enables patients to save money while ensuring that you get paid. Similarly, financing a higher fee through a third-party finance company provides you with cash flow and peace of mind. Because patients have different needs there are four recommended financial options for greater convenience and customer service:
Small discounts for payments paid in full by cash or check. Check your insurance contracts carefully before offering insurance patients any discounts. Discounts must be disclosed to the insurance company and in some cases are specifically prohibited.
Credit cards. Accepting a range of different credit cards gives patients greater options when paying their bills.
Short-term payment plans. Offer a short-term payment plan for multiple appointment cases, with final payment due at the final appointment.
Interest-free patient financing. Interest-free financing will help to increase case acceptance and avoid collection issues. Don’t be deterred by the fact that a small percentage will be retained by the third-party financing company as their fee, because overall practice production and profitability will almost always increase when patient financing is used broadly and properly.
Schedule times when the financial coordinator will address overdue accounts. Rather than letting collections activities take a back seat, give them priority treatment. Identify specific times when the financial coordinator will focus on collecting overdue fees. The time allotted will depend on the volume of accounts needing attention. Various performance targets—in addition to the 99% collected goal—can be established as motivators, e.g., number of patients contacted per week, or how many overdue accounts settled per month.
Use the Rule of Threes for contacting patients who owe the practice money. As soon as an account becomes overdue, it should trigger a series of contacts designed to elicit payment. First, the financial coordinator should place a phone call to the patient once a week for three weeks. If this doesn’t work, she should then send one email per week for three weeks. Finally, if payment has still not been made, she should send a formal letter once a week for three more weeks. This process will work in all but the most difficult cases.
Submit insurance claims daily. To minimize delays in receiving payments due from insurers, claim forms should be prepared, double-checked and submitted every day. The practice should also implement a system that alerts staff when payments from insurance are overdue. If reimbursements are late, contact insurers immediately to see if there’s a problem.
Remember that time is of the essence. The longer a bill remains unpaid, the less likely you are to collect. Aim for collecting 90% of fees either at the time of service or within 30 days. Then focus on the remaining 10% so as to acquire most of it by the 60th day, the reason being that most accounts receivable that reach 90 days will never be paid.

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