Everyone is worried about producing more, but most of us should consider what we net (get to keep). Our slogan has always been, Produce More, Collect All, and Keep Half. One of the secrets of great collections is to have every patient pay up front. I was teaching a seminar in Salem, Oregon, and noticed that one of our clients was in the audience. Not knowing what they would say, I asked the doctor what his collection rate was when he started with Summit and what it was currently. I assumed it would be better, but when he said it was 113% I smiled, knowing that the strategies that Summit Practice Solutions teaches and implements for our clients are awesome. Today, where we no longer have to carry the accounts receivable, it is pretty simple to get our collections rate over 100% if the practice is growing. While this is just one part of the Produce More, Collect All, Keep Half strategy, let me give you the Top Ten reasons you want to learn how to get patients to pre-pay their treatment.
1. You get your money: This allows you to pay bills and possibly even invest the money to earn more money between the time the patient pays and when they have the work done. It should result in about 5% or more to you in having it to use rather than chasing it later. A bird in the hand is worth two in the bush.
2. Fewer Cancellations and No-Shows: While cancellations and no-shows will never disappear, pre-payment is a key strategy in lowering it below 10% (national average is 15-20%). The holes in your schedule are eliminated while making your overhead plummet.
3. No buyer’s remorse: It just seems like the patient’s attitude is better. If you think about it, having patients go through with pre-payment signals that you have done everything correct up to that point: The patient is engaged, understands the need, and wants the treatment.
4. You don’t have to deal with the insurance companies: Because their rating and their contracts are with the patient and not you, they don’t like dealing directly with the patient and will usually follow through in half the time with them. Gone are the ten follow up calls and waiting to talk to a person. Gone are the phone calls from the patient wondering why the insurance company still has not paid, because they are thinking you did something wrong. Part of making managed care work is minimizing the time and effort to get paid. You have to do this to make it work.
5. No statements to send out: Statements cost you money in manpower, time, materials and postage, and you still won’t get paid. Think how nice it will be when you don’t have to expend the staff time to chase down the patient and the insurance companies. The lost time and effort can be reallocated to more important tasks.
6. Everything fits: This seems like a fairy tale, but when people are paid up, there never seems to be a problem. If you do something for free, or allow the insurance to pay first and then bill, there is always a problem. Get your money up front and stop having problems. It is called the “Prostitute Syndrome” (I kid you not). It is based on the fact that the value of the service diminishes rapidly after it is delivered. Get that money up front before you hold hands and kiss.
7. They refer: Do you realize that patients that owe you money don’t refer? It is a little known secret from guys like me that have done it wrong. An increase in referrals means less money invested in marketing. You should have well over a 50% referral rate or something is really wrong. A referral rate below that means that patients don’t like something and they are telling you that by not coming back or referring.
8. All of your Financial Arrangements are done before any treatment is delivered: I know, you don’t have a doctor that works on people that don’t have a signed financial arrangement, but for those few that have an 800 lb. gorilla that constantly breaks their own rules and ruins the accounts receivable totals, consider the ripple effect of doing everything up front. Now if we could just figure out a way to keep the doctor from changing the treatment plan. Oh, wait, this will do that too. He will be less likely to change or alter an already paid-in-full treatment plan.
9. You cut down any lawsuit: Sometimes having to resort to collection agencies triggers a lawsuit when the delinquent patient realizes that you actually want to be paid for your work. Granted, it is probably two years after it was done, because you don’t have adequate follow up to your poor financial arrangements, but it will happen.
10. Your recall system will flourish: You need at least an 80% recall effectiveness rate, but I seldom see offices over 45%. Imagine the extra cost in marketing by not having your recall in order. Patients that owe you money don’t come back for recall.
Bonus Reason #11: The doctor stays in the back and out of everyone’s hair. He/she is happy and you can’t buy that for any price when it comes to creating the kind of culture you need to be a Super General Dental Practice.
This is how we Summit.
Michael Abernathy, DDS