It’s no secret that a lot of dental practices struggle with getting paid for the work they do. Ideally, you would complete a dental treatment, charge an appropriate fee, and collect payment. It seems easy, right? But what often happens that you provide treatment but then begin trying to navigate the often confusing and exhausting process of collecting from both patients and insurance companies.
Why? Well, reasons range from inaccurately pre-judging a patient’s ability to pay, to poor of communication, to a lack of dental administrative staff training and beyond. But the end result is an increase in A/R.
We asked our professional dental billing services department for some tips on how to more successfully reduce A/R. This is what we learned.
1. Create and Communicate a Payment Policy
Your patients have expectations of you to provide excellent dental care. Likewise, you should have expectations of them. But unless they clearly know those expectations upfront, outcomes are rarely ideal. That’s why it’s crucial to document expectations surrounding payment and ensure your patients understand them. If your practice does not have a payment policy already in place, your first step is to create one. The policy should include:
- When you expect payment
- When and how to send statements
- Acceptable payment options
- Financing options
- Past-due payment policies
Once created, make it a practice to distribute your payment policy to new clients and even to existing patients. Review the policy with patients before you start treatment to avoid confusion later on.
And remember, this is a policy—one that applies to all patients with no or (very) few exceptions.
2. Ask for Payment at the Time of Service
An excellent way to improve your collections is to not create the need to follow up by collecting payment at the time of service. Ensure that your payment policy is clear on this before you start treatment. This applies to insured patients as well, who have co-pays and other upfront fees that they are responsible for.
3. Give your Patients Payment Options
Provide flexibility to your patients by giving them payment options. It can serve to strengthen your relationship with existing patients and may even help you attract more patients in the long run. You can offer payment options like:
- Partial payment before treatment, with the balance cleared at the time of service
- Cash, check, or bank card during service
- Monthly payments via outside financing
- Monthly payments via internal financing
While you want to be flexible, too many payment options can be overwhelming and confusing and creates additional administrative burden for your practice, which doesn’t help you get paid on time. Offer those that make sense for your practice and your patients.
4. Leverage Technology
An excellent way to reduce your A/R is to leverage technologies like electronic billing and dental software. Electronic billing makes payments easy and seamless for patients. They simply log into their account, see the amount they owe, then pay you anytime, from anywhere. This is particularly helpful when you offer payment plans, as electronic billing saves you the time and effort of creating and sending statements.
Most dental software has built-in collection tools to monitor collections. They can improve your collections by increasing automating repetitive collection-related tasks. For instance, you can send automatic payment reminders to patients rather than spending loads of time calling and emailing them.
5. Train Your Team
A well-trained team is fundamental for when it comes to increasing profitability and reducing A/R. They assist patients understand your payment policy, fees, and financial guidelines. When patients understand their options, they feel in control and more committed to following through on their agreements when compared to a “mandate” from your office.
Make sure your team knows your payment policies as well as how to talk with patients about them. They should feel comfortable and confident about discussing payment options, outside financing, and actions to take for past due accounts. From the front desk to the back office (and yes, even the dentist) everyone should be prepared to help with collections so that the process never has to be interrupted by a potential staff turnover.
Some practices opt to identify someone on the team to act as a financial administrator. He or she is responsible for keeping A/R as low as possible by taking the lead on helping patients make the financial arrangements necessary to pay their bills. If this position make sense for your practice, offer that person the kinds of training they’ll need to perform their role successfully.
The financial administrator should also be trained to call patients with overdue accounts, knowing what to say in the calls and how to say it. Offering the administrator a well-thought-out script to guide conversations with patients is ideal in a polite, firm but non-confrontational way.
6. Offer Discounts for Upfront Payments
One of the easiest ways to improve your A/R status is to offering discounts for payment in full before or at the time of service. Considering how much it will save you in administrative costs versus having to track payments down later, you can still come out net positive and foster patient loyalty. A fee adjustment of between 3-6% is a good place to start.
7. Follow Up
Many dental practice owners and managers make one major mistake with collections: they fail to follow up on payments. Without consistently following up with both the insurance company and the patient, collecting on amounts owed you becomes a losing proposition. Research shows that after 90 days, an account loses 7% of its value each month it is overdue. Past 12 months, you lose more in labor, stamps, and supplies than the amount a patient owes you.
Consequently, it is best practice to follow up immediately on your accounts. Your financial administrator should lead your team to conduct use the Four-Notice Technique to follow up with patients on their outstanding balances:
- Send a current statement to the patient
- After 30 days, send a gentle reminder that the payment is past due
- After 60 days, send a firmly worded letter followed with a phone call
- After 90 days, send a final past-due notice. If it does not work, forward the account to a debt collector
8. Consider a Third-Party Service
Handling collections is time-consuming and labor-intensive. It takes much time that you could redirect to treating patients, promoting your practice, building a loyal client base, or other actions to improve your bottom line.
In the alternative, a quality third party revenue cycle management team has the expertise and tools required to handle collections effectively. They do what they do best, and give you the time you need to spend with patients.
Regrettably, collections are a prime source of headache and frustration for many dental practices. We hope you use these 8 tips on improving collections for your dental practice to avoid unnecessary challenges to your practice and instead increase profitability through decreased A/R. To get professional advice on how to improve your collections and streamline operations, consult one of our specialists through a free practice operations analysis to learn where you can improve the collections process for your practice.