Reports in hand equal cash in the bank

By Sally McKenzie, CEO

Remember the good ol’ days? You know, the ones in which your schedule was booked for months, the patients were flowing like champagne from a fountain, and you were rolling in the green — or at least you thought you were. Then came the recession; it put a cork in the bubbly, made Swiss cheese of the schedule, and as for cash flow, accounts receivables went from so-so to “uh-oh.”

The truth is, you probably have little or no idea what your receivables were before the economy hit the skids, because you were most likely racing through your days too quickly to give nary a glance at the figure. And, after all, enough patients were paying up front and in full. Ah yes, the good ol’ days ...

By the time 2008 rolled around, practices had come a long way in educating patients about payment expectations. Gone were the days of patient-dictated payment plans — “I would like to pay $50 a month on my $1,200 bill; that way I’ll have it paid off in just two years. No problem, right?” Practices put their collective feet down and said goodbye to the banking biz. Policies were not only adopted, they were actually implemented. Business staff became more comfortable with confidently explaining financial policies to patients, and patients were more willing to accept them. Then economic circumstances changed, and dental teams panicked.

Two years later, it’s time to hit the pause button on practice panic and pay attention to what I’m about to tell you. We all know that the economy has undergone a series of changes and challenges over the last several months. That being said, the expectation remains: Practice collections should yield 98% for treatment currently being performed. Should you be sensitive to your local economy? Absolutely — but not at the expense of the practice’s financial solvency. It’s time to issue a collections correction and get your accounts receivables back on track. But before you dig out, you have to dig in — into key practice reports, that is. These are your guide to cash in the bank.

The accounts receivable aging report ...

This report should include all credit balances and all debit balances. It is vital to understand how many dollars are outstanding 30, 60, and 90-plus days. Because practice costs for tracking and collecting old balances can far exceed the actual value of the account itself, this report should be printed monthly.

The outstanding insurance claims report ...

This report identifies how many dollars in outstanding claims there are in each category: current, 30, 60, and over 90 days. This report is crucial because the longer dollars remain outstanding in claims, the more costly it is to the practice. Print this report monthly. Many of today's software systems allow you to track daily.

The accountant earnings report ...

This report details exactly how many dollars are being written off in each category: accounting adjustments, insurance plan adjustments, professional courtesies, prepayment courtesies, etc. This report should be monitored daily and monthly.

The production by provider report ...

This report allows you to track individual provider production for each dentist and hygienist. It is important to track individual production numbers to determine productivity. Typically, hygiene production should produce approximately 30% of the total production in an office.

The production by code report ...

This report gives you an opportunity to track how many times a specific procedure is done. This can be used to determine productivity, treatment acceptance rates, and much more. Also, if the practice is utilizing special techniques, tracking the production by code will help to determine effectiveness; i.e.; tooth whitening, periodontal aides, crowns, bridges, and implants.

The treatment plan report ...

This report identifies how many dollars are being presented to patients. Utilizing this report effectively can identify your success rate in treatment acceptance. The formula for this is: dollars recommended divided by dollars accepted equals case acceptance rate. Your case acceptance percentage should be at least 85%.

Now that you’ve carefully reviewed these key practice financial reports, you have a much better understanding of where your practice financials stand, and you are ready to take action.

Author bio
Sally McKenzie is CEO of McKenzie Management (www.mckenziemgmt.com), a full-service consulting/coaching dental management company, providing proven management solutions since 1980. Sally is also publisher of The New Dentist magazine dedicated to dentists in the first 10 years of practice. She is a contributing editor to Dentistry Today and the publisher of The Dentists Network. She can be reached at (877) 777.6151 or [email protected].