Reprinted with permission from Linda Drevenstedt.
The key to great collections is consistency and follow-through. Get together with your front office team and put the following guidelines into practice and you will GET YOUR MONEY.
1. The best defense is a good offense. Always be sure you have discussed all fees and payment options with every patient. Have every patient with a treatment plan over $500 sign off on a payment plan.
2. Mail statements consistently. Even if you have insurance pending, send everyone who owes you money a statement EVERY month – no exceptions.
3. Be sure all statements have a due date clearly marked. Include an option to pay with a credit or debit card.
4. Review statements before mailing and add specific notes or stickers:
"30 days past due."
"Insurance has paid their portion."
"60 days past due; please remit within 10 days."
5. Send statements immediately after insurance pays unless you have the patient on a credit card agreement to put any balance not paid by insurance on their credit card. If there is a balance due, include a credit card option on the statement and also include a return, addressed envelope.
6. Call patients who have not paid within 60 days, 10 days after the statement goes out. Ask for payment within 10 days.
7. Send patients a copy of the patient's claim when insurance denies payment. Send a statement with a due date in 10 days. If the balance is large, send a CareCredit© application in the envelope.
8. Send a gentle collection letter 10 days after the call if no payment is received. It is critical to stay on a regular schedule once you start collections calls or letters. The sequence needs to be prompt from your office. This is not a "Oh, the checkbook is low; go call some overdue accounts." This is a systematic, consistent system to get your money. Someone on the team needs to be accountable for following through with the steps.
9. Send collection letter No. 2 10 days after letter No. 1 if no payment has been made. This is a more firm letter with a CareCredit© application and an option to pay the amount in three equal payments on their credit card.
10. Send collection letter No. 3 10 days after letter No. 2 if no payment has been made. This is a final notice or letter. Send this registered mail. Caveat – You must follow through with any threat, so be prepared to send the patient to a collection agency, an attorney, or to small claims court. Don't bury this in the files.
11. Turn the account over to a third party collector if the final notice gets no response within 10 days. Use the following methods to move old accounts off of your current accounts receivable. Your computer should allow you to put them in a special billing category so that they are separated and receive no more statements.
• Collection attorney – If you have a large account, usually over $1,000, then a collection attorney is a good choice. They will charge 30% to 50 % of the money collected. Ask your business attorney or CPA for a referral.
• Collection agency – If you have amounts from $50 to $999, send the patient's account to a collection agency. Collection agencies are most effective if the account is under six months old. Be sure the collection agency you choose will put the debt onto the patient credit report.
• Small claims court – In many small towns, this is a good resource. The patient must have wages that can be garnished for this to be effective. And, you need to be in a county where this is an uncomplicated system. Try it to see in your county. In many large metro areas, this is not effective due to the large caseload of the county. There is usually a filing fee.
• Write off small balances – If the balance is under $50, then write it off if — and only if — you have completed at least five steps of collections calls and letters.
12. Send a patient dismissal letter – Too many practices will send people to collections and then keep them in recall. Not a good idea. Once the patient has been sent to any of the entities in No. 11, send the patient a formal dismissal letter. Follow the guidelines for dismissing a patient provided by the American Dental Association or your state dental association.
The key to great collections is consistency and follow-through. Get together with your front office team and put these guidelines into practice and you will Get Your Money.
For sample collection letters and call scripts, checkout our website for Collection e-SSENTIALS.
Author bio
Linda Drevenstedt, RDH, MS, is president of Drevenstedt Consulting, LLC. She uses her wit and wisdom to coach, consult, and create courses that assist practices in reaching their potential by developing leadership in each person. Her experience spans dental assisting, dental hygiene, practice administration, and consulting, and she is a member of numerous speaking, consulting, and management organizations. Reach her at (800) 242-7648, send her an email at [email protected], or visit www.drevenstedt.com.
