Data collected by Sikka Software indicates a steady practice management trend.
But is it good for business?
Here’s a simple question that will either be easy for you to answer or will you stump you: What’s your practice's current accounts receivable (AR) number?
If you know the answer, great! If you don’t, it’s imperative that you dive into the numbers.
Using data gathered by Sikka Software from more than 12,500 dental practices, I was curious to see what average AR numbers were among these practices. Digging through the numbers from 2011 to 2016, the numbers I found over the last four years were in the six-figure range (figure 1).
Figure 1: Average dental practice accounts receivable totals, 2011–2016
As you can see, average AR has increased about $30,000, or 36%, over a five-year period. What are we to make of this trend? To answer that question, I turned to Dayna Johnson, a dental consultant who believes AR is one of 5 stats dental practices should monitor daily.
“I am constantly amazed when I work with a practice and they are guessing at what their AR number is,” Johnson says. “More often than not, I find when practices don’t know their number, their guess of what it might be is much lower than the real number. The look of shock on their face when they hear the actual number is a testament to exactly why you should know this number and what it is every day.”
How can you lower your own AR number? Johnson believes part of the problem is that dental practices have a hard time talking about money with patients.
“I have seen a patient walk out the door without paying a dime on a procedure that cost more than $20,000,” Johnson says. “That patient walked out because he was able to avoid the money conversation with the front desk, and said he wanted to think about his options on how to pay. That’s not acceptable.”
Johnson believes it’s important for every patient to know where they stand financially with the practice, and vice versa. “A patient should never walk out the front door without a financial plan,” she says. “It takes everyone in the practice feeling comfortable talking about money and knowing what the options are. What if the patient wants to pay by credit card? Do you have an outside financing option like CareCredit in place that can be an option? Everyone in the practice should know the answer to these questions.”
What’s your AR number? What are you doing to keep it down? If you don't know, make a plan today to get answers to these important questions!
Author's note: Want to learn more about what Sikka Software can do for your practice? Practice Mobilizer is the free app that lets you send HIPAA-compliant video messages, track patient arrival times, access zip-code-specific fee data and more. Click here to learn more about Practice Mobilizer.
Also by Kevin Henry