Sally McKenzie, CEO McKenzie Management Printer Friendly Version

Create Your Own Stimulus Package

To date, I’ve heard nothing about a stimulus package for dental practices, so it’s incumbent upon you to create your own. One of the best places to start is plugging the leaks in your revenue stream, leaks that can cause serious financial trouble seemingly overnight. In actuality, it takes about four months for a practice to spiral into serious financial disarray. Certainly, the average practice isn’t necessarily teetering on the brink of financial disaster; however, it is likely losing some $2,000–$3,000 per month in practice revenue. The culprit? Lack of attention to key systems, specifically those dealing with money.

For starters, make sure you’re paying closer attention to the dentistry you collect on than the dentistry you produce. Not that the latter isn’t very important, but it is still quite common for dentists measure their financial success by the amount of dentistry they produce—$500,000, $800,000, $1.5 million, etc. But it’s not the production that pays the bills.

Speaking of collections, given the state of the economy, some dentists may feel pressured to abandon or ease their financial policies. You don’t have to be rigid—options are critical—but you also don’t want to set a precedent that you’ll be paying for (literally and figuratively) for multiple economic upturns and downturns to come.

Take a look at your receivables. You should know this by now, but by way of reminder, your accounts receivables should be no more than one month of what the practice produces. In other words, if production is $80,000 per month, there should be no more than $80,000 owed to the practice. You should also see a 98% collection ratio every month—that’s 98 cents on every dollar. If the office is collecting assignment of benefits from insurance companies, the front desk should be collecting from patients 45% of the monies that were produced that day. If the dentist is not accepting assignment of benefits then the dentist should expect the front desk to be collecting in the high 90s over the counter because it is almost a cash practice.

Getting back to revenue losses, have you checked your audit trail lately? In other words, do you have a system in place to catch and correct costly mistakes? No matter how good your business employee may be, she/he makes mistakes. Look at key reports daily. In particular, examine the day sheet and the deposit. Print and review an audit trail report daily. It reflects every transaction that has transpired in the office since the last printed audit trail. Perhaps you performed a $900 procedure yesterday and the patient’s credit card was accidentally charged only $90. It happens.

It happens because people are human. HOWEVER, for far too many practices, money is lost because business employees are grossly undertrained. Combine the lack of training with the fact that many of these employees are lone rangers who must multi-task at a frenetic pace and it’s no wonder individual practices are losing thousands every year. These are the people who hold your financial solvency in their hands. Make sure they are thoroughly trained to handle this major responsibility.

Next, inventory your patient complaints. If you are getting calls from people who are angry because they don’t understand how the practice arrived at a particular balance, that’s a good indication that there are system shortfalls.

Information is the key to avoiding serious problems with patients when it comes to charging for treatment. About 75% of complaints against dentists involve money—not that the fee was too high, but that there was a misunderstanding about the fee. When the data in the computer system does not leave an audit trail these misunderstandings can turn into major problems for the dentist.

Make sure there are no surprises and patients are fully informed before a procedure is performed and the information is documented in the system. The patient should be very clear on the specifics of their clinical condition and what needs to be done as well as why it needs to be done. This is not only good patient relations, it is critical in curbing cancellations and no-shows.

Take a close look at your own financial systems and perhaps you can award yourself a million dollar bonus next year, and you will have done so without any help from the government.

Sally McKenzie is CEO of McKenzie Management, a nationwide dental management, practice development and educational consulting firm. Working on-site with dentists since 1980, McKenzie Management provides knowledge, guidance and personalized solutions that have propelled thousands of general and specialty practices to realize their potential.

Interested in speaking to Sally about your practice concerns? Email her at sally@thedentistsnetwork.net or call 1.877.777.6151.

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