As the end of the year approaches, if your practice is like many others, it tends to wind down. Your office closes out the books, ties up loose ends, and looks to the year ahead. But what if your team started thinking of the practice’s internal accounting practices like preventive dentistry? Where should it make changes now to keep cash flow healthy through the new year and beyond? Check out these 5 strategies your practice can begin using today.
1. Don’t Write Off Delinquent Balances.
You might be thinking, “Wait, aren’t write-offs the cost of doing business?” It’s easy to write off delinquent balances and call it a day, especially with the year-end crunch. However, many practices don’t realize the true cost of a write off. Consider this: say you wrote off $20,000 for 2015. To recuperate that loss, you’d need to produce $200,000 worth of treatment for new patients just to break even. Think of your monthly production. How long are you willing to work for free to offset your losses? Even more important, these write-offs could have been profits that went toward your retirement account, education funds for your children, creating vacation memories, etc.
What if instead of writing off that original sum, you invested a small percentage into an A/R management system that recovered the funds, so you could put them back on the books as revenue the following year? Practices that make solid commitments to A/R health reported up to a 75% reduction in the number of delinquencies that eventually become write-offs.
2. Reach Out to Patients During Tax Refund Season.
Beginning in late January, your patients begin filing their taxes and collecting refunds. This means patients who may have been strapped for cash at the end of the year now have funds to honor their financial responsibilities.
The National Retail Federation reports that more than 40 percent of consumers expecting to receive tax refunds will use them to pay off existing debt. Tax season is the most effective time to reach out to slow-paying patients—but the window of time you have to do so is smaller than you think. It’s critical that communication is made as early in tax season as possible. It starts with a coordinated contact plan. Whether you make one with your staff or through a third party, consider having that plan in place before the holiday season and executing it within the first weeks of January.
3. Plan for Delinquent Accounts Amid Year-End Production Increase.
If you’re marketing your services like most practices in America, chances are you’re filling your December calendar with patients who are maximizing their insurance benefits once their deductible is met. The lift in production looks great for the bottom line, but what happens when many of the accompanying patient-based balances go unpaid into 2016? If you are planning to boost your business with year-end procedures, begin putting your A/R strategies in place to balance out delinquencies.
4. Provide Year-End Staff Relief.
Dentists have set the bar for running their businesses by using a lean, talented administrative staff that handles tasks of a group twice its size. Your team is faced with the daily challenge of prioritizing numerous tasks. As a dentist, you’re generally immersed in the treatment and rehabilitation of patients. Meanwhile, your untouched A/R is becoming a serious issue.
You might be thinking, “We can just internally work these accounts. The staff can devote a few hours a week to it, and they’ll get done.” But the best way to handle A/R is to outsource it to a trusted third party. Here’s why.
Your staff stays focused on your practice and patients’ needs.
You hired experts in their chosen fields. Consider doing the same for your A/R.
A third party is trained in the latest laws and strategies to best return your funds.
If your administrative team is not versed in the related laws as they change, its contacts to patients could be cause for litigation.
It’s more cost effective than you think.
With recovery rates of 60% or higher, and fees as low as 1-5% available (through TDA Perks partner TekCollect), the return on investment is clear. By pursuing A/R internally, the true cost you’re paying is employee time. Most business owners agree that an in-house pursuit of receivables could end up costing 1½ times the receivables amount.
You can concentrate on patient care rather than your business.
Many dentists admit to being better doctors than business people—and that’s okay! Find a trusted source for your cash flow management, and rest easy.
5. Consider Early Intervention.
You rely on your patient relationships. They mean repeat business, referrals, and help build your reputation and practice longevity. Wouldn’t you rather focus on strengthening relationships with your most valued patients, instead of on pursuing receivables from patients who avoid their financial responsibilities?
You may want to give patients with delinquent accounts more time to pay. However, keep in mind that the Department of Commerce reports that:
- Accounts 3 months past due are worth $.83 on the dollar.
- Accounts 6 months past due are worth $.67 on the dollar.
- Accounts 1 year past due are worth $.45 on the dollar.
Account value deteriorates—and accounts become more difficult to collect—over time. In addition, the longer your practice waits to reach out to patients with delinquent accounts, the more aggressive it will need to be to recapture lost revenue.
When contact is established early, a customer-service approach can be taken. Instead of being reprimanded for outstanding accounts, patients can be reminded of their balances, asked about their situations, and be offered assistance, education and support. You’d be surprised how receptive and responsive your patients will be to this approach—especially at year end. This is why your practice should partner with a firm that can promote patient loyalty in addition to collecting outstanding accounts. Avoid working with a company solely as a last resort to writing off delinquent balances.
The bottom line? Don’t wait until the new year to begin preventive maintenance on your revenue cycle. Put these 5 strategies to work in your practice this December, and begin seeing positive improvement in your patient relationships, staff productivity, and A/R.
TDA Perks Program partner TekCollect provides comprehensive revenue-cycle management, collections and customer retention solutions to nearly 30,000 businesses nationwide. The company specializes in dental practices, optimizing internal accounting practices, limiting and controlling delinquencies, and improving cash flow for the long-term. TekCollect’s approach generates the highest recovery ratios in the marketplace, and its non-alienating strategies preserve dental practices’ patient relationships. To learn more, call 888-292-3530 or visit TDA.TekCollect.com.