No matter how hard a dentist and staff work to increase
production, it is likely that the practice profit will not rise unless all
fiscal aspects of the practice are monitored and managed. “Earn more” plans must be accompanied by
“Spend less” plans for profit to reach potential.
Question: How can you
improve fiscal accountability in your office?
Answer: Know the numbers you need
to collect; know what those numbers mean; and know how to drive those numbers
to increase profitability. To accomplish
those goals, set up a template, a spreadsheet, to be completed monthly by an
experienced business staff member or your bookkeeper. Review this monthly monitor at the end of
each month---no procrastination allowed.
Ask questions and get understandable answers. In short, pay attention and understand the
whys and wherefores of your practice finances.
MONTHLY FINANCIAL ANALYSIS
Income comparison
by actual $’s and by % of increase or decrease over last month and over year to date (YTD) compared to
last year to date. Break production and collections into -self-pay, -indemnity
insurance; -managed care; -welfare
Production this month to last month;
YTD to last YTD
Collections this month to last month;
YTD to last YTD
% of collections
to production (To calculate: divide collections for a period by production for that same period. 97% is
minimum goal, not counting managed care
which should be discounted from production prior to calculation of collection % rate.)
Sources of
payments
Cash, checks, debit cards over the counter
- % of collections (Goal=30%-40%)
Bank card payments - % of collections. (At least annually get competitive bids on the merchant rate
you pay.)
Indemnity insurance
# claims filed
$ amount filed; $
amount collected; % of production; % of collections
New insurance
providers; employers using those providers
Problems collecting
claims from providers; reasons for problems, solutions
Patient feedback; complaints;
comments
Managed care
#
of managed care providers; employers using those providers
#
claims filed
Production
on managed care patients : to total
production
Collections
on managed care patients---$ amount filed; $ amount collected; % collection rate
$
amount written off; % of total practice production written off
Welfare---monitor points similar to the
2nd, 3rd, 4th, & 5th points listed above for Managed
Care
Write offs (adjusted off your regular fees)
Managed
care - $
Welfare
- $
Professional
courtesy discounts - $
Bankruptcies
declared by patients - $
Charity
dental care - $
Bad debt
- $
Billing - date;
# statements mailed
Accounts
receivable (A/R); total $, and breakdown of current, 30 days, 60 days, 90 days,120 days-sent for outside collection
action.
Current-50%-60%
of total A/R,
30
days-15-20% of total A/R;
60
days- 10-15% of total A/R,
90
days-under 10% of total A/R,
120
days-$ in collections
Accounts payable
- $
Budget -
reconciliation and update; priority needs for cash outlay
A regularly-scheduled monthly meeting with the staff member
or advisor who is responsible for collection of this data is minimal for proper
analysis and management of the fiscal part of your practice. Regular analysis followed by corrective steps
will mean more money in the bank for you and your practice.
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