Monday, August 1, 2016

HOW TO GET FIRM CONTROL OF YOUR PRACTICE FINANCES

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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