In my 35 years of
practice management consulting work, I have observed most dentists pay close
attention to the “big picture” numbers for production, collections, capital
improvement costs, and perhaps, the monthly Profit and Loss Statement for the
practice. In contrast, the secondary
numbers, those relatively minor expenses that get paid automatically or small
Accounts Receivable balances that get ignored, receive little to no attention
or oversight. These numbers represent a
major “hole” in the practice finances, leaking dribbles and dabs that add up to
over-spending while under-collecting.
Over-spending happens when cost details go unchecked or
there is no practice budget, no specific dollar amount allotted monthly for
various expenses When these factors are
missing, there is no mental alarm that flashes for the staff member responsible
for bill payment when a cost escalates.
Some examples of practice expenses that should be monitored
and comparatively shopped at least annually include merchant rates paid for
credit card services (I’ve seen rates vary as much as 2.5% to 3% between
different vendors.). Telephone rates
and the cost of IT support are other costs that differ greatly between
providers. The various insurances a
dental practice must carry should be put out for bids each year to several
reputable agents. Many practices fail to
search for opportunities to save money on dental supplies such as reduced
shipping charges on ordered supplies
(Check out Practicon’s new fantastic flat-rate shipping rates.) or by joining
supplier buyers’ clubs (such as Practicon’s Premier program) that can save
frequent buyers thousands of dollars over the course of a year. Some suppliers will even allow an office to
place an annual order at a significantly reduced cost for frequently used
supplies to be delivered monthly.
Contracted services such as janitorial, landscaping, medical
waste pick-up, document shredding services, even reception room magazine
subscription rates, should be checked minimally every six months to determine
if the contracted price is the amount for which your office is billed monthly. There are recorded jaw-dropping accounts of
dentists being cheated when they allowed bills from vendors to be debited from
the practice bank account automatically.
A dishonest vendor can implement price increases throughout the life of
a contract, and the dentist or his/her bookkeeper is totally unaware of
increases since the monthly payment is made as an unchecked routine.
Another major loss of money occurs when Accounts Receivable
(A/R) are not monitored and worked regularly.
The dentistry has been delivered; and a statement has been sent, been
sent again, and been sent yet again with no response from the patient. Or third party claims get put aside to handle
later and never filed. Or if they are
filed, failed reimbursement is not pursued.
What to do? One business staff
member should be thoroughly trained and made responsible for managing A/R with
regular billing cycles, timely filing of third party claims, and proper follow
up for all outstanding monies due the practice.
The recommended guidelines for aged A/R:
Current
– 50% to 60% of total A/R
30 days
– 15% to 20% of total A/R
60 days
– 10% to 15% of total A/R
90 days
– under 10% of total A/R
120 days
and over – sent for outside collection action
Suggestion: spend time with your business staff member
responsible for the type of financial details outlined here and your
bookkeeper, if not one and the same person, to assess how these potential money
leaks are affecting your practice. You
may be surprised by the additional money in the bank that results from working
such seemingly minor aspects of your practice finances.
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