3 Ways To Improve Practice Cash Flow
By Peter Gopal, PhD
Dentists tend to focus on production when assessing their practice performance, and often lose sight of something more important – cash flow. Money collected today pays your bills, not production.
Put simply, cash flow is the movement of real dollars in and out of your business over time. Below are 3 ways to immediately improve cash flow in your practice.
1. Tighten up your estimates for the patient’s portion. Most practices accept insurance assignment which complicates the entire process of billing and collections. For patients with insurance, you should estimate and collect the patient’s portion at the time of service. The more accurate your estimates, the better off you are.
Acquire all of the details on a patient’s insurance plan before treatment, and be careful with estimates for posterior composite fillings, posterior crowns, and bridges. Insurance companies typically use alternative benefits to pay less for these procedures. In addition, be aware of frequency limitations for x-rays and exams and replacement policies for dentures and crowns. Verify coverage for implants and orthodontics.
Always inform the patient that you are only providing an estimate and that final reconciliation will occur only after insurance pays.
2. Monitor your accounts receivables age regularly. Accounts receivables (A/R) become increasingly difficult to collect as they increase in age. To improve collections and reduce A/R age, file claims electronically instead of by mail. Track the A/R age every two weeks. Accounts overdue for 60 days should be followed up on a high-priority basis. Ultimately, you want to drive down the portion of A/R which exceeds 60 days.
3. Provide payment options for patients. Consider offering third-party financing from companies like CareCredit®. With financing, cash enters your account at the start of treatment rather than at the end of treatment.
A PNP client since 2005 with his wife Dr. Hema Gopal (Premier Dental), Peter Gopal, PhD, is President of Visionary Management, a dental practice management consultancy. Contact him by phone at (215) 295 6975, or visit www.visionary-management.com.
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