Oral Health Group
Feature

Developing a successful financial system

March 1, 2005
by Debbie Castagna & Virginia Moore


Where to begin

In order to implement a successful financial system, you must go beyond the typical way of thinking. Instead of simply focusing on whether your practice should accept insurance, conduct billing internally, or use a patient financing program, you should review all possible situations you could face from day to day within your practice. It’s important to set up guidelines to determine how complex financial issues will be handled. Will you offer credit adjustments? And if so, who qualifies for them? How would you deal with payment arrangements for a child who comes from divorced parents? By developing a set of guidelines to answer questions such as these, you’ll know exactly what to do when a patient brings up a tricky financial situation.

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A good financial guideline takes into consideration what’s going to work well for both the patient and the practice. In other words, it creates a win-win situation in which patients can obtain optimal treatment while the practice is compensated as quickly as possible. Once you’ve carefully detailed your financial guidelines, review them with your staff and make the written document available for them to reference as needed (but be sure it’s not in your patient areas!)

Payment options and arrangements

For a financial guideline to be successful, it must offer patients a variety of payment options to obtain the treatment they want and need. Financial negotiations should always begin with asking the patient for full payment up front. Some practices offer a courtesy adjustment if the patient pays for everything before the actual procedure. This type of incentive can be very successful with patients who can afford to make one large payment.

Some patients, however, do not have the funds available to pay for larger treatment plans in one lump sum. If that is the case, you must always ask for an initial investment. We’ve found that when patients put money down from the get-go, they will most likely follow through with treatment and stay committed to paying off their balance. So no matter what payment plan is arranged thereafter, it’s important to collect some type of initial sum.

The language you use is important when requesting this initial payment. Rather than asking for a “down payment,” which makes patients think they are pledging to pay for the rest of their lives, using the words “initial investment” can shine a more positive light on the subject. These words emphasize that dentistry is an excellent investment that can benefit your smile and overall oral health for years to come.

After collecting the initial investment, a payment schedule should be constructed to collect the remainder of the balance. We like to set a boundary of two to three months for patients to pay off treatment costs, but if this is not possible, we suggest an alternative payment option, such as CareCredit. With CareCredit, patients can finance treatment for up to 12 months no interest. This makes it easier for patients to pay for care, and therefore can significantly increase your practice’s treatment acceptance rate.

Some doctors claim they’re comfortable extending credit themselves for four to six months. This may be so, but when your accounts receivable start to grow and you notice the effort it takes to collect those dollars, you’ll realize extending credit for this long is not the most prudent or efficient use of time. We suggest that if patients need to extend their payment plans for more than two or three months, let a patient financing program handle it. Remember — you’re a dental practice, not a financial institution.

Alternative financing is also essential if your practice offers cosmetic or esthetic dentistry, implants or other services with larger fees. Esthetic procedures like tooth whitening and veneer application, or more extensive full mouth reconstruction can be a significant investment, so most patients would appreciate the ability to pay over time. These patients who seek out cosmetic or smile enhancing procedures are sometimes driven by emotions and may want to begin treatment immediately. Offering payment options will allow them to start treatment right away and easily pay for it over time.

One point we cannot stress enough is to make sure you do not tie payment due dates to appointment dates. This routine increases the number of no-shows and cancellations at a practice. It might also leave you in a number of tricky situations, including what to do if the patient shows up for his or her appointment but does not have the money to make the payment. Rather than having to face such awkward situations, it’s easier to simply disassociate the two and put them on different days.

The financial coordinator

The various payment options and arrangements your practice offers cannot simply be outlined on paper and handed to patients. These options should be discussed in detail and supported with data so patients can fully understand what’s available to them. It’s imperative to identify an employee in the practice to take on this task — the financial coordinator. This individual should be mainly responsible for the payment arrangements with patients.

There are certain traits to look for when searching for an effective financial coordinator. First of all, it’s extremely important for this employee to be a good listener. This goes beyond simply hearing what a patient says. A good listener will make sure to ask for clarification when a subject comes up that can easily be misunderstood. Financial coordinators must also have the ability to maintain great eye contact, and should appear to be relaxed, confident, and trustworthy when discussing payment arrangements. Even tone of voice can dramatically affect a patient’s level of comfort, so that should be taken into consideration. But most importantly, financial coordinators need to see their job as an incredible opportunity to help patients achieve their dental health goals, rather than a way to wrestle away a patient’s pocketbook.

In order to maximize treatment acceptance, monetary discussions between patient and financial coordinator should occur in a designated consultation room that allows for privacy, few interruptions, and a professional atmosphere. Most people have some level of anxiety that comes with being in an exam room, so we recommend making financial arrangements with patients in a non-clinical setting. That way the patient can be completely relaxed and comfortable while you discuss an issue as delicate as money. If you do not have a separate consultation room, make sure the discussion happens in private (perhaps the treatment room) and don’t forget to allow room in the schedule for the consultation if it occurs in the treatment room or operatory. The doctors’ private office is another option to consider.

The whole team plays a part

Although the financial coordinator is chiefly responsible for payment arrangements with patients, everyone in the office needs to be comfortable quoting fees and discussing financial guidelines. Clinical staff members are often asked questions about treatment costs. If they react in a confused or dismissive manner, it can reflect badly on the practice. We suggest that clinical staff members familiarize themselves with fees for the 15 most sought after procedures. This does not mean these employees should actually make payment arrangements. They can simply quote the cost and then introduce the patient to the financial coordinator to allow for a smooth transition.

All staff members need to understand their practice’s financial guideline to make sure consistency is expressed throughout the team. Hearing two conflicting points of view will just confuse the patient, and that can result in an overall negative experience with your practice. It’s important to make sure the same payment options and arrangements are being presented in the same manner amongst all team members. And when the financial coordinator is busy with a patient, there
should be other staff members ready and able to answer financial questions.

The doctor also has a key role in financial discussions. His or her first responsibility is to work on gaining commitment from the patient to the value of treatment. Although we recommend that the doctor quote the fee or fee range for any treatment being diagnosed, we highly discourage the dentist making payment arrangements. If there’s concern over the cost of care, set aside the financial aspect for a moment and work on highlighting the benefits of treatment.

It’s important for the financial coordinator to be present during the treatment discussion between doctor and patient so he or she is privy to everything that has been shared in this conversation. Therefore, if the patient brings up any objections or concerns, the financial coordinator will have prior knowledge of them before discussing payment arrangements. This allows the financial coordinator to handle these objections with more ease, and eliminates the “he said, she said” so patients cannot claim the doctor told them they could pay for treatment at a certain cost over a certain amount of time.

Making sure the financial coordinator is present from the beginning of the doctor’s treatment recommendation can also add great continuity in the eyes of the patient. It enhances the patient’s perception of the doctor and financial coordinator as true partners, not separate entities. When the doctor introduces the financial coordinator and explains his or her presence, it elevates the importance of this employee’s role in the entire payment process. This usually helps patients trust someone other than their doctor with a topic as potentially sensitive as money.

Once a commitment in favor of treatment has been expressed, the financial coordinator will help the patient choose a suitable payment arrangement.

Monitoring your performance

Once you have a rock-solid financial system in place, you must monitor its performance in order to ensure success. It’s important to set benchmarks and examine practice statistics to make sure your financial guidelines are working correctly. You should establish a well-organized follow-up system to monitor collections, accounts receivable, and credit adjustments to make sure these levels are healthy. With clear financial guidelines and a solid monitoring system in place, you’ll start to notice fewer debts and overdue accounts.

Monitoring your practice’s performance begins with staff communication. We’re strong believers in having weekly staff meetings, where all employees can review and discuss the goals of the practice. One meeting a month should be strictly devoted to numbers. In this meeting, the team can evaluate what the practice collected during the previous month and how much was written off. If there’s a problem with either of these amounts, or if the practice did not reach its pre-set goals, the staff needs to develop an action plan to fix the problem. Your practice’s treatment acceptance rate should also be reviewed in staff meetings. Employees can divide new and existing patients into separate groups when analyzing these statistics. Once solid credit guidelines are established and payment options are included in your financial plan, you should start to notice an increase in treatment acceptance.

Not only can staff meetings increase practice performance and production, they can add to team morale and the overall satisfaction of your employees. When staff members set goals for themselves and pay attention to numbers, they can actually measure their progress and see the result of their efforts. If financial goals have been met, it usually means your patients are satisfied with the care and payment options you’re providing. When patients seek out your practice’s counsel and then say “yes” to treatment recommendations, that can make a profound difference in how a doctor and team feel about the work they do.

Aside from the weekly staff meetings, the doctor and financial coordinator should meet once a month to assess accounts receivable. In order to improve your practice’s financial health, we recommend examining all accounts that are ninety days or older, and then highlighting those patients who have not paid anything within the last 30 days. These accounts need to be dealt with as soon as possible, because the longer they go unpaid, the more likely you’ll never see that money. Another way to improve financial health is to determine a specific dollar amount, and then set a guideline that anytime treatment costs are below this amount, the patient pays in full at time of service. This guideline can give you peace of mind in knowing that financial arrangements will not have to be made for treatment below this fee level. It can also improve cash flow and free up time so your financial coordinator is able to concentrate on making payment arrangements for higher-level treatment.

It’s time

Now that we’ve offered you some useful techniques on how to implement a successful financial system, it’s time for you to apply them to your practice. If you already have a number of these measures set up in your office, you’re on the right track. With well-organized financial guidelines, an effective financial coordinator, a supportive team, and an efficient monitoring system, you’ll notice a significant increase in your practice’s performance and production. Financial success is only a few steps away!

Debbie Castagna and Virginia Moore are founders of Insight Solution, a speaking and consulting company dedicated to revitalizing the dental practice.

Reprinted with permission, Dentistry Today, (2004:23(10): 142-144.