I received a rather enlightening telephone call the other day from a dentist from a small town in Kansas. The dentist told me that when he graduated from dental school seven years ago, he purchased a nice practice from a retiring dentist. He indicated that all was going very well but that he was confused about one thing. He indicated that when he bought this practice seven years ago he had one front desk person, and she used to spend about one day a week on billing and collection activities. Now seven years later, he told me he still had one front desk person. In fact, the same person. I told him that's great, because long-term team members are invaluable. He agreed, but was confused all the same. He said his front desk person now spends about three and a half days per week on billing and collection activity. He asked me, "Has the world changed that much in the past seven years to justify this tremendous shift in the time that it takes his front desk person to manage the accounts receivable?" Sadly, the answer is Yes! The world has changed that much, even in small-town Kansas.

If You Only Do What You Have Always Done, You'll Only Get What You Always Got. [Anonymous Quote]

The world has changed, and continues to change. These changing times require new solutions. The old ways of doing things just don't work in today's demanding business climate. Traditionally, most dental offices have had very casual payment policies. They sent out statements and hoped patients paid. While this may have worked a generation or two ago, it doesn't work very well today. If you have not modified or updated your financial policy recently, now may be an excellent time. Some minor refinement may be in order, or in some cases, wholesale change may be needed. Following are some recommendations to consider to help you succeed financially with your patients.

Begin With A "Status Check"

Before making any changes, begin by identifying your current performance. Use the following three criteria for evaluating your existing payment performance:

• Collection percentage of 98% or higher
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• Total Accounts Receivable equal to 1-1.5 times your average monthly production
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• No More than 20% of your receivables aged 60 days or more

These three criteria provide a benchmark for you to compare your present performance. If your office is close to achieving this level of performance, then you may only need to make some minor adjustments. However, if your office falls well short of these objectives, then major changes are likely in order.

Make Sensible Changes

It would be absolutely wonderful for every dental office to be a 'cash practice', where every patient gladly pays the entire fee (including the insurance portion), in full, in cash before you ever begin the treatment. If this sounds like a fairy tale, it is!! If cash were the only payment option, it may sound wonderful, but there is a down side to this strict payment policy. With cash as the only payment option, you would be eliminating a huge segment of your patient base that would like to have the best possible treatment, but might need some sort of payment flexibility.

The ADA conducted a study recently where they learned that 77% of the U.S. population could not pay a $500 out-of-pocket expense for dental treatment. That's more than three out of four people in our country. Think about it another way. How are cars sold in our country? People are more concerned with the monthly payment, than how much the care actually costs. Keep this in mind as you make changes in your financial policy.

The key to your payment success is to strike a delicate balance. You need to be flexible enough to accommodate people, yet firm enough to avoid collection or cash-flow problems. It is important to recognize that you need to be able to present payment options. Tom Hopkins, who is an outstanding sales authority says, "When selling anything, you need to remove objections in the mind of the buyer." He is absolutely right. In dentistry, you need to remove cost as a sales objection. This can be done by presenting payment options. The key is to install options that eliminate the need for you to be the banker.

If patients require a payment plan, consider installing a Healthcare Credit Card in your practice. With a Healthcare Credit Card, your office gets paid up front and the patient has the ability to make low monthly payments. In my opinion, every dental office should replace self billing with a Healthcare Credit Card. Approval can be provided within minutes and you will still be able to offer your patients the low monthly payments they need or want.

Another idea for a payment option is to have your patient authorize you to automatically charge their major credit card on a pre-determined date. For example, let's say that you have a patient in need of treatment and they need some payment flexibility. You could provide this flexibility by spreading the total treatment fee over a specific number of payments automatically charged to their major credit card. While this is not entirely fool-proof, you have reduced your payment risk by automating the payment process. You have also reduced your workload, because you will not need to mail out a billing statement. Both of these payment options meet your need to provide payment flexibility, yet eliminate or reduce your payment risk. These are win/win solutions for your office and the patient alike.

The Best Way To Implement Change

A very common question that I get at my seminar is; "How do you change existing patients who are accustomed to not paying at the time of service?" This is a very real question because existing patients can be difficult to change. New patients are easier, because we can inform them of your payment policy and most will go along. Existing patients however, can be more difficult for the simple reason that we have trained them wrong. The good news is that regardless of how dysfunctional your payment policy is, it has been my experience that any practice can succeed with making changes in its payment policy, provided it is done properly. Changes will not happen overnight. My experience is that it will take one recall cycle, six to nine months, to completely retrain your patients.

Once you have revised your payment policies and installed some new patient-friendly payment options, you are ready to start to introduce your new payment policy to patients. Dive right in. Draw the proverbial line in the sand and decide that from this day forward, you will follow your new policy. Be prepared, not all patients will be ready to comply. If you never required payment at the time of service in the past, some patients will resist. If they resist, consider the following approach:

Patient:

Can't you just bill me like you have always done?

Front Desk Person:

You know, I wish we could, but we had some problems with billing in the past. If all of our patients were as good at paying as you, we could continue to offer billing. What we have done is to put in some new payment options that will continue to keep our care affordable.

Now if the patient continues to object, then respond as follows.

Front Desk Person:

I'll tell you what. We wouldn't normally do this, but I am happy to make an exception with a good patient like you. Since you were not prepared to pay today, I'll go ahead and send you a billing statement just as long as you'll take care of it quickly for me. Next time you can be prepared to pay at the time of service.

End Result: Positive Patient Relationships

It may seem like this entire article is about money. I suggest that following the recommendations in this article may produce an even more important benefit; namely, Positive Patient Relationships. This is perhaps the most important result of making changes in your payment policy. The truth is, patients who owe you money don't like you! When they owe you money, they often skip appointments, don't respond to your recall efforts, and they do not refer. By replacing your old liberal payment policy with new payment options that provide patient flexibility you will eliminate the possibility of patients falling out of grace with your office. Let others do the lending and you can focus on what you do best, which is taking care of your patients. Consider making some changes in you office financial policy that are businesslike yet patient-friendly. The end result will be an improved bottom line and better patient relationships.