Where is the money?

Oct. 1, 1997
I recently had an interesting experience with one of The Levin Group`s new management consulting clients. The office entered our one-year program and was shocked to discover that its collections for the last 12 months represented only 83 percent of total revenues. This is a classic example of a dentalpractice not being run as a business and not using financial numbers and analysis to understand the overall performance of the practice. In a

Roger Levin, DDS, MBA

I recently had an interesting experience with one of The Levin Group`s new management consulting clients. The office entered our one-year program and was shocked to discover that its collections for the last 12 months represented only 83 percent of total revenues. This is a classic example of a dentalpractice not being run as a business and not using financial numbers and analysis to understand the overall performance of the practice. In a

profession where only 3 percent of all practitioners can retire at the age of 60, this lack of control is no longer acceptable.

Since 1985, I have consulted with over 2,100 practices on management, finance and marketing. Looking back on over 12 years of clients, I have found that the average dentist who uses The Levin Group`s tightly-controlled management systems can retire five to eight years earlier.

The options: pay me now

To achieve the proper financial system, you must establish highly-specific collection mechanisms. The Levin Group believes in four types of collection options. While we want to make it as easy as possible for our customers to do business with us, we still have to find a way for them to pay us.

The four financial options include:

1. Taking 5 percent off for cash up front.

2. Using a credit card.

3. Paying 1/2 up front, 1/2 by the end of the case.

4. Using a Dedicated Health Care Credit Card (DHCCC) that creates a line of credit, not a loan.

Each of these options requires using written scripts for training the staff. As each option is presented, patients may take advantage of flexibility, such as getting 5 percent off or using a credit card.

Patients should not have the flexibility to establish payment plans that result in ongoing collections with a lack of interest and which you may never collect anyway.

Essentially, The Levin Group does not believe in creating office payment plans for your patients.

Neither a borrower nor a lender be

Shakespeare was ingenious. When he said not to borrow or lend, he had an excellent concept. It was not that he was uncharitable, but he understood that when you owe people money, they generally do not like you. When they owe you money, they generally do not like you either. The longer patients owe you money, the less likely it is that you will ever get paid. Payment plans in almost any aspect of dentistry, other than orthodontics, generally result in patients who eventually resent having to pay the monthly amount.

Patients do not remember that you demonstrated outstanding customer service and provided high-quality care. All they remember is that they have to write you another check and they resent it. If their bills are piling up, yours will go on the bottom. After all, are you really going to go after them legally and risk them coming back legally at you?

How to buy a lawsuit

You might think that you do indeed have leverage to collect owed money. After all, through a series of letters and phone calls, you always can threaten to turn patients over to a collection agency. For the more daring types, you actually can do it.

I have seen many clients move forward and turn patients over to collection agencies. These lovely operations start off with a nice letter and may eventually completely harass the dentist?s former patient.

However, patients have the ultimate leverage. An incredible number of lawsuits are filed after patients are turned over to collection agencies.

These are retribution lawsuits. You sue me ? I sue you. In the end, the money is never collected, and the dentist and practice are distracted because they have to deal with the lawsuit. There is a great deal of emotional pain, and everybody is equally miserable.

In almost all cases, it is better to collect now. Sometimes, in our zeal to provide dentistry, we feel we are doing the patient a favor by providing a payment plan. They find a way to come up with the down payment on the case and honestly believe that money will appear for the monthly payments. When it does not appear, they cannot pay you. They rationalize this by disliking you immensely.

Life is much easier when money is collected upfront: administrative costs are down, patients can come back without embarrassment, nobody dislikes anybody and nobody gets sued.

Dr. Roger Levin is founder and president of The Levin Group, a national, dental-management and marketing-consulting firm. He can be reached at (410) 654-1234.

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