The Credit Connection

Nov. 1, 1996
Darn! I forgot my checkbook. Is that statement an honest error or a slick line? "You want half down at prep? Gee, I`ll bring it in later today." Do you send the impression to the lab or wait? "Bill me at the end of the month." Is this patient a worthy credit risk?

Duane A. Schmidt, DDS

Darn! I forgot my checkbook. Is that statement an honest error or a slick line? "You want half down at prep? Gee, I`ll bring it in later today." Do you send the impression to the lab or wait? "Bill me at the end of the month." Is this patient a worthy credit risk?

Today, tools exist to take much of the guess work out of extending credit. When you employ them, your collections program takes on new luster. The program begins with the credit bureau. Three national credit-reporting agencies (Equifax, TransUnion and TRW) collect a wealth of detailed information on how individuals pay their credit obligations.

This information stays on file 7-10 years. Most credit files also contain fraud prevention systems: an alert for someone using a deceased person`s Social Security number, a SSN issued within the past five years or an address that is a campground.

Susan Engelbart, branch manager for CSC (Credit Services Company)-a credit bureau affiliate of Equipfax-reports that to help a dentist involved in allowing a patient to charge services, credit bureaus have developed a "credit bureau risk score." The most popular score is Beacon, developed in conjunction with Fair Isaac. These scores are compiled from archived data and predict the likelihood of an account going delinquent in the next 24 months.

Engelbart points out that the score is so simple, employees unfamiliar with credit files can make decisions based on management guidelines, with minimal training. If an account has gone delinquent, credit bureau files provide data for collection purposes.

Accessing the credit-reporting system is fast and easy. Plan A: Call your local credit bureau and ask for a demo of the software that can be installed into your own computer system. Plan B: you may lease software and dedicated terminals to accomplish the hookup. By simply inputting consumer ID data, you receive a printout of the credit file in seconds. Prices vary, but most files range from $2-$4, a tiny amount for the loss it can prevent.

The format in our office goes something like this:

1. A treatment plan is presented on every patient. A financial plan is worked out between the chairside DA and the patient. The credit-worthiness for a deferred payment plan must be approved by the receptionist who, if needed, will access the credit system for an evaluation score.

Note: The federal Fair Credit Reporting Act requires prior permission by the patient. A statement on our health history gives us permission to check credit at the same time a patient signs to the accuracy of his history.

2. To reduce the need to extend credit, a menu of payment programs is offered, each of which places the onus for collection on another party, such as Visa, Mastercard, Discover, American Express and a special no-interest account that we have arranged with a national finance company. Never, ever override the wisdom of any creditor, if they deny credit.

3. Office payment policies are universal and administered for Mr. Joseph GotBucks exactly like they are for Joe Lunch-Bucket. The rules are simple: insurance payment is accepted as payment in full; patient portion is due on completion-assuming a credit report agrees-and one-half down is required at the start of any work requiring a lab fee, with the remainder due on seating.

With a fair financial program in place, with staff required to make acceptable financial plans prior to performance, with reception staff having full authority for "go" or "no-go" decisions, with the office never overriding credit turndown, with credit reports at our fingertips, then accounts receivable can and should not exceed 80 percent of last month`s production. Importantly, front-desk collections at the 45 percent level are easily within our fingertips.

Our money in our patient`s pocket is not a fair arrangement, especially when our dentistry is in his mouth. A little computer savvy takes away the guesswork.

The author practices dentistry in Cedar Rapids, IA. His latest practice-building book, Anatomy of a Successful Dental Practice, is available from PennWell Books at (800) 752-9764. Address

e-mail commentary to [email protected].

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