Th 158963

5 Critical Computer Reports

Sept. 1, 2004
Your practice-management software has the muscle to measure the financial health of your practice

By Linda Drevenstedt, MS

Are you taking advantage of your practice-management software system? It's understandable if you're not. The dizzying array of available reports can overwhelm even the most tech-savvy.

There are, however, five critical reports that each system generates, and it's worth the health of your practice to learn how to access and read them. These reports include:

1) Production by provider and by procedure code report
2) Collections report
3) Accounts receivable report
4) Insurance aging report
5) Adjustment report

By itself, the data provided by each report will not tell you if your practice is healthy. However, with a few crunches of the numbers, you'll have a better understanding of the overall health of your practice. Unfortunately, no industry standards exist for the names of these reports. To help practices, I have posted a "How To" on my Web site that provides the names given to these reports by each of the five leading software systems.

1) The Production by Procedure Code report

There are several practice-health benchmarks to calculate from this one report. Run the report for a six-month period for most of the following calculations. Run a separate report for each dentist and each hygienist, as well as a total practice report.

Doctor service-mixture benchmark

Step one: Run the Production by Procedure Code report for a six-month period for each dentist. Be sure the report is by individual procedure code — not by category.

Step two: Total the procedures that are "primary care" for your practice. Primary care procedures have charges equal to or higher than your fee for a crown.

Examples of primary care procedures are:
• Crown and bridge preparations
• Denture or partial impressions
• Cosmetic bonding or veneers
• Periodontal or oral surgery
• Root canal
• Implant procedures
• Orthodontic banding

Step three: Calculate your results:

Click here to enlarge image

Recall effectiveness benchmark
Recall effectiveness often is not calculated. Many practices preappoint their patients at their recall appointment for the next recall appointment and assume that recall is doing fine because the hygiene schedule is full — wrong assumption! Just like periodontal disease, you don't feel it. Recall systems are often under the benchmark and practices are completely unaware of it.

Step one: From the Production by Procedure report, find the number of periodic exams completed in a six-month period.

Step two: Find the number of active patients. This can be on a practice demographic report or the report might have another name. You want the numbers of active patients seen in the past two years.

Step three: Calculate your results using the formula below. Compare your results to the benchmark.

Click here to enlarge image

Hygiene department benchmarks
Unfortunately, many practices view hygiene departments as cost centers rather than profit centers. The next few calculations will show you how your hygiene department compares to the following benchmarks.

Step one: Run the Production by Procedure code report for all providers for a six-month period and include all hygienists. If the exam fee is allocated to hygiene, subtract those fees from the hygiene production before calculating.

Step two: Calculate the ratio of hygiene production as a percentage of the total practice production using the formula below.

Click here to enlarge image

(*For pediatric practices, the benchmark is 40 to 50 percent.)

Hygiene periodontal therapy analysis I

Step one: Run the Production by Procedure Code report by provider for a six-month period and include all hygienists.

Step two: Find and highlight all of the periodontal procedures done by the hygienist. These are codes in the ADA's "4000" code range. Total the periodontal production done by your hygienists.

Step three: Calculate the ratio of periodontal production as a percentage of total practice production. Use this formula:

Click here to enlarge image

Hygiene periodontal therapy analysis II
Step one: Run the Production by Procedure Code report for all providers for a six-month period and include all hygienists.

Step two: Total all production by the hygienists in the six-month period. If the exam fee is included, subtract the total of the exam fees.

Step three: Use the total of periodontal therapy done by the hygienists that you determined in the prior analysis.

Step four: Calculate the ratio of periodontal procedures as a percentage of hygiene production. Use this formula:

Click here to enlarge image

Hygiene effectiveness rateStep one: Run the Production by Procedure Code report for a six-month period by individual hygienist. Find the grand total production without exam fees.

Step two: Determine the compensation for each hygienist for the same six-month period. This is compensation only, not benefits. Include any bonus wages paid.

Step three: Calculate the hygiene compensation as a percentage of their production. This calculation can be done by individual hygienist as well as by department. Use this formula:

Click here to enlarge image

2) Collection report
Most computers give you a year-to-date or month-to-date collection percentage. To determine the practice collections health requires an additional number crunch. Always use a three-month average of your collections each month to determine collection health. By using the three-month average, you account for the money cycle from insurance companies and patient payments as well as the variable number of days your practice is open each month.

Also, by using the method below, you account for any adjustments that can skew your collection percentage. This is particularly important if you are on any reduced-fee plans that require a write-off of the percentage the plan does not cover.

Step one: Run the collections for each month for three consecutive months. Run the production total for the practice for each month. Run the adjustment report for each of the months.

Step two: Add the collections for three months to obtain a total.

Step three: Take each month's production and subtract the adjustments to production. Add all of the adjusted production months to obtain a total.

Step four: Divide the total of the past three months' collections by the total of the past three months' production. Use the template and formula below:

Click here to enlarge image

3) Accounts receivable report
Your computer gives you an accounts receivable, or AR, report. The actual total of your AR does not tell the health of your practice. For example, $250,000 in accounts receivable could be healthy for one practice, but not for another. Taking the data and crunching a few numbers tells the true health of your practice.

Accounts receivable ratio

Step one: Run the AR report without the credit balances. Many computer programs default to include the credit balances in the AR report. However, this gives you a false read on your AR health.

Step two: Determine your practice's average total production during the past three months. (Hint: if you have done your collections percentage as in report No. 2, you can easily get your three-month average production to use for this calculation.)

Step three: Divide the previous three months' average production into the current AR total:

Click here to enlarge image

Accounts receivable aging report
Step one: On your AR report, this calculation is usually done on the very last page. You may have to add to the "over 90 days" and the "over 120 days."

Step two: If your computer does not give you the percentage, divide the total AR over 90 days plus over 120 days and divide by the current AR total.

Use this formula:

Click here to enlarge image

4) Insurance aging report
Believe it or not, staff members at several practices have told me their systems did not generate this report. They reviewed the outstanding insurance when they did billing rather than reviewing this report. This is not an efficient process. The report may be called "outstanding insurance," "insurance aging report," or "unpaid insurance report." This report should be reviewed by the dentist and the front office staff each month.

The last page of the report usually gives you the aging status broken down into categories — current, 30 days, 60 days, and 90 days. With this report, there are no numbers to crunch; just look it over and create an action plan if there are any insurance monies remaining in the "90 days and over" column.

Here is a sample:

Click here to enlarge image

5) Adjustment reportReview this report each month. Calculate write-off percentages by categories. For example —

• PPO write-offs
• Medicaid write-offs
• Courtesy savings write-offs
• FOD — Friends of Doctor write-offs
• Professional courtesy write-offs
• Staff dental care write-offs
• Charity dental care write-offs

Calculation for write-offs:

Click here to enlarge image

The data from this report is valuable in determining how much of the practice production is written off and therefore will never be in the practice checkbook.

Although there are no specific benchmarks, it is important if any one category exceeds 20 percent. If you are on any control-fee plans, establish a category for each one. This allows you to monitor the write-off percentage with each plan. That number is important when it is time to renew contracts.

Your computer allows you to customize your categories for write-offs so you can better understand where the money is going. For example, in one practice, when we added the FOD, we found the dentist was writing off dental care for his friends and their families in excess of $17,000 per quarter! Another important reason for monthly review of this report is to uncover instances of fraud. Ensure that all write-offs are legitimate.

Many dentists are concerned about what goes on at their front desks. These five critical computer reports help you evaluate the health of your practice. By taking time to review these reports with your staff, you can stay aware of your practice business health. If you find areas that are not healthy, you may want to seek the advice of a coach or consultant.

Sponsored Recommendations

Clinical Study: OraCare Reduced Probing Depths 4450% Better than Brushing Alone

Good oral hygiene is essential to preserving gum health. In this study the improvements seen were statistically superior at reducing pocket depth than brushing alone (control ...

Clincial Study: OraCare Proven to Improve Gingival Health by 604% in just a 6 Week Period

A new clinical study reveals how OraCare showed improvement in the whole mouth as bleeding, plaque reduction, interproximal sites, and probing depths were all evaluated. All areas...

Chlorine Dioxide Efficacy Against Pathogens and How it Compares to Chlorhexidine

Explore our library of studies to learn about the historical application of chlorine dioxide, efficacy against pathogens, how it compares to chlorhexidine and more.

Enhancing Your Practice Growth with Chairside Milling

When practice growth and predictability matter...Get more output with less input discover chairside milling.