#871: Increase Profitability with Your AR

The Dental A Team Podcast

Consultants Tiff and Dana talk all about accounts receivable and why knowing your numbers is so critical to practice success. Hint: Once you know where your numbers sit at, you can develop systems to improve the areas in need of help.

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Transcript:

Tiffanie (00:08.706)

Hello everyone! Welcome to today's podcast. I am here with my fave Dana. Dana thanks for being here with me today. I know we have busted out so many podcasts recently. You have been my like go -to gal for months now. So thank you for taking the brunt and the load of all of the podcast needs that I keep sending your way. I truly appreciate you Dana. How are you today?

Dana (00:30.92)

Doing good. Absolutely. You're so welcome. And I feel like podcasting with you is so easy Tiff So it's never a burden on my end.

Tiffanie (00:37.666)

Thank you, thank you. And it's our time together. We got to spend some time together at Retreat and I was like, my gosh, I really do love just like the moments that we get together. So it's perfect. And I have...

You're down more southern in Arizona than I am, so you're closer to this beautiful hike, Seven Falls, and it has been so hot on my mind. I mean, it's way too hot outside right now, so we have to wait. But we're projecting that one for the fall, and I just cannot wait to do it. As soon as we have a date, I'm going to make sure that you know so we can go together. We'll have to take some photos for our podcast listeners so they can see these beautiful falls. Love it.

How is everything in your world from a client standpoint and just from a consultant standpoint, how is the mid -year going for you as a consultant and what kind of trends are you seeing aside from, I know we chatted about hiring on another one, on another podcast, but what other kind of trends are you seeing? We've been talking a lot of finances the last couple of months. Are you seeing anything within that with your clients right now, Dana?

Dana (01:47.112)

I think, yeah, the finances right now are a hot topic and I think we're looking at numbers more than ever and a lot of those numbers are including expenses and so I think that conversations have shifted absolutely to be more heavily related to numbers and halfway through the year, right, this is a big time where I look at, okay, let's check on goals, like where are we halfway through the year and let's build out the rest of the year. So really looking at numbers right now at time with clients.

Tiffanie (02:12.45)

Yeah.

Yeah, totally. And we've done a couple of numbers podcasts recently as far as like budgets and overhead and really figuring out how to get those numbers down. So I know, I know when those things come up podcast wise, it's usually because it's relevant to some of the consulting that we've been doing. So I think we both have seen that a ton this year in general for a lot of our practices. I think people are just starting to get a little bit more business savvy. It could be, you know, the DSO market is on the rise and, and, and

and my GP owner doctors and my specialty owner doctors even are really starting to try to get a handle on what their overhead looks like, what their profitability of their business is and what that might look like, not just to sell, but I always say, and I learned this from Ms. Kiera Dent, that any business should always be set up to be sold if in the event they do ever want to. It doesn't mean that they're going to sell, but you should always have yourself set in that way so that you're the best and the most profitable that you possibly are.

possibly can be. So I think it's really brilliant that a lot of the doctors and the trends that I'm seeing are more business savvy in that way and really trying to get a handle on the knowledge so that they can move forward and be their most profitable. So on the topic of profitability, I really wanted to discuss, we've chatted a lot about like overhead, how to manage it, how to control it as best we can, manipulate the pieces that we can within overhead, but I really wanted to talk about

talk today about looking at our AR as a way to also increase profitability. I think that I've seen a lot of people miss this. And if I'm blunt and honest here, I've had a lot of consultant interviews that have missed this as well. And so I know it's not a super common thing to look at because it is something that's so drastically overlooked a lot.

Tiffanie (04:12.578)

I know, Dana, when I have doctors that are trying to increase profitability, most of the time, and I've had interviewees, you've seen this too, where we're like mock interviewing, we're trying to guide them to the right answer. We've seen it a lot where people, we want to increase the profitability. We want to decrease overhead, increase profitability, and people tackle production. They're like, well, you have to produce more. But you can't.

out -produce the problem. We've been saying this for years. You cannot out -produce the problem because the problem is not typically in your production. Dana, where is the problem typically found? My all -star lovely consultant of the Dental A Team that would know this and did know this, where is the problem typically found when profitability is low and overhead is high?

Dana (04:57.896)

Yeah, absolutely. You're going to look at your collections for that. And great news is AR can add to collections month over month.

Tiffanie (05:06.146)

Yeah.

Yeah, exactly. Spot on. Nailed it. She's hired. She's staying for a lifetime. She's here forever. Yes, your AR, you guys, your collection. So a lot of the times, practices don't know what your collections should be set at, like what your projected collection should be, what your percentage should be. So for a standard GP practice, meaning we're general producing, we're doing a lot of bread and butter, maybe implants, maybe surgeries, things like that, but not a ton of ortho.

were PPO or fee for service, you should be 98 % or higher in your collections percentage every other month. So that means that your team is collecting 98 % of the production for that month. 100 ,000, you got $98 ,000 in collections. Now caveat, doctors, because this comes up a lot.

your collections from your software is not always going to match your collections in your bank account. Sometimes there's a week or so that it takes for something to post on the bank account that's come through, so it's in a different month. That's always a caveat. And then also, you have your merchant services fees that are deducted from your deposits when you have credit cards ran, or if you're doing credit, or any other kind of merchant services. Those fees are deducted from your deposit. So you're always going to be a little bit skewed there. So

minimum of 98 % or higher is going to keep your profitability and your deposits pretty standardized high, if I could say that. Now, AR, this is your accounts receivable. Most doctors don't know a ton about AR, and that's OK. You didn't learn it. But the sad part here that I'm going to announce,

Tiffanie (06:50.754)

Most dental professionals, most of the front office team, the dental assistants, the things that we know about these systems and these processes like AR, accounts receivable, was taught to us from the person who did it before us at the practice where we learned how to do it.

And hopefully, that person knew how to do it. And hopefully, the person who was trained how to do it next did some more research and learned how to do it even better, took some courses, went to some CE. There are courses and things out there. There are ways to learn it. But it's not always happening. So doctors, it's really important to us as a company, the dental A Team, we spend a ton of time with our doctors ensuring that you guys know and understand what these numbers mean because they can affect your profitability so much.

So you should have 98 % or higher collections rate. And then your AR, your total outstanding money, meaning the total amount of money that you're waiting, it's out there in the universe, and you're just waiting for it to fall into your lap, should be less than one month's total production.

So I've had a doctor, I've had a couple times, I've had a couple practices come to us, but I had a doctor, he is one of my favorite human beings in the entire world. He is the most genuine person I have literally ever met. And he came to me a few years ago and he said, I think something's going on, I have no money, but I have a ton of production and I feel like my AR might be high. And I said, okay, cool, I'll get in, I'll dive into it. And I get there for his first in office visit, this was like,

years ago, I think 2018. And I opened it up and I was like, my gosh, I think I'm going to cry. This is a one and a half doctor, like his associates, I'm going to count them as like a half doctor, and two hygiene. And their outstanding AR was like $270 ,000, I think.

Tiffanie (08:41.89)

And I was like, my gosh. And so much of it was untimely filing from insurance. So much of it was patients hadn't had statements in years. So there are balances here that are five years old that they just haven't gotten taken care of. So much of it was just a disaster. And it was so scary. And I was like, we're going to get a handle of this. And it's OK. We're going to figure this out. We're going to get your profitability up. So looking at it.

at that 98 % or higher on collections rate and your outstanding AR less than one month's production is going to help that. So knowing those stats though doesn't change the game. So if you know those stats, you look at it and you're like, OK, Tiff, Dana, we're at 92 % collections. It's really close, for sure. If you're doing ortho or if you're a Medicaid accepting practice, I want 95%. So you've still got 3 %

higher to get to. And you've got quite a bit of ways to go for that 98%. So Dana, when you're working with practices, because I know we both see this a lot, where practices come on for systems. And they're like, these are the things we think we don't know. And we dive in, and we're like, gosh, we need to start here, because we've got to get your profitability up before we start working on new patient phone calls. We've got to make sure that the money is being collected on the back end. So what are some systems that you put into place? What are some things that you've

things that you do to help doctors find that profitability in their AR and to really get their billing department working for them and not against them.

Dana (10:16.936)

Yeah, yeah, I think first it is like pulling those reports regularly and looking at those numbers and then knowing of that what is collectible so having a system to if you have agreed upon payment plans like if you have ortho or you do some in -house payment plans knowing how much of your ar is sitting on those that really like We can't count on collecting now because we agree to take that over time

Then once you know what you have that's collectible, just kind of knowing where it sits and knowing how quickly we're getting insurance claims paid and kind of looking at trends is most of that patient is most of it AR because when you know those things, then it helps you create systems to improve on things so that you know basically like where you want to put your effort as far as reinventing the wheel or coming up with systems. So it is, I think, pulling those reports and knowing where that money sits, then you can start creating

basically a cadence right for your billing person to really follow to ensure that the bulk of your AR is sitting in current and you have clear processes for the aging especially when we get to that 90 point I see so often in offices they don't have a cleanup process really for AR so AR continues to grow and money continues to sit there and we have

hopes that we can collect it, right? Or we say, well, I've got a lot sitting in AR and that will come in. Well, that's really not collectible and we've done everything that we can at this point, then having a cleanup process too, so that you have accurate numbers when you're looking at your AR.

Tiffanie (11:51.874)

Yeah, totally agree. Totally agree. I think something that a lot of practices miss is creating a cadence for statements for patients. And number one, you shouldn't have a lot of statements, you guys. Doctors, if your billing department is sending out a massive amount of statements, you're like, gosh, why am I always buying stamps? Why do we need more envelopes? What is happening right now? It's 2024, right? We shouldn't have this many statements. Or why am I sending out so many texts to pay? What is going on here? You shouldn't have a lot of statements.

and dive into the root cause of what's going on every single time. And Dana's pulling the reports and look, that's what she's talking about. She's talking about, let's see what's happening here. So if we're not profitable and we're like, gosh, employee cost is high and supplies are high and labs are high, all of these things are high, how do we change this? First, look at your collections and say, am I at 98 % or higher on my collections? If you are, that's a separate conversation.

will happen a minute. Most of the time you're not, or you've got a ton of money sitting in AR that wasn't collected before and you're trailing that, and so your collections is still not in a healthy standpoint and it could be better. So first look at that piece and then dive into those pieces that Dana's talking about. What is collectible? So maybe even have a spreadsheet. A lot of billing representatives love to work off of spreadsheets. That's just kind of how their brains work. So have a spreadsheet maybe that says this is how many ortho accountants

We have this is how many in -house savings plans we have We've got this many patients that are making three months worth of payments, which I am NOT an advocate for I would much rather pay I would much rather you pay the percentage to care credit to be the banker than for you to be the banker and chasing money forever So make and make a good decision for your practice, but that's always what I advocate I know all of us here at the Dental A Team do we don't advocate being the bank or the lender It's just not who you are. You're a dentist not a bank and you don't have a bank

a banking facility. So go through and see what is collectible and then go through and see what's insurance and what's patient due, right? So what's outstanding from patients? If you have a high patient outstanding situation going on there, you really want to look into that and figure out what's creating that. Something before the patient statement is creating this situation. So oftentimes it's bad information in our computer. Oftentimes it's not the right

Tiffanie (14:21.3)

Insurance verifications not the right information and we're not able to give a good treatment plan So we're giving bad information to our patients And so they're not actually truly paying what they should be or close enough to what they should be I'd rather you have credits that have to be returned than statements and we're chasing money We can always say hey, you've got more treatment to do. Let's use it for that or hey good news We've got a credit on your account. I'm so excited to return this back to you rather than hey, by the way, you're

Your insurance paid less than we anticipated they would, and it left you with a balance. Much different conversation. So if you do have a high number of statements going out, or you feel like your patient outstanding is high, I want you to dive into those reasons and really just ask your team. Like, hey, guys, I don't want you to have to chase all this money. I don't want you to have these hard conversations with these patients. It seems like it'd be incredibly uncomfortable.

It is. And ask them, what are we doing prior to the statement point to make sure that you guys don't have to do this? Now, I want you guys to pay attention to how I worded that, because it's much different than saying, what are the systems that aren't working that's creating these patient balances where patients have to pay us? I know it sounds the same. It sounds very similar. And to you, you're black and white, and you're saying the same thing. I'm saying, let me help you not have to make these hard conversation calls and tell patients they owe us money. Let's make it work.

make sure our systems are in line and that they're actually working for us because the result that I'm seeing means that something along the way isn't working and it needs to be changed. I don't want you guys to have to do these hard conversation phone calls. So look into that and look to make sure your systems are working. Now,

Flip side, maybe your patient base is super clean, and I'm super impressed, and I'm like, Fran, freaking fantastic. You're getting the right information in the system to produce the right information to collect from the patients. That's fantastic. Now it's held up in insurance. Now.

Tiffanie (16:16.354)

Y 'all know 2024, we had a whole insurance mishap early this year. Okay, so there's still a lot of stuff caught up in there. And there are a lot of practices that I have that I work with that were like, it's the change health thing to like, I'm just waiting for that to clear up. And I'm like, wow, okay, cool. But if you're still not calling on it change health situation or not, if you're not calling and following up on these, they're likely not.

to get paid. So making sure no matter what the situation, what the climate is, we're always following up on these insurance claims is what Dana's talking about there. Like making sure we have a cadence and a system. And Dana, I think you and I probably work very similarly this way. And you guys, this is where you're going to see we're two consultants at the same consulting company that could do this slightly different. So there are a million ways to do this and to do it right. You just have to find the way that is going to work the best for you. So Dana?

Typically, what I'll do is I'll have an office manager or a billing representative pull those reports at the beginning of the month. And each week, they're going to work a different section of those reports. So the first week, they'll probably work 0 to 30. Then they're going to do 31 to 60, then 61 to 90, and then 90 plus, and then restart again. Now, I have them working those chunks and then also sending a chunk of the alphabet because.

Oftentimes I see practices, and this is how we did it in my practice years ago. It was like, okay, the first Thursday of the month is statements day. They've got to be out by the 15th, so I'm going to give myself a week to work through all the statements. And then that second week of the month is insurance follow -up, period. And it was like bombarded with so many questions about statements for a week, a full week of bombarded with billing questions. And then,

a ton of insurance claims still fell through the cracks because we weren't giving ourselves enough time and we were trying to bite off more than we could chew at one time. So Dana, how do you split it up with your practices? I say this all the time, you guys, Dana is my systems queen. We all have systems. We have systems for dental lighting we know are tried and true and that they work. But Dana, she teaches, preaches, and just coaches systems.

Tiffanie (18:39.81)

Constantly with the type of clients that she is working with virtually that's mostly what she's doing So I lean on you Dana a lot to just make sure like what is it that you're seeing? And what are you seeing is working the best for your clients as you're creating these systems for AR with them?

Dana (18:56.52)

Yeah, it's very similar to yours, Tiff, in that the first thing is first is the second that you get an EOB and you know that the patient has a balance, right? You're going to send something right then and there so that they get that initial contact. I also usually to kind of preemptively try to avoid some of those phone calls, template notes or add notes to your statements to let patients know why there is a balance, especially if it is an unexpected balance. Okay, so that should help reduce the bombardment of those

Tiffanie (19:25.89)

Good.

Dana (19:26.474)

calls. And then it is it's working insurance AR every single week. And then I do split it up so that we aren't what can happen is, okay, I'm working 30 this this day, or this week, week one, and I get so far into it. And then when I work current again, I call on those same ones and the ones that are lower down the totem pole, I'm not hitting for a month or two. So I do tend to break them up and alphabet is an easy way.

Tiffanie (19:45.826)

Yeah.

Tiffanie (19:51.906)

Yeah.

Dana (19:56.394)

to break them up so that we ensure every claim or every patient gets that consistent follow -up.

Tiffanie (20:03.394)

Yeah.

I love it. I love it. And it works, you guys. So then what happens, like that's wonderful systems for your AR. And we'll do, we'll always do AR system, like podcasts, we'll always do those for your teams as well. And we train the teams how to do it. But this, you guys, is to increase your profitability. So when you have these solid systems, I hope you see that kind of snowball effect. How if it's not a good system and it's not working, it snowballs and snowballs and snowballs into more debt, basically, right? Your practice has this outstanding money.

that's not been collected it's like debt from all of your patients and your insurance companies to you which decreases your profitability because profitability is about money in the bank not production on the schedule.

So I hope that you're seeing that and I hope that you're seeing the snowball effect of good information in means good information out, which ultimately means the correct collections is happening, satisfied patients, everyone's happier, team doesn't have to like chase money, doesn't have to have these hard conversations and your profitability goes up. Happy people, happy money, happy all of the things and really see that.

It's not always about the production. Now I did promise you, if you do have your high collections and you're like, you know what Tiff, like my AR is not horrible, but my profitability just isn't there. Now it's the time to look at your production and look at your schedule because you could be missing some huge opportunities on your schedule. Now we talk a ton about blocked scheduling. Dana's a freaking whiz at.

Tiffanie (21:32.482)

implementing block scheduling. So many of our consultants do it with almost all of our practices, I would say, are on some form of block scheduling within their practice because it guarantees the profitability, right? Or it guarantees the production, I should say. And if your practice is on top of the collections, like you're saying they are, it guarantees the profitability. I've had practices, and Dana, I know you have too.

implement this block scheduling and find not only thousands of dollars on their schedule, but also hours of time. With the right efficiency, with the right mold and the right model, you can save time, create space for more patient treatment.

And with the right collections, it increases your profitability. I did have a dentist text me yesterday, and he said, should I start pushing my PPO, like low paying fee schedules out, because today's production was junk. And I said, well.

No matter what the fee schedule is, no matter what the insurance is or non -insurance, if we're scheduling to a productive schedule based on our blocks and not just scheduling to get a crown on the schedule, no matter what fee schedule it is, it should work.

So if we're not to production yet today, or tomorrow, and we're $3 ,000 off, but your crown you're trying to schedule is $1 ,200 only, then probably don't take that whole block.

Tiffanie (23:03.01)

or a week from now. You're going to look for the spaces that it makes sense for the financial aspect of it to go in. We're treating all of our patients. Our patients are all getting the treatment that they need. And no one's being forced to wait longer than they should. They're getting put into the schedule where they should be put into the schedule. And he said, yeah, we usually do that. Today was an anomaly. I'm just in a sour mood. I'm like, OK, fantastic. Then I don't need to call the practice and figure out what happened to my blocks. They're working. But that's the same thing.

space you guys that if the collections is there the AR is fantastic in this practice the the one I'm talking about that texted me we worked I don't know 18 months hardcore

on overhead AR collections and profitability and figuring out his money. So for him to be texting me complaining that he had a rough production day, that was a blessing. I was like, fantastic, if that's the least of our worries right now, we can get back on track. But if that's where you're at, and Dana, I think you've probably seen this too, where doctors are like, we're clean. My AR is clean, we're collecting the money we're supposed to. Our systems are fantastic, but we're just not producing enough. And have you seen, I know,

scheduling is a really huge, huge aspect of it. But have you seen even in like diagnosis and watching those numbers, have you seen that you've been able to increase that for doctors to really help that profitability?

Dana (24:26.375)

Yeah, and it's just it's really just a series of questions. Okay, what are the obstacles to getting to where you want? One, do you have enough patients, right? Because it can be new patients. What is our case acceptance of the patients that we have? And what's our diagnosis rate? Oftentimes, that's the one that's overlooked. It's the hardest probably to talk about or for doctors to maybe admit or take a look at and that's okay. But knowing that like, hey, if my goal is $5 ,000 a day, and I know our case acceptance rate is, you know, 55 to 65%,

Tiffanie (24:35.682)

Yeah.

Tiffanie (24:44.61)

Yeah. Yeah.

Dana (24:56.282)

what does that look like for diagnosis and then what does that look like per patient and no that doesn't mean we're forcing diagnosis on patients but it gives us an idea and we know what we're striving for it helps us get there so absolutely all of those pieces lead into production so there's lots to take a look at when we say hey we aren't profitable that doesn't have to do with AR for sure.

Tiffanie (25:02.466)

Yeah.

Tiffanie (25:16.834)

Yeah.

Yeah, I love it. I love it. Thank you, Dana. So we've got a ton of tips in here for you guys. Today, I want you to go look at your collections. I want you to get used to looking at it and know what that percentage is. Have those conversations with your billing department so that they know that you're watching it too and that you want to know and be a part of it. So look at the systems and processes, you guys, by pulling your reports first. Dana said pull those reports. Look at what is collectible. What's your outstanding look like? What's your percentage? And then work backwards from there. What are the systems that got you here?

or trouble point, like troubleshoot, what is it that's pointing to the root cause of whatever it is that you're seeing, and then dive in from there. Okay, so pull your reports, do your due diligence, and break it apart, like Dana said earlier. I want you to be in communication with your billing department or your office manager, whomever is the one that's reviewing these accounts and taking care of it, and ensure that you guys have a good system and a cadence that spreads these things out so that whomever is responsible for it has the time to

actually get it done. Go do those things. Make sure that your team knows you do not want them to have those hard conversations with the patient. So let's do everything in our power to make sure that we don't have to have those. When they do come up, it makes it much easier because they're few and far between.

As always, Dana, first and foremost, thank you for being here with me today. Thank you for sharing your tips and your systems. You are honestly a fantastic consultant, and your clients are just so lucky to have you. So thank you for being here with me today, Dana. Anything that you want to add into their action items before I wrap up today.

Dana (26:55.592)

Not anything I want to add. I just want to stress the point that you made and that is asking the questions and figuring out and coming from curiosity. Oftentimes doctors steer away from this because they know nothing about billing, right? Or they don't know anything about AR. So it's, they avoid conversations because I don't really know what they do. So I don't know what questions to ask and just don't let that hold you back. Just come from curiosity. Like you said, tell me what you do. Walk me through this, right? And how can we make those pieces better to get better results?

Tiffanie (27:05.89)

Yeah.

Tiffanie (27:24.962)

Yeah, I love it. That was a fantastic statement. Thank you, Dana. All right, guys, go do the things. Go figure it out. As always, we want to hear from you. If you've got a system that's working and you're like, guys, I think people need to know about this, let us know. Drop us a five -star review and let us know what you're doing. Or email us at Hello @ TheDentalATeam .com. We are here to serve the dental community in the best ways that we know how. And one of those ways is just pumping out massive amounts of information that you guys can implement if you need help training your teams on these kinds of things. things.

systems or if you need help learning them, this podcast was a good start, but you need a deeper dive and you need more knowledge, please reach out. The team that gets the emails, Hello @ TheDentalATeam .com. You can schedule a call on our website. We do know what we're doing. And those beautiful ladies and gents that will take those calls will point you in the right direction. We are here to help you. We just want you to have the best, most solid information and the best business possible. So go get your profitability up. And until next time, we'll see you later.