Every spring, we prepare a customized Collections and Overhead
Analysis for each of our dental practice clients.? As part of our analysis, we tally up the collections for each dental practice client from the two prior years to see if year-over-year revenue for our sample increased or decreased.
When we compare 2015 collections with 2014, we noted that the total collections for all 142 practices in our sample (located mostly in Massachusetts and other New England states) showed an increase in collections of 6.1% from the prior year. Our analysis factored in a total of $137 million of 2015 collections from these 142 practices, including general practices and specialists. We obviously view a 6.1% revenue increase for our sample as great news.
However, what we found as troubling is that just over 60% of our clients showed an increase in collections from 2014 to 2015. This means that two out of five practices in our statistically relevant sample saw lower year-over-year collections in 2015, even though the sample as a whole saw collections increase by 6.1% from 2014.
To summarize:
- Our sample of 142 dental practices as a whole shows a 6.1% increase in collections for 2015 from the prior year
- However, 2 out of 5 practices show a year-over-year decrease in collections.
While our analysis is limited mostly?to dental practices in the Greater Boston area, we feel that the results are applicable to most healthcare providers.
Interpreting the Results
Why would 40% of practices in our sample see a decrease in collections from 2014 while operating in an environment where collections for all the practices as a group increased by 6.1%?
For starter, like all businesses these day, healthcare is becoming more competitive.? The better run practices, therefore, are putting themselves in a position to grow at the expense of their less well run competitors.
Plus, while healthcare professionals are generally very well schooled in their respective fields, very few receive any formal training to manage a medical or dental practice.? Doctors who either spend the time to learn to be a manager and a leader, or are able to delegate those responsibilities to a capable Practice Administrator, can see their practice grow as compared to their colleagues.
The good news is that management is a skill that can be learned.? A great first step is to read the short business fable, The One Minute Manager.? Beyond that, there are plenty of other great Management books and courses available to practice owners looking to improve their management skills.
Suggestions to Increase Collections
Below are some other tips to help improve your practice collections:
- Fine tune your re-care system to get more visits out of your active patients. Dentists might consider using a program such as Smile Reminders, Lighthouse 360, Demand Force, or Patterson’s RevenueWell. to minimize cancellations and no-shows. Specialists should continually cultivate and develop their referral network.
- Attract new patients through internal marketing, referrals and/or advertising.
- Try to reactivate patients who have not been seen within the past year but have visited for treatment within the prior 2-3 years. Same goes for reactivating your referrers.
- Increase procedures provided through your office. Perform more high-end procedures.
- Collect fees at the time of patient visit to minimize new money ending up as patient receivables.
- Take steps to reduce your current outstanding patient receivables. Offer various payment options. Consider utilizing a collection agency more aggressively.
- Increase your fees if not all your practice reimbursements are set by insurance companies and/or government programs.
- Make sure none of the money being collected by your front-desk staff is being lost due to theft. (Watch our informative recorded presentation: Preventing Theft at a Dental Practice by the Front Desk Staff)