Carrying an accounts receivable balance is a common practice for dentists, but it can easily get out of control. If your practice is looking to increase collection rate, accelerate cash flow, and actually improve the patient payment experience, this article is for you and your staff.
Before we dive into the specific tips, let's review what we here at Pearly like to call the Three Pillars of Collections Excellence: systems, staff, and training.
The foundation for practice collections success starts with your systems. You need to leverage modern tools, automation, and have a documented billing policy. Next, you need the right people on your staff (I'll assume you have rockstars!) and, importantly, ensure team members are properly trained on your collections process.
Below are 9 actionable tips to improve your dental practice's systems and training in order to collect more patient payments, faster:
Embrace New Payment Technology
According to the Federal Reserve, the number of checks written per household fell nearly 175% over the past 15 years while payment via cards, direct deposit and other services more than tripled. Consumers now expect convenient payment options that does not involve a trip to the post office.
Is your dental practice one of the few remaining businesses that accepts checks as the primary form of payment? If so, you need to change your systems. In addition to inconveniencing your patients, accepting checks require labor costs to print, mail, and deposit check payments.
Accepting credit cards in your office and via online bill pay has been a "must have" for the past decade for any dental office. However, new payment technologies such as Pay-By-Text and digital wallets are now becoming the norm.
By allowing patients to complete payment on their mobile device with a variety of payment methods including credit card, debit card, ACH, Apple Pay, Google Pay, and more, you reduce friction between patients and making a payment to your practice.
If your patients cannot pay their bill in a matter of seconds, from any device, it's time to take action.
Connect on Preferred Channels
As an office manager or owner dentist, it's your job to engage your patients on their preferred channels. Your practice is likely already doing this for marketing and appointment reminders.
Billing, however, is an often overlooked area when it comes to connecting with patients on the channel they prefer - text message.
If you've ever made a collection call, you know that a common phrase from patients is: "I don't think I received a bill." The patient may be happy to pay, but your eStatement got lost in their inbox or they didn't want to spend the time searching for the stamps.
By sending your payment requests via text message, dental patients can seamlessly complete payment on the go. Importantly, if the patient has made a payment with your practice previously, they should never need to give you their card or bank details again - it should be stored in your system.
Offer Installment Plans & Financing
Patients should choose how they want to pay your practice for a balance due, not the other way around.
Many practices we speak with ask their patients to pay in-full or, if the bill is large, present them with a third-party financing solution such as CareCredit. This is a good start, but not sufficient for collections excellence.
For balances under $1,000, we recommend that you provide patients with the ability to pay-in-full or in interest-free installments over a relatively short time horizon. While this $1,000 cut-off will vary based on your patient base and location, the key is to automatically present an interest-free installment option with every bill.
This is an increasingly popular tactic for eCommerce websites as it boosts conversion rates. Note that installments, as we defined them, are not loans and do not require a credit check. It's a short-term payment plan that allows patients to break-up their bill.
Below is an example of how Pearly's Pay-By-Text payment portal looks when Installments are enabled for a $450 balance:
The patient can choose to pay in-full today or break up their payment into 5 installments, automatically charged via card or ACH, every two weeks. Practices choose which patients to offer installments to and can customize the schedule.
Installments help jump-start patient payments. The patient may have declined third-party financing while in your office, but a few weeks later when they receive the bill, paying in-full is no longer feasible. By automatically providing an installment option at checkout, you give your patients a convenient way to start payment and accelerate your practice's cash flow.
For balances over $1,000, providing patients the ability to pay over a longer period of time (typically 12-months) with third-party and in-house financing is necessary. One common mistake we see is to only provide one option for third-party financing. Use two or three different companies to maximize approval odds. In addition, for patients that may not qualify for traditional financing, be prepared to provide them with in-house financing. By intelligently choosing which patients to offer in-house financing to, you'll increase case acceptance and build good will with your patient base.
In summary, expanding the payment options available for your patients leads to improved collection rates and increased case acceptance.
Friendly & Persistent Follow Up
As Benjamin Frankly once said, "Energy and persistence conquer all things." Reducing your dental practice's accounts receivable balance should be one of these things.
You may have heard the term dunning. Dunning is asking customers for money they owe the company. Dunning is obviously disliked by both practices and patients. Practices can find the collections process time consuming, emotionally draining, and expensive. Patients can find dunning invasive, annoying, and strain the patient-practice relationship.
Fortunately, this negative perception comes from the approach versus the process.
If your normally friendly practice staff takes on the demeanor of an aggressive debt collector, the collections process can go sideways fast and damage patient retention. On the other, demonstrating empathy for patients and providing a seamless process from them to pay past due balances is more effective for collections and provides a superior experience for patients.
Striking the right balance between empathy and persistence can be a challenge.
Many practices are so nervous to damage the patient-practice relationship that they just send an additional statement if the bill has not been paid in 60 days and hope for the best. If this is the collection process at your practice, your collection ratio will suffer. Other practices take a more aggressive approach with strongly worded letters and harsh phone calls with patient backlash as the result.
As the Goldilocks once said, the collection effort balance should be "just right."
There are three key areas to focus on with respect to your collection outreach process: 1) channel; 2) messaging; and 3) frequency.
As noted above, engaging patient on their preferred channel is key. We recommend a combination of text messages and emails, with a collection call coming only after at least 5 reminders have been sent.
Messaging is critical and should be personalized to the patient and match your practice's tone/brand. Here at Pearly, we believe friendly, positive messaging is more effective that negative, intimidating language. The vast majority of your patients want to pay your practice in a timely manner for your oral care services. However, life often gets in the way and making your patients jump through hoops to complete payment (e.g. mailing a check) increases days to pay. By keeping reminders friendly, you can increase the frequency of your outreach without providing a negative patient experience.
If you are engaging patients on their preferred channels with friendly, personalized messaging, you can ramp your frequency. As soon as a bill becomes past due in accordance with your dental practice's billing policy, the patient should receive a friendly text or email reminder at least once per week. While this may seem excessive, frequent billing reminders keeps your practice top of mind for patients versus their other obligations. Importantly, frequent collection outreach will not be successful, in our humble opinion, unless the messaging is friendly and you provide a seamless payment experience on the right channels.
With Pearly's A/R Automation Software, patients with past due balances are automatically enrolled in what we call a collection flow. A collection flow is an outreach schedule that sends friendly text and email reminders to patients at the right time, before your staff needs to make the dreaded collection call. Collection flow messaging is friendly and the frequency is intelligently timed based on patient likelihood to take action. There is a clear call to action and patients can seamless complete payment from any device, using a variety of payment methods. As soon as payment is completed, the patient is automatically removed from the collection flow.
Take a look at your A/R Aging report and compare it to recommended benchmarks. If more than 25% of your total accounts receivable if more than 30 days past due, it's time to revaluate the channel, messaging, and frequency of your collections approach.
In-House Membership Plans
In-house dental membership plans are care plans that you offer directly to your patients - cutting out the insurance middle man and providing patients with affordable and comprehensive dental benefits. Patients elect to make a monthly or annual subscription payment for preventive care versus paying at the time of each service.
Converting your uninsured patients base into members has a long list of practice and patient benefits (more here), but also helps reduce your accounts receivable balance. Membership plan subscription fees result in recurring revenue for your practice. It's a reliable revenue stream that gets directly deposited into your practice's bank account.
Practices using Pearly's turn-key dental membership software design custom care plans in minutes, enroll patients in their office (or anywhere online), and billing is automatically handled by our platform.
You can track active members and revenue in the Pearly Portal. This is money your practice does not need to manually collect!
Regardless if your practice decides to use Pearly, work with another vendor, or manage everything internally, offering membership plans directly to patients is increasingly becoming a "must have" for forward-thinking practices.
Ask for Full Payment at Checkout
Asking for payment at checkout can be uncomfortable, but it should become part of your practice's culture. It doesn't matter whether you think the patient has the funds available or not, it should be standard practice to ask for payment after treatment is completed.
After you finish a meal at a restaurant, the bill is due.
The first few times asking for payment at checkout will be uncomfortable, but it gets easier each time. Patients will also adjust their expectations as they realize payment is expected immediately after treatment is provided.
Many patients, of course, will not want to pay right away and that is okay. It can be an option, not a mandate. As stated above, your practice should have multiple payment options and plans available for patients who cannot pay in-full right away.
We've found, however, that many patients find paying while they are in the office easier and never knew it was an option.
The key is asking. Make it part of your culture to ask for payment after treatment is provided - you'll be surprised by the results.
Gratitude & Incentives
Collections excellence is not possible without your practice staff being bought-in to the process. As noted above, asking for payment at checkout can be uncomfortable and making collection calls is not why people choose to work in the dental industry.
Gratitude is a powerful tool and many dentists do not genuinely thank their team for meeting or exceeding collections goals. Everyone loves to be acknowledged and it is especially important after a difficult task like collecting money. A simple thank you goes a long way to keep your team motivated to make collections a priority.
Furthermore, providing incentives to your team based on collection rate or another related metric can help to align goals between your staff and the practice's bottom line. Incentives can be individual, such as bonus checks, or a full team benefit like a nice dinner out each month when goals are met.
Overestimate vs. Underestimate
Insurance pre-estimation is tricky. It is challenging to get right and we have found that practices typically underestimate the patient portion.
When a practice underestimates the patient portion, the practice needs to send an additional bill to the patient. The additional balance due is typically a nominal sum, but the practice has to incur the billing costs (estimated at $5 to $10 per statement) and the patient has to complete another payment for service they believe was already paid in-full.
While this may not be possible for your practice, if you are going to make a mistake, overestimate! You are now sending the patient a refund or providing a credit to their account versus asking for more money.
The conversation between practice and patient changes from, "sorry, we made a mistake and you owe an additional $20" to "good news, your insurance covered more than we thought and here is $20 back."
Again, this may not be possible for your practice, but if it is, you can help eliminate small past due account balances resulting from insurance coverage underestimations.
Document Your Process & Policies
Most practices have a documented billing policy available for patients and practice staff. We have found, however, that few have a collection flow chart outlining their dunning process.
Creating a collection flow chart is easy and provides a visual representation of the steps your practice staff should take based on the age of each past due account. For example, as soon as an account becomes 31 past due, send a friendly reminder text. If the bill has not been paid 6 days after the text reminder, send an email on Friday morning. At 50 days past due, call the patient.
When you have a documented dunning process, your practice staff is accountable and it makes it easier to iterate on the system. For example, if you find that patients are more likely to open an email and pay on Saturday afternoon, you can update your collection flow chart accordingly. In addition, documentation leads to more efficient onboarding of new team members. It reduces the "institutional knowledge" factor and gives new hires a clear process to follow.
Collections excellence is achievable for every dental practice. By focusing on your systems, staff, and training, your practice can collect more past due balances, faster.