Dr. Pamela Maragliano-Muniz:
Welcome to tonight's DE Solutions Lab. I'm Dr. Pam Maragliano-Muniz, Chief Editor for Dental Economics. Tonight's topic is awesome because there's nothing worse than waking up every day, working hard, and not getting paid when we have money that's rightfully owed to us. So tonight's topic is A/R on Autopilot: How to achieve collections excellence at your practice. With me tonight is Jeff Cole. He is the founder and CEO of Pearly. Jeff, thanks so much for joining me.
Thank you, and thanks, everyone, for joining as well. We're excited to dig in here.
Dr. Pamela Maragliano-Muniz:
It's going to be great. I think everybody runs their practice a little bit differently, and maybe we run our reports at different times during the month or maybe monthly, some people probably bi-monthly or maybe every other month or every quarter, and so I can't wait to hear your suggestions on how we can get paid in a more timely fashion and how we can hone our systems as well.
Definitely. Why I love, which just sounds weird, but the topic of A/R and how can you really streamline your billing process and get paid for the production, getting paid for what you produce. What we've found with so many practices is oftentimes the billing and A/R and collections process is really almost like people want to push it aside, even though it's one of the most important aspects. In terms of processes and technologies, so many practices have amazing ways to book online appointments, get reviews, they can have an incredible patient experience in the office, the most modern equipment, the most comfortable chairs, the best looking practice, and then when it comes time to actually collect money post visit- especially post the insurance claim- there’s a lot of confusion for the patients. It can be really difficult. A lot of times, your practices are relying on that one specific person.
So, today we're going to dive in here. As Dr. Pam mentioned, my name's Jeff Cole, I'm the founder and CEO of Pearly.
To get started, what I always like to say is your dental practice is not a bank. Dentistry is not a place where you should have lots of patients owe you money. You've delivered services. The patients come in, and unfortunately, A/R gets complicated due to dental insurance, estimates, and what happens is we see a lot of practices who have aging A/R balances. When you look at the metrics, this should be one of the most important reports that you're pulling, because a high, rising, aging A/R balance really destroys practice value.
Write offs, for example, anytime you write off a dollar, that's just a dollar less in profit. As A/R ages and moves from 15 days past due, 30, 60, 90, the cost to collect really increases, whether that's sending it to collections and having the collection agency take a really large chunk if they can collect it or every day that goes by and the patient has not been in the office, they forget why they owe money, the nuances of dental insurance. Maybe they thought they paid the copay in the office. We work with several practices, and before we started working with them, we would look at it and they would have 100 patients that owed them less than $25, and some of these patients, they've mailed them many statements, they've made multiple collection calls. They've actually spent more money to collect that $25 than the $25.
The final thing is that it's time-consuming and frustrating to collect past due A/R. This is not only frustrating for the practice because no one on this webinar got into dentistry because they basically want to ask patients for money. That's not fun. It's usually the worst part of an office manager or financial coordinator's job. For patients, that's not the experience that they want. We know that rising A/R balances really can destroy value, but it's difficult to collect especially post visit. There's so many moving pieces and processes from running complex reports from your practice software, auditing those statements, sending them, sending reminders, posting payments. So, the typical approach is maybe every month you're running and mailing statements and you get a bunch of calls, patients are confused.
The end result is this combination of factors where it's so critical to collect A/R, but it's the least fun task for the office to do. It's often very reliant on a single person. As staffing changes or someone leaves, that can really have a negative impact. If you're joining this webinar, if you work at a dental office, if you're an office manager, if you're the practice owner, you're on the RCM team at a DSO, you know the frustrations. You've probably made the same voice where you have that difficult patient who owes a small balance because insurance didn't pay that full claim and you're spending a tremendous amount of time and money. Ultimately, if you need to write it off, that's just lost revenue.
What we're going to cover on this webinar here today is first we're going to talk about benchmarking. One thing that we hear from a lot of practices is, "I don't really know if my A/R is a problem or not, specifically the patient A/R?" What are my goals? You can't just look at that overall balance because you need to compare relatively to other practices. After this first section, we're going to give you three core metrics that you can measure and should track on a weekly basis to understand maybe your practice is doing great and you don't need to change any processes. Or if you're under our recommended goals and benchmarks, how do you take action? That will lead us into the next second and third section here where we're going to talk about a collection excellence framework, which is aligning your staff, your systems, and your training to achieve collection and excellence and ultimately elevate your own A/R metrics.
And finally, we're going to go through five specific ways that you can implement, whether it's new tools or just changing your processes, in which you can actually boost that collection rate with the goal of getting paid for what you produce. And then, we'll follow up with questions that we can answer here. And following this webinar, you'll receive an email. So if there's anything that I didn't cover or any additional questions, please feel free to reach out.
So let's go into benchmarking. I love this quote, which is, "What gets measured, gets managed." It's a little bit of a cliche, but it's so clear. While those A/R reports can be annoying to run, the best practices, they really track a few different metrics. There's some different names, or maybe your practice is a little different and you want to measure more or measure less, but I'm going to walk you through three metrics that will give you at least that overall sense of how your practice is doing. You can run this report right on here. Log into your practice software, download the report in Excel, or if you're using an analytics provider. I'm sure everyone on this call knows how to run an aging report. Depending on your practice software, there's going to be different ways to do it. Ideally, you're able to get that in Excel so you can cut and manage the data. Or I'm sure a lot of practices on here are using an analytics tool or provider that may make some of these metrics more easily.
And importantly, when you're going through each metric, what I've found is that sometimes a practice suddenly decides that they really need to focus on their A/R, and they make this big effort to run all these complex reports and see where we're at at a point in time. Now, the key to actually achieving that collection excellence is to actually go ahead and measure it week over week, month over month, quarter, over quarter, year over year so you can see what's working or what's not.
Dr. Pam, at your practice, what type of reports do you run? Is that something you guys talk about on a weekly basis or monthly basis? How are you currently tracking your patient A/R?
Dr. Pamela Maragliano-Muniz:
I have a feeling after this hour I'm probably going to have to tweak things a little bit, not going to lie, but we have our daily and our monthly reports that we run. But I would say from an A/R specific report, usually that's a monthly conversation that we have.
Yeah, and that's what we hear a lot, which is fine, but I would recommend, similar to if you're running a daily report on production or new patients or new appointments, actually getting paid, you're measuring all of the work that you're doing but not what you're actually owed and earning.
The first metric is accounts receivable ratio, or the A/R ratio. Just to get everyone on the same page, these are three metrics and what we like to track and what we find is an easy way to do it. This is probably the easiest way where sometimes if we get on the phone with the practice or if you're looking at your team, someone may say, "Oh, well, we only have $40,000 of A/R or we have 20,000, or we have 500,000." Well, that doesn't really tell you that much because dental practices are totally different sizes, have totally different production amounts. So this different metric allows you to say, "Okay, what's my total A/R divided by my average monthly production." Importantly, when you're running those A/R reports, and this is a mistake that I do see many practices make, is they run that A/R report and they include credits, meaning patients who actually have a credit at your practice. That artificially lowers your A/R number, which is money that's owed to you.
For example, I've run reports for practices and they'll say, "Oh, I only have $40,000 of A/R." We'll put it through our software and we say, "No, you actually have 60,000, but you have $20,000 worth of credits." That 60,000 is actually that total number. You can also break it down by your patient A/R or your insurance A/R. Today for this conversation, we're mainly going to be focused on patient A/R since that is something that your practice really has total control over. For your insurance A/R, you're at the mercy of your own arrangements and their processes, but the balance that patients owe you is totally you're in control.
If I were to look at this, what's the goal? This is a ratio that's been around for a long time, and the goal it's simple, it's one. In a perfect world, your total A/R will equal your average monthly production. For example, if my practice is $70,000 in A/R, we do about 70,000 in production each month, that's A/R ratio of one. If, for example, I noticed that our accounts receivable has been rising a bit but our production stayed the same, this metric is like golf, the lower score, the better, so 1.2 that is not as great. Now, for groups or DSOs, what's really helpful here is you may have a group of five practices that vary a lot in size, this could give you that apples to apples comparison across each office regardless of the monthly production, how is my practice doing?
The second piece here is the collection ratio. This is probably my favorite metric because it's basically saying, "I'm doing $100 worth of net production, how much of my X is actually going into my bank account?" So this is collection ratio, collection rate, but this is the amount of actually funds, payments collected divided by the net production there. And that becomes the collection ratio. What we like to see here is a collection ratio of definitely over 95%. If you can get to 98%, that's really that gold standard. In this example, this is a metric that you can look at over a time period. This is something you could track each month, "What's my collection ratio this month?" where I'd look at, "Okay, what were my funds collected in this month divided by net production?"
We generally recommend doing a longer look back window here just because maybe you had a big production month and then the money's not coming in later or with factoring in insurance claims. Dr. Pam at your practice, if you looked over the past year, is collection ratio something that you know off the top of your head, your team is tracking? Is that something you guys review frequently, not to put you on the spot here?
Dr. Pamela Maragliano-Muniz:
No, that's okay. You can put me on the spot, and I'm a practice owner just like everybody here. Like I said, we're going to have to up some of our game here. To be honest with you, my office manager might do this on her own time, but I have never seen this. I'm not sure if others feel the same way.
Yeah. This is such an important rate because I think a lot of practices make the mistake of, "Hey, I just performed $1,000 worth of treatment." That's great, but if you get paid $0 from that, you've spent your time, you have your overhead costs, you're not getting paid for what you produce. This is a really important metric to look at. Look back a year, look back a quarter, and you can actually understand, "Okay, we were supposed to collect $100, how much did we actually come in?" Right?
Now, depending on the time period or the metrics, A/R, it's a part of dentistry, and write-offs are a part of dentistry, but importantly, depending on your practice, we see some practices that have a 99+ percent collection ratio. That really comes down to their billing policies and communicating to patients. In my opinion, this should be one of the key metrics you're looking at, because every dollar that you're not collecting on net production, you've already paid the team, you've paid your rent, you've paid everything, this is basically pure profit. So if you think about it, if you have a collection ratio of 95%, put in more general terms, that's 5% of your total revenue each year that you're not getting. So if you were to collect that, that would actually just go straight to the bottom line.
Now, the final key metric here to look at is the aging breakdown. This is different names, but what I like to think about this is this helps you understand even if you're total A/R maybe it looks like it's in a good place, not all A/R is created equal, right? If you have a practice that has $100,000 in, let's say, patient A/R and you looked at it and Practice A had $80,000 of that was 90 days past due and another practice who 80% of that was zero to 30, those are two very different A/R balances, because the likelihood to collect AR decreases as it ages. So that's what's really important, where this just gives you a breakdown. When you run your A/R report, and again, make sure to not include credits there, and you're going to see the different buckets. Most practice softwares will do 0-30, 31-60, 61-90 90+. Others will do 90 to 120 and then 120+. So whatever way that you're tracking it, you can break it down by that to understand how are we trending.
This is a great report, actually, as you're going to be talking to your team, Dr. Pam, to look at on a week over week basis as well as a month over month basis, because this is going to give you almost that A/R health check. So if you're just looking at the top line number of, "Oh, this month we had 50,000 of patient A/R. The previous month we had 51,000. Oh, we're doing pretty well." But if you notice that all of that A/R, the breakdown changed, said, "Wow, well, we're good at collecting what's come in in the last month, but we're just letting this A/R ages." And so, this is where you look at, "Okay, I want to clean up the A/R. What am I going to do to tackle 60+ day balances," for example.
In terms of goals if you're trying to track, these are four buckets. Again, if you did 90-120, you could look at that as well. By a simple rule that we like to see is less than 10% of your total A/R is 60+ days past due. So that means that in the 0-30 and 31-60, patients are paying, and that's something that you're able to collect. There's going to be folks who maybe have a disagreement about a balance or there's going to be a small percentage of people who truly do not want to pay, and if these metrics are standardized, this means that you're either writing off or sending uncollectable balances to a collection agency in a timely manner. But if I'm looking at this and I notice that month over month, my 90+ day pass due relative percentage continues to increase, that's a red flag where, "Hey, we're letting folks slip through the cracks here."
Some practices when we'll pull their metrics, they didn't follow the policy, and 90+ days past do A/R really continues to increase, and that's really a red flag. This is also something that's good if you do have a staffing change, whether it's an office manager or whoever at your practice is responsible for that A/R, being able to look at it where if they leave, we hear a lot of times of, "Oh man, Suzie left the practice, and then I checked three months later, and our 90 day plus past due skyrocketed." Okay, well that's because she was really responsible for that A/R and collecting balances, but now all of a sudden, maybe the new team member wasn't trained or you don't have systems, and that's really where you can run into some issues.
So, now that we've gone through these three key A/R metrics, and again, there's a lot more you can dive into in looking at average days to pay and different types of metrics, distribution of balance sizes, because maybe you look at your A/R but there's one $5,000 balance that's 90 days past due and that's messing with your numbers. But in general, if you were to just track these three metrics week by week, month over month, year over year, you're going to have a really good sense of how your billing policy is working, what patients are paying. What's interesting, hitting these goals is less exciting than tracking new patients or production per patient, but this is going to give you almost that dashboard of, "Am I getting paid for what I produce?” Write-offs are just such a killer, and if you're a practice owner here and you're looking at selling your practice or you maybe you recently acquired one, A/R is always something that in that acquisition process is so important.
And that again, by increasing that collection ratio and actually increasing and getting closer and closer to collecting 100% of what you produce, the value of your practice is going to go up significantly. If you recently purchased a practice, and we work with a lot of customers who either it was a DSO and they just acquired a practice or maybe a new dentist purchased a practice, having a real sense of, "Okay, this is what their metrics look like now. I'm going to take action, and in a month, in three months, I'm going to look to see if we're trending in the right direction."
So highly recommend every practice pull down that aging report. If you use different analytics tools, great, if not, this is something that in 20 minutes you can pull a report, put it in an Excel spreadsheet, do a couple formulas, and just give yourself a really great view on how it's tracking. If I were doing, like Dr. Pam, you mentioned in your monthly meetings, similar to, I'm sure, many metrics you look at in terms of new patients that much, recall, hygiene production, different things like that, these three metrics are something I would definitely recommend having in that report and giving a look back.
Awesome. So now we've dug into how does my practice step up, hopefully, some people on this webinar taking a look at their own reports and getting a sense of how they're doing. Now let's talk about after you've tracked and reviewed this, maybe you looked and said, "Okay, hey, I'm actually doing really well," great, keep doing what you're doing. Or you looked at it and you said, "Wow, our collection ratio is 92%. That means $8 out of every 100 we're not getting. Let's take some action here." How do we become a practice that really values collection excellence? The first thing is, I think, a mindset shift. I love this quote from Michael Jordan, "Talent wins games, but teamwork and intelligence win championships."
And that's the biggest thing that I see practices not doing, where it's focusing on patient A/R is the responsibility of everyone at the practice. It shouldn't just be one person has it down. Again, you're going to have a point person or an owner who's really following up, but they're reporting, and these metrics should be shared with the team. And really, everything from the front desk, the dentist, the office manager, it's really a team approach. Just to give you some quotes that we hear from our sales team when they're speaking with practices that come to us to try to solve some of their A/R problems, we'll hear things like, "Three months after Debbie left, our 90 plus days A/R doubled." Well, as a practice owner, you do not want your office to be so reliant on Debbie, right? You want a system where if there's a new person that came in, you have a real system in process.
Similar to, "I've mailed six statements to Kevin, and he still hasn't paid his $22 balance." Maybe you've lobbed in some phone calls. Well, given that the average mailed statement, if you factor in mailing, printing, and labor cost, that all in cost of the time or even an office manager making a collection call, typically it's going to be $5 to $10 per statement factoring all of that in. So at this point, you've literally spent more to collect. And so many practices do focus on those larger balances, but a lot of these smaller balances under $50, some offices have policies that say, "Hey, when something is 180 days past due and it's under $50, we're just going to write it off."
What we've seen when we dig into some reports, practices are oftentimes surprised with how quickly that adds up, because again, writing off that $50 balance versus being able to collect it in an efficient manner through a systematic process, that's just straight bottom line profit.
And finally, this is also what we hear, "Yeah, we do make collection calls, but only when we have time." Everyone on this call, no matter what your role is, you're so busy, and making collection calls is not fun. There may be people on here that really like doing it, but that's why most people, they're not excited to come into work and call people telling them that insurance didn't cover the amount that we thought and they owed an extra $75. So as a result, sometimes making those collection calls and focusing on that A/R becomes a bit of an afterthought. Practices, even if they're not using any new tools or approaches, practices where they know that every Thursday from 1:00 PM to 5:00 PM, I'm going through that A/R list and making calls, those practices are going to be so much more successful because it's a specific activity that's scheduled and you know is going to happen each and every week.
So, how do we think about collections excellence? Well, I bucketed it in what I call the three pillars of collection excellence. And it's, how do you align the right systems, how do you align your team, and how do you train your team? Also, it's training your patients. Every practice is going to be a little bit different, but when you think about collecting A/R, these are the three areas of your practice that you need to think about. So many oftentimes, what we see is it may just be one pillar, which is staff, Debbie, but as soon as Debbie leaves, there's no real system, there's no training for the new person, and suddenly you see those A/R metrics go up, right?
How do you put in a really clear- with the right systems, the right staff, and the right training- to actually achieve that collection excellence? Again, this is a team effort. This should be something where you're reviewing the metrics, everyone understands that system, those workflows, and importantly, you actually have a real process and training so if there's staffing changes suddenly you're still producing the same amount each month. But if your collection ratio goes down, every one of those treatments, you're losing money, it's less money than you're collecting.
Now what we're going to talk about is five specific ways that you can increase your collection rate or increase all of the three key A/R metrics. The first is documenting your internal A/R workflows. I can't stress this enough. These five different ways that we're going to go through are things you can implement with whatever current systems and tools you're using. There's also helpful things that save time like Pearly and others. But really, what I look at is this is going to be different, and this is just an example, but so many offices, they have a patient financial policy, right? So you're communicating to patients, "Hey, here's our financial policy. Insurance is just an estimate. We're happy to submit those claims for you. Any remaining balance you're responsible for."
However, oftentimes the internal billing policy or the internal A/R workflow, it's not documented. This is something that you want to look at as a practice where, okay, when the patient's in the office, we're obviously going to verify their insurance, take the copays, confirm their contact information. If they're an uninsured patient and we have a membership plan, we're going to offer that to them and provide a statement when they walk out. Whatever that current policy is, but having it documented in a checklist gives your office some accountability in terms of what's the information that we're going to get. Oftentimes, when we'll integrate with different practice offers, we'll find out that the responsible party, and we do see this happen in a lot of different offices, they only have an address. They don't have an email or a mobile phone, right? Maintaining that accurate contact information is so important.
Depending on what systems you're currently using, if you can securely store their card on file, that's really helpful as well. My recommendation would be group up with the key stakeholders to your practice and have that checklist for what information are you going to collect upfront to give yourself more of an opportunity to have collection success after that insurance claim comes back. Educating the patient on the financial policy, this sometimes is something you just show them or maybe you have on your website, but imagine if every patient came in, everyone who's working in the dental office understands a lot of the nuances of insurance, most people and most patients don't really understand how dental insurance is different than your traditional health insurance, right?
So if you can have a real strong policy of informing your patients, "Hey, we're submitting this. You're paying your $25 copay. You may receive a bill from us after the claims come back that you owe a remaining balance." So really priming them on, "This is how you're going to receive your bill." Maybe you're sending a text message, a mailed statement, whatever that is, make sure that the patient is getting educated. And then post visit, some practices will send out a remaining balance if they're doing insurance estimates. We see most practices will wait until all of the claims are either paid or denied and there's a patient balance without an insurance estimate. This is where we see most practices are not documenting this or don't have a real system in place where whatever it is that works for you know, "Hey, day one," and I'm saying day one, in terms of once the claim has been posted, "we're going to send a statement. Then every 10 days until payment's made, we're going to send a text and email reminder. At day 45, we're going to make a call. Day 60, we're going to mail a pre-collection letter letting them know, 'Hey, it's been 60 days. We've sent you a number of texts and calls, you haven't paid.'" That's more the friendly letter.
And then day 90, you're going to send them to collections agencies. Some practices don't send a collection, some do, whatever works best for your patient base and your practice. This is just something where you want it to be documented. So if I'm a new hire at a dental office, I can look at this document and say, "Okay, these are the activities that I'm supposed to do. These are the policies for post visit billing," and everyone's aligned and everyone knows what to do versus, "Oh yeah, I lob in a call every once in a while, or I'll look at the big balances." It should just be a consistent process that, again, we're making this a system aligned with the team and the training and documenting that internal billing policy is so critical.
I wanted to show this. We looked at data of over a 105,000 billing notifications that were sent through Pearly. What we realized is that when a balance is over 30 days past due, it takes an average of 3.7 notifications, so email or text, to resolve a balance. What this shows is people are busy, people have shared attention spans. Sending out a mailed letter that gets thrown away or sits there or even sending out one text message. Patients need to be reminded, and it's so important to reach them at the point that matters. So, sending consistent messages every six to 10 days, they owe money, they owe the balance, these are transactional texts and emails that you can remind them. Because sometimes you'll get a text, patient ignored it, that second text message that comes 10 days later, all of a sudden, they're at Walgreens, they're on their phone- great- they know that they should take action. So personalizing that patient journey to drive billing resolution and balance resolution is so important.
And then also, recommend everyone reviews the statements that they're sending patients, right? A lot of those dental statements are really ugly and confusing. There's different things you can do to customize them, make them more transparent. Patients just want to understand why they owe a balance, not just see a number with no details included. And that's what we see that happens a lot, is if you get a text saying, "Hey, you owe $50," and there's no reference, it doesn't show that insurance paid, and this is the remaining balance, one, you're going to get a lot of calls, and two, you're making that this... No one really understands why they own money. So just making a transparent, frequent notifications and making your statements obvious and readable will increase the likelihood that patients will pay, and they'll pay a lot faster.
One thing I always like to talk about here is you should think about your billing outreach as almost marketing automation. Let's say, if you're sending appointment reminders, various marketing emails and touchpoints, whether you're doing it in-house or using a marketing agency, your average patient is likely receiving a lot more communications from your office about specials and appointments and new treatments and really every marketing to actually drive them to come in and book an appointment. You're probably running different advertising and focused on getting people in, but then suddenly when it comes time to actually get paid for the work you do, you're batching out mailed statements each month. That's why you're not going to see that collection excellence.
Number three, what we always like to focus on is the patient experience. I think when people think of collections and asking for money, it has a very negative connotation. I like to look at it as, how can you actually provide an amazing billing experience that's going to help you attract and retain more patients? There was a great healthcare survey done that said over 60% of patients are actually willing to switch providers for a better payment experience. So if it's really annoying to pay, they're having to mail in checks, you shouldn't have an experience that is so different and feels so old-school compared to how you're used to shopping on Amazon, buying anything else online.
So that's where we talk about reducing payment friction. You want patients to be able to pay you in whatever manner they prefer, not gate it so they can only pay in one specific way. For some patients that's going to be including multiple mobile payment options. Some patients want to receive a statement and mail in a check, call over the phone. Reduced payment friction means opening the door to more payment options. Give them modern options. We have a practice that we work with in the Bay Area, there's two offices. I feel like most of their patient base are younger and work for tech companies. 80% of their patient payments are through Apple Pay.
They click on the links, they're mobile, they're through Apple Pay. We work with another practice in a rural area of Texas, and I think it's a pretty even split between about half of patients mail checks and half call and pay over the phone. They do have an online billing option, but given their patient base is older and their preference, that's how they're going to pay.
That's okay. In a perfect world, everyone would click on a text link, pay by tax, your practice wouldn't need to do anything. But by forcing your patients to pay in specific ways that they may not prefer, they're going to delay payment. I know that when I get a bill, I'll give you two different examples here, randomly our water utility sends a text and I can reply with "Okay," and it charges my card on file for my water and trash each month. I pay that bill within a minute every single time of getting it. My son's pediatrician sends out mailed statements. You have to rip off the top of it and mail in a check, or I have to go through this clunky bill pay thing and enter this 10-digit code. It's a terrible process. What happens? That sits on our kitchen counter, and when we get around to it, we pay the bill. And guess what? That's increasing the days to pay. Not factoring in inflation and all these other areas, that's just money that they're losing because they're making the billing process for me more difficult. Why not make it easy, get your money faster.
Offering membership plans, I'm sure many of you on the phone, you have a membership program, whether it's managed through software or in-house, it's only going to cover the uninsured patient, but this removes the A/R issue from the equation. They're actually going to be paying monthly or annually, and then any additional services you should have their card on file, you can bill them right away. And building more of that recurring revenue stream and eliminating the post-billing aspect of it by getting your uninsured patients on membership programs that you can actually control the cost and the fees.
There's a lot of other benefits here, but specifically when we've looked at A/R, practices who do really make an effort to communicate their in-house membership plan and get their uninsured patients enrolled, you see a significant reduction in that A/R because you've removed that post-visit billing part of it.
Finally here, treatment financing or in-house payment plans are very important, and you typically hear this associated with case acceptance, right? According to a survey by the Federal Reserve, 32% of Americans can't afford a surprise expense of $400 or more. Now, our recommendation that we've seen is treatment and payment plans shouldn't only be on the case acceptance in the office side. If someone has a surprise balance, and maybe they slip through the cracks and someone who maybe insurance got denied or maybe payment plan options were not presented in the office, if you're sending a patient a bill of, let's say, over $500 and maybe they're 45 days past due, if you're only including the option for them to pay in full or pay by check, people are going to delay payment and try not to pay. So, by setting rules, and this should be documented in your internal workflows, you should have specific rules that make it easy for your staff and for patients to know that says, "Hey, if a patient balances between this and this amount or they're over 60 days past due, we're going to allow them to enroll in our in-house payment plan," however you manage it.
Or, if you have third-party financing companies like Sunbit, CareCredit, LendingClub, they'll include those online application links that should be incorporated into your statements. Because if I receive an $800 bill that I already thought was covered, or maybe insurance denied it, it shouldn't take me a phone call being on hold with the office saying that this is higher than I can afford, what options there are. There should be a link, and everything should be, "Hey, here's how much it is you can pay in full. Here's different pay over time options." Incorporate those in your communications to patients, as well as on your statements or however you're requesting payment post-visit billing. Again, I'm sure everyone in this office has some type of pay over time option, whether it's in-house, third party financing, probably a combination. The mistake is only having this conversation in the office. For any balance that's past due, let's say, over 30 days and over $500, patients should see that option because they'll just start paying. You'll collect more balances faster that way.
We see practices who will say, "Oh, well, for this third party financing company, I don't want to pay the fees on that $500." My response is always, "Well, would you rather have 90% of 500 or 0% of 500?” Because you know if that balance gets sent to collections, you're going to be even paying a greater fee. Documenting those specific rules, his is also important, coming back to that team and training aspect, is while there's going to be one-off cases, patients that you need to offer custom options to, making it that clear policy so your entire team knows, "Hey, anyone who has a balance over this amount, even if it's post visit and it's post insurance, I'm going to provide this option."
Those are the five ways. Again, these are all five specific tactics that you could implement, and it all starts with actually documenting your internal billing policy. So everyone here has that external-facing financial policy, that should be translated into letting you and your office know, at every step of the way, for every balance amount, what are you doing?
To wrap this up here, I'll give you a total shameless plug for Pearly. We help dental practices really put A/R collection on autopilot. We see a lot of success in helping practices streamline billing, reduce cost, increase their cash flow by bringing this modern experience. How it works is we integrate at the ledger level to most practice softwares. We give you great dashboard and metrics, and we actually allow you to set those specific workflows.
So, hey, I'm going to send a text and a statement anytime a patient is X number of days past due, they have balances over this sizes. If a patient has over a $500 balance, I want to give them these pay over time options. Then step two, which is really important, is we optimize that billing outreach. So you can say, "Hey, I'm going to send that initial text and email," but then there's going to be that personalized path where every 7 days or every 10 days we're going to check that patient still owe balance, they haven't made a payment, we're going to send that reminder. This is where you see a huge lift in activity because it moves from them receiving a mailed statement once a month or maybe you're manually sending out a pay-by-text request every so often. This entire flow, we turn into that marketing automation where they're getting different touch-points at the right time through optimized messaging.
Then step three is give them an easy way to pay. If they want to call and pay over the phone or the notification serves as a reminder for them to mail in a check, great, but also allowing them in a couple clicks to pay with their preferred payment method and for you to understand all of those reporting and insights. If you guys are interested, head over to Pearly.co. We're offering a free 30-day trial. We're also going to follow up to everyone on here if you have any additional questions or are interested in seeing what we do. But regardless, if you have your own systems in place and other tools you're using, that's great, and hopefully these five tips will help you at least better understand, one, how your A/R is doing, and two, some specific actionable strategies for you to increase that.