How does the average dental practice bill their patients?

Why RCM Maturity Matters

From working with thousands of dental practices, we have seen a wide range of ways in which billing teams manage their revenue cycles. While every practice has their own unique approach to stay on top of collection, some processes yield more positive outcomes than others.

We call a high level of process refinement and robustness “RCM Maturity”.

To understand this gradient of RCM maturity for practices, we created an assessment that gauges process sophistication through a series of survey questions. Each question is weighted with a score that helps to categorize process efficacy.

In this report, we compile the results of submissions from our RCM Process Assessment tool to determine the level of maturity surveyed practices have regarding patient billing and accounts receivable (A/R) management–some of the most essential elements of a practice’s revenue cycle.

For each participant in this survey, we first asked them about the type of organization they represented and if they primarily used a manual or traditional billing system. From here, questions are conditional and dependent on previous answers. All answers were anonymous and were from practices unaffiliated with Pearly.

What is the RCM Maturity Model?

The survey results from this assessment provide context to the spectrum of billing practices across the industry. To portray and categorize these results, we use the RCM Maturity Model.

The goal of the RCM Process Assessment is to assign dental practices and organizations to corresponding positions along the RCM Maturity Model curve.

• AD HOC - Practices on ad hoc level are often intermittently performing billing tasks–often in a reactive manner. Reporting is simplistic and sporadic. Billing is done completely manually without any digital tools other than PMS batching.
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• STRUCTURED - This level designates practices with established billing SOPs and regularly scheduled patient billing activities. Though still heavy on staff hours and manual inputs, this level of billing is a big step in the right direction for practices, and represents the largest segment of practices surveyed.

• DIGITIZED - Once digital billing tools are incorporated into standard practice, the process is considered “digitized”. Text and email modalities are the go-to method of billing communication with patients, and configured dashboards are used for reporting. Though digital tools are a mainstay in billing, the process is still largely manual with staff intervention required to collect most balances.

• AUTOMATED - Billing automation is the largest cost-saving step towards a balanced and optimized billing system. When you use workflows instead of staff input to collect balances, you both increase the frequency of patient communication and increase the number of balances you collect. This is largely because of the consistency of automated billing software that allows practices to target the right balances at the right time with the right message. Staff intervention is minimized and patient-portion collection is handled in a hands-free manner.

• OPTIMIZED - The final stage of the RCM Maturity Model involves iterating based on results collected over time. Using data-driven insights from each patient cohort and each office (for multi-location organizations), practices can update their billing workflows to further refine their collections process.With this model in mind, let’s explore what our survey respondents self-reported.

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What is the performance ranking distribution?

The vast majority of respondents indicated that their billing process was on the lower-middle of the RCM Maturity scale. With 40.5% and 39.2% scoring in the “Structured” and “Digitized” range, respectively, we see that automation is rarely leveraged by non-Pearly users to audit accounts and send statements. We also see that nearly 11% of surveyed practices don’t have an established and standardized billing process, which implies that they only make an effort to collect sporadically.

The advanced side of the curve (Automated and Optimized stages) represent less than 10% of respondents, indicating that about 90% of practices that took this survey would benefit from implementing automation and data-driven optimization into their billing processes.

From here, we can analyze the breakdown of results based on some of the most score-influencing questions in the assessment.

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Is your patient billing mainly done with paper statements?

Because the majority of practice respondents indicated that they primarily use paper statements for billing (and not digital notifications), we might infer that this ratio might be the norm in the industry at large. Relying solely on paper statements is costly, time-consuming, and less effective than digital modalities. For that reason, this question weighed heavily on the final scoring outcome of this benchmarking assessment.

Looking at the distribution at the group level, we can see the trend where the larger the organization, the less prevalent “traditional billing methods” become.

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Do you have an online pay portal or accept mobile "text-to-pay" payments?

Here we can see that about ⅔ of respondents have digital means of collecting payment, even if that means that their patient billing communication isn’t primarily facilitated by regular SMS and email notifications. We also notice that there is a correlation between the size of the dental organization and the prevalence of digital tools for billing.

Drilling down into the group-size distribution, the trend continues with all three organization sizes offering digital modalities for their billing more often than not.  

Though this particular question was kept intentionally general to the most ubiquitous digital tools (text-to-pay & pay portal), we believe that if additional questions were asked to qualify this one, we would see a wide range of responses.

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Does your staff manually audit patient accounts before sending a statement?

From what we have gathered from working with thousands of dental practices, is that there is a strong correlation between high staff inputs, high billing costs, and high collection rates. This makes sense because staff hours can be costly, but the effort to regularly call patients and send them statements can mark the difference between a stellar and an abysmal collection rate.

For this reason, we position “automatic account auditing” as the #1 determining factor for a mature RCM process. If a practice employs a filtering system that qualifies balances that are eligible for billing and automatically engages those balances, then that practice will score highly according to the RCM Maturity Model.

With the data collected here, we notice that nearly 7 out of 10 practices manually audit patient accounts. Surprisingly, a large cohort of dental groups report using automation to audit accounts, demonstrating particular savvy in this area.

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How many staff hours per week are spent performing A/R collection tasks?

In line with the previous assessment question, we see that a high amount of staff hours dedicated to billing and A/R management tasks is actually an indicator of an unrefined RCM process. This is in part due to the high cost of dental staff to perform billing tasks. If a practice is trying to address a lagging collection rate by over-deploying staff resources, then they should expect to see a negative impact to their cost-benefit outcome.

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What percentage of your patient-portion A/R is older than 90 days?

The older the A/R, the more difficult it is to collect. According to the ADA (and corroborated in a previous Pearly study) once a bill is over 90 days past due, the chance of a full successful collection drops by 75%. Pearly practices see collection rates 2.5x greater for this cohort of balances.

With this in mind, we consider that practices that carry more than 25% of A/R 90+ days past due are far below the high-performing industry benchmark. What we see from this assessment is that roughly ⅔ of practices fall into this category, and almost ⅓ of practices are carrying 90+ DPD A/R representing over half of their total patient A/R.

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How frequently are you reaching out to patients with a statement once their balance is past due?

From studying millions of transactions  of our customer practices, we have calculated that for every billing reminder that a practice sends, there is a 6% increase in the chance that the bill will be collected before 90 days. While this is impacted by billing practices (including the frequency of notifications and the language/tone/format used), it is still a general rule for offices that we work with.

Best practice is to send one billing notification (with links to pay or a QR code) every 7-10 days for optimal results. From this assessment, only 5% of respondents are billing at this frequency. In fact, there were over 3x practices that responded that they “don’t send reminders” after the initial statement was delivered.

Do you offer payment plans for financing treatment?

Payment plans give patients the financial wherewithal to pay for treatment, regardless of the out-of-pocket costs. They increase case acceptance rates while drastically increasing the likelihood of full payment.

In a recent study we conducted on payment plan efficacy, we found that collection rates for balances 90+ days past due and $200+ were lifted by an average of 19%. These are by and large persistent, aging, and substantial balances that would have gone to collections or ultimately written off as bad debt.

Here we find that 61% of surveyed respondents offer some sort of payment plan financing, which implies that most practices have this base covered on the patient billing side of their RCM process.

If your practice does not offer payment plans, there are several ways to include them for patients. 3rd party financing partners (like Sunbit or CareCredit) and offering in-house payment plans customized for your patients are the main two options for practices.

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How often are you running reports related to your accounts receivable balances?

A common mantra for the performance-oriented is “what gets measured gets managed”. For A/R collection and management, this phrase rings especially true.

In our assessment, we noted a slight bell curve from the responses, with the largest portion of respondents indicating that they run reports on a weekly basis. This reporting frequency follows best practices for the offices that we work with.

While patient A/R can fluctuate on a day-to-day basis, the ratios across days past due (DPD) buckets should conform with industry benchmarks. By measuring this on a weekly or even monthly basis, you can spot trends in your collection efforts and make adjustments before issues arise.

For practices that don’t run A/R report (representing 12% of respondents) we recommend starting with a simple A/R aging distribution report to get a 10,000-ft view of your carried A/R balance situation.

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Final Takeaways

1. Workflow-based automation for sending patients billing notifications
2. Automatic qualification of eligible patient balances for collection
3. A strong offering of payment options (including payment plans) that meet patient preferences

If all three of these standards are met by a practice, they should consider their process to possess a high level of RCM maturity.

Depending on what a practice lacks, there are numerous ways up the RCM Maturity Scale.

If it’s a qualitative feature of their process (missing payment plans or digital payment methods) or quantitative metric (possessing too much aging A/R), practices can commonly address core issues with RCM automation software.

We offer our RCM Process Benchmarking Assessment to any practice that is curious about how they compare to their industry peers. If you want to know how your practice ranks on the RCM Maturity curve, you can take the assessment here.

By taking the assessment, your practice can gain actionable insights for improving your RCM process. It only takes 2 minutes, and it will make you take a scrutinizing look at the way you bill your patients and manage collections.

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