I’ve worked with so many dentists who pour their time and energy into their practice, working harder and harder, but not seeing any true profit. Beyond the financial strain this causes, it creates a great deal of undue stress for you and your team. However, the culprit might be right in front of you: your Collections Gap! If you’ve ever looked at your production numbers and thought you should be doing great, only to look at your bank account and see a different story, then it’s time to close your Collections Gap!
Manage Your Collections Goals
The industry benchmark for collection is 98% of your net production, but we encourage you to take it a step further and aim for 100%. After all, every dollar you don’t collect is a dollar that could have been invested back into the practice or deposited into the bank. However, setting the right goal is only half the battle, because if you’re not meeting it, then you’re still missing out. Ultimately, there are several reasons why practices fall short of their collections goals:
Addressing these concerns will drastically improve your collections, but they will take some time. However, something you can do TODAY that will start showing results is changing how often you send out statements. Instead of sending them out on a monthly basis, switch to doing it weekly, which will keep your claims from aging too much and will make sure your AR isn’t too long.
Collections Increases Overhead
Your overhead is actually a direct product of your collections, because it’s a percentage of what you collect. When you aren’t collecting 100% of your production, it inflates your overhead, because your fixed costs don’t diminish with your decreased revenue. When that happens, it makes your overhead percentage spike! To start making a real change, work on your financial arrangements and begin holding yourself to the standard of collecting 100%. Like Kirk says, “All roads lead back to a solid financial arrangement,” so if you really get those right, you’ll set yourself up for successfully collecting everything you’re due.
Start Shrinking Your Gap
There are multiple gaps that exist in every practice, and they’re standing in the way of true profitability. When you tighten up those gaps, you keep more money in the practice. Ultimately, that’s the key to real profit: keeping more of what you produce, not simply producing more. Collecting more will have a true impact on your profitability—even if it’s just by a few percentage points—and it will do so without adding extra work. You’ve already done the dentistry, after all! Shrinking your collections gap starts with awareness. Use our GAPS at a Glance tool and start filling in the information—when you see what the GAPS tell you, you can start making meaningful change.
The key to improving your collections lies in your team—you must empower them to take accountability for your financial systems. Everyone must be clear about the financial arrangements and how to have those conversations with patients, because ultimately, that’s your first line of defense. Improving collections truly starts with the conversations you have with patients up front, and then the leadership and the back of the practice support those conversations. Remember, this is money you’ve already earned, so don’t leave it on the table! Join us in the Best Practices Association and start shrinking your Collections Gap today!
To learn more about ACT and how we can help you build a Better Practice and a Better Life, reach out to Courtney!
Tune in next time and learn how to create a foolproof plan for the future!