Are you seeking strategies to improve your collection percentage and grow your yearly revenue? If so, you've come to the right place. Collection percentage plays a crucial role in financial success for dental practices, whether they're start-ups or well-established clinics. To avoid losing out on revenue, it's important to pay attention to various elements of the billing process. Let's start from the beginning.
Collection Percentage vs. Production Percentage:
Your collection percentage is a reflection of your dental practice's financial performance. It encompasses the total revenue you receive from patients and the amount billed to their insurance companies. The average collection percentage for dental offices is 91%, which means that out of every $100,000 of production, the practice loses $9,000. The calculation for collection percentage is as follows:
Collection percentage = Total collections / total adjusted production
Ideally, you should aim for a collection percentage of 98%-100%. However, you may not fully grasp how this percentage works. It begins when a patient visits your office and requests a specific procedure. At the outset, your staff contacts the patient's insurance company to confirm coverage, determine what the insurance will cover for the procedure, and apply any agreed-upon discounts. After completing the necessary procedure, the patient pays their portion at the front desk, while you expect the remaining balance to be paid by the insurance company. To receive payment from the insurance company, you must submit a claim, potentially through a clearinghouse. Once both payments are received, congratulations, you've been paid. Unfortunately, we know that this process is rarely as simple as it seems. Several factors can come into play, such as:
Did the combination of payments cover the full bill?
Did the patient pay the correct amount or encounter issues with their payment?
Have you received the expected income from the insurance company? Are there delays in payment?
And many more potential complications.
This is how the collection percentage process typically works, but it's disconcerting to know that, on average, only 91% of what you're owed is collected. In some months, this percentage may even drop into single digits. If this trend continues, it indicates unresolved problems that could lead to persistently low collection percentages in the future. Just imagine the consequences of being unable to meet payroll or, worse, having to file for bankruptcy.
To avoid such disastrous outcomes, you must focus on increasing your collection percentage. There are specific factors to consider, and even a slight increase in the collection percentage can result in thousands of additional revenue dollars. These factors include:
Implement a Rigorous Procedure:
While it may sound straightforward, it's crucial to educate your patients about how your office operates. When a patient visits your office or books an appointment over the phone, your staff should inform them about the procedure's cost and the need to verify their insurance information. This upfront communication ensures that both your staff and the patient understand what the insurance will cover and the patient's payment responsibilities upon their visit. Remind patients of the accepted payment methods (e.g., cash, check, credit card) and emphasize that payment is expected on the day of the procedure.
2. Verify Insurance:
Before providing any treatment, your staff must verify the patient's insurance coverage. This conversation is vital for both the patient and your staff, as it clarifies the patient's financial obligations and helps them understand what they can expect from their insurance.
3. Hire a Billing Coordinator:
Dental billing is a full-time job that requires undivided attention. If you assign billing coordination tasks to someone with additional responsibilities like answering phone calls or scheduling appointments, it increases the likelihood of mistakes and subpar results. Hire a dedicated billing coordinator to reduce errors in the insurance claim process and improve the collection percentage.
4. Invest in Staff Education:
A knowledgeable staff is an efficient staff. Your team should be well-informed about payment processes, appointment scheduling, insurance claim submissions, and all other aspects that contribute to a successful and efficient dental practice. Investing in staff training is a wise and profitable decision.
In addition to these factors, there are tools and resources you can invest in to further enhance your collection percentage, including clear communication with patients, information retrieval, payment posting, accurate claim submissions, thorough research of unpaid claims, and maintaining a high collection percentage.
5. Optimize Patient Payment Collection:
There are various methods of collecting patient payments, such as collecting them at the front desk or receiving them via credit card. Sending electronic bills may not be the most effective option, as emails can be easily deleted or forgotten over time. Collecting payments at the front desk is the most reliable and efficient approach.
This discussion has highlighted five ways to increase your collection percentage, and understanding and implementing these strategies can be the key to boosting your revenue.
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