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30 Years of Dentistry: Lessons Learned
Lesson #7: Flexible Financial Arrangements Joe Steven Jr., DDS

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The next lesson I would like to discuss is the hot topic in dentistry concerning financial arrangements with our patients. In the last 15 to 20 years the trend of requiring cash upfront in order to have zero accounts receivable has become popular. You've heard the clichés: "You don't go into a grocery store and say 'charge it', do you? My favorite is, "We have an agreement with our banker, if they don't fix teeth, then we won't loan money to our patients."

Running a dental practice is a business. There are not too many businesses that sell high-end products or services that require you to pay $5,000 upfront. The average American has less than $500 of expendable cash at any given time. Some of you may recall one of my past articles titled "Look See, No Fee." For 32 years, I haven't and still don't charge for single periapical X-rays on emergency patients. I don't charge for emergency examinations either. Some doctors criticize me and say I am losing a lot of money. But I am gaining 10 times that amount by all the goodwill I generate by not charging them. Don't nickel and dime your patients to death.

Here is a good example. A new mechanic just opened a shop down the street from our office. I took my car there to get the oil changed and to evaluate a squeak in the steering column. When I went to pick up the car, the owner whom I first dealt with was not there. One of his mechanics said that the keys were in the car and to go ahead and take it. I left. I looked at the invoice later and there was a $400 estimate for the steering wheel column repair, but no charge for the oil change. I called the next day to inquire about the mistake, "Michael, you did not charge me for the oil change. Are you sending an invoice for that later?"

He said, "No, don't worry about it."

"What do you mean 'don't worry about it'? You changed the oil didn't you?"

"Sure."

"Well, you need to send me a bill."

He said, "No, no, no; hopefully you'll come back and see us again!"

Needless to say, I went back to him to get my steering column fixed and he has received many referrals from me. It's just good business!

I learned this valuable lesson years ago. I saw a gentleman in his 60s on an emergency basis. I took an X-ray, couldn't find anything wrong, but needed to do a bite adjustment. Following the simple treatment, I did not charge him for the service. He came in a few weeks later to have his teeth cleaned and examined. As he left the treatment room, he pulled me to the side. He said, "Hey doc, from one businessman to another, I want to tell you why I'm here today. You saw me a couple of weeks ago and corrected my bite and solved my problem, and you didn't charge me anything for that. In my entire life I've never been to a doctor or a dentist whereby they didn't charge me something to see me. When you didn't charge me for the bite adjustment that told me that you were different and special from everyone else. And that's why I'm here today, and that's why you will be seeing my wife soon. And, I have been telling everyone else about your office!"

I have met many highly successful dentists on the lecture circuit, and many of them have a high accounts receivable (A/R) rate. My good friend, Dr. Jeffrey Hoos, who excels in full mouth implant cases, tells me that he gets concerned if his A/R drops below a certain amount because it means he is not closing some of his bigger cases. He admits occasionally he does get burned and doesn't collect on some cases. He tells me that if he wasn't willing to take the chance, then he would not be doing as much dentistry as he is capable of providing.

Same thing with Dr. Brett Bigelow. I went to visit him in a very small town in Alabama to do a seminar for his team. On the way back to the airport we were talking about financial arrangements. He asked, "Joe, do you like to gamble?"

"Yes, that's why I book a lot of meetings in Vegas or a city that has casinos. I love to gamble. It's small potatoes, but I like to gamble."

"Oh, I love to gamble too, and I do it every single day with every new patient."

"What do you mean?"

He said, "The policy in our office is that every new patient has credit!"

He told me earlier about the Care Credit they offer. "Brett, if a patient does not qualify for Care Credit, do you still gamble?"

"I sure do. Until they prove themselves unworthy of credit, they have credit. Don't get me wrong, I am not going out on a big limb with these patients." He then started to describe his system. If it's an extraction, filling or even a crown, and the insurance pays half, he tries to get about a third down for the patient's portion and then two monthly payments later. He had a similar comment to Dr. Hoos, "Sure, I get burned a few times, but if I am not willing to take the chance at getting burned, I would not be doing a lot of dentistry." Trust me folks, these calculated risks make for successful dentistry.

There is nothing wrong with having a high accounts receivable rate, as long as it does not climb every month year after year. Twenty years ago our accounts receivable rate was over twice our monthly collections. However, I was in the process of building my practice and I was very flexible in our financial arrangements. As a result, our production and collections kept increasing month after month. Over the last 10 years, our receivable rate has dropped below one month's collections, because we have tightened up our controls as we can afford to turn down some patients if they don't meet our more restrictive arrangements. We had to build a patient base though and we did this by financially accommodating our patients.

To build a practice, taking a risk is often beneficial. You won't hear this from anyone else on the lecture circuit. They'll always tell you to have a near zero accounts receivable rate; to require cash upfront. I don't know very many dentists who have this type of philosophy and have a highly successful practice.

In these hard economic times, it's hard for people to come up with the money for some of the services that we offer our patients. Be flexible when it comes to financial arrangements. Take a gamble every now and then knowing that you may lose on some of these cases. You have to watch the numbers of course, and be on top of your game. If you run the front office by the seat of your pants and no one is paying attention to details, it will be a disaster. But, if you get the paperwork in order and you get the patients to sign a financial agreement, you have a much greater chance in collecting all your fees. There is no guarantee, but it sure tilts things in your favor. Look at your accounts receivable, and see if you can afford to be a bit more flexible. Your patients will certainly appreciate it and so will you when you see your bottom line!
Author’s Bio
Dr. Joe Steven graduated from Creighton Dental School in 1978 and has been in solo practice in Wichita, Kansas up until June 2007 at which time his daughter, Dr. Jasmin Rupp, joined him. He is president of KISCO, a dental products marketing company, providing “new ideas for dentistry,” and is the editor of the KISCO Perspective Newsletter. Dr. Steven along with Dr. Mark Troilo present “The $1,000,000 Staff" & the “Team Dynamics” seminars. Dr. Steven also presents three other seminars: “Efficient-dentistry,” “Efficient-prosthetics” and “Efficient-endo.” Dr. Steven also provides the KISCO Select Consulting Program to dentists in the form of a monthly audio cd recording. (Contact info: jsteven@kiscodental.com, 800-325-8649, www.kiscodental.com)

This story, originally published in the KISCO Perspective Newsletter, is reprinted with permission.
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