The ABCs of Collections by Dr. John A. Wilde

The ABCs of Collections

by Dr. John A. Wilde

As an overriding theme, let me affirm my belief that when executed optimally, dentistry is primarily a relationship industry. That stated, a successful practice’s collection policy must focus on being effective while enhancing rapport. However, proceed with caution because money is a delicate, emotional, provocative subject fraught with hazards.

What follows isn’t inviolable truth but one man’s educated opinion, perpetually adjusted and enhanced over 40 years of highly successful private practice. (Our annual collection percentage ranged between 100% and 98% for decades, and I retired with less than $20,000 in accounts receivable.)

Start with a vision
Let’s begin with the critical first step: The primary duty of any independent practitioner who wishes to excel is to develop, articulate and consistently reinforce a unique office vision. Our statement of collective values was birthed with input from our entire team over an almost yearlong process. To show its significance, a calligraphed copy of “Our Office Purpose” hung on each operatory wall, and we read it aloud at the opening of every staff meeting. Every policy, including collections, must be consistent with such pristinely defined mores and principles, or dissidence and concomitant stress results. Often.

Without such lodestar guidance, there is little chance for meaningful and sustained mastery, and this salient point can’t be overemphasized.

Continue with vigilance
An enduring dental saying is that, “Dentures not paid for never fit.” Having made numerous dentures—one of my most profitable and least stressful procedures that seems a dying art— I affirm the veracity of this sentiment. Patients who owe money don’t receive needed care, seldom refer and are not whom I’d choose as ambassadors.

Once you’ve developed a collection policy consistent with identified values, constant awareness of the practice owner and staff is essential. Part of our plan was a firm goal of receivables remaining at two weeks of production or less. We reviewed aged accounts receivables monthly during staff meetings so problems could be identified quickly and decisive steps taken to correct them posthaste. (The longer away from treatment, the more challenging and unsuccessful collections become.)

We accepted all credit cards and offered discounts, reducing fees by 5% for work paid in advance and 8% when the proposed treatment was completely prepaid. However, I would caution those who extend markdowns to do so with awareness: A 10% discount in an office with 70% overhead reduces net profit by 33%. ($100 collected at 70% overhead = $30 net. If collected dollars are reduced by 10% to $90, profit becomes $20.) So why make these concessions?
  1. Dramatically enhanced case acceptance. (Folks love a bargain!)
  2. Failed appointments rarely occur on prepaid accounts.
  3. A financial misunderstanding in the midst of care is considerably less likely.
  4. To maximize cash flow, which is the lifeblood of any business.
Our office charged 1.5% monthly interest on outstanding balances. Check state usuary laws, but although patients love you, the chances of them paying a bill that isn’t charging interest versus others that are is dramatically diminished.

Account for the financial spectrum
The next issue depends upon establishing a definition of “fair,” which I believe is a critical cultural divide within our benighted nation. Should fairness be defined as treating everyone the same, or considering everyone as past behavior indicates?

In my perhaps (probably) curmudgeonly view, I vote resoundingly for the latter. The first has led to the “there are no losers, and everyone gets a medal” culture, which I feel is a bane of our existence.

(Twenty years ago, my son started a wrestling club in which five of my nine grandchildren, including one granddaughter, participated. Even a 5-year-old staring at the lights with an opponent on their chest is acutely aware that, at the moment, they aren’t medal-worthy.)

Translating my philosophical choice directly to dentistry, we performed a credit check on every new patient, a signed release to do so appearing near the bottom of our medical form. This took a few moments, cost a few dollars, and the answer was a single number that made interpretation quick and easy.

Based on the history of the ones we’d treated, or the credit score of those new to us, every patient was assigned a rating that was prominently visible in their chart.
  1. Fantastic credit history. These patients could arrange virtually any terms they liked, because they had a sustained history of meeting financial obligations in a timely manner.
  2. Good but not excellent financial history. Most patients landed here, and we required additional upfront payment and established a strict financial arrangement.
  3. Cash or no charge. These folks demonstrated an unwillingness or inability to pay. I treated many I believed worthy for free, but there’s no point in wasting staff time and morale trying to collect.
Some dentists treat everyone as an A credit risk but then, when past-due accounts roar out of control, establish C policies for all, which offends and drives off the most financially responsible and desirable people. Avoid this too-common fate by making thought-out, proactive and value-based arrangements in advance.

Identify your point person
All financial obligations must be established and followed by one individual—not the dentist, whose singular task is to fix teeth. This process begins when we craft a written treatment plan that details every appointment and the patient’s step-by-step commitment through the completion of care. This document is signed and dated by the person receiving care (or a responsible adult) and a staff member.

We place (or scan) a copy in the patient’s file and add patient notes summarizing the arrangement, which we can read at a glance. If a patient is in arrears for seven days, we call, answer questions and, if need be, form an amended plan. Except for emergency care, we delay further treatment until obligations are reestablished.

I assume calling people who owe money is difficult, although I’ve never done it. This job becomes particularly complicated if a primary point of our efforts is deepened relationships and requires a staff member replete with self-esteem, tact and empathy. This priceless paragon must have highly developed interpersonal skills, remain calm even when others aren’t and be constantly aware of the goal of expanding patient connections.

Our financial leader went by the pseudonym of “Phoebe,” so we knew any calls for her were finance-related. This nom de guerre created anonymity that helped her perform this stressful job. While Phoebe could delegate specific tasks to others, she retained overriding responsibility for all our financial aspects.

In conclusion
Crushing student debt, insurance industry squeezes, inflation in an uncertain economy— these are not times favorable to laissez-faire financial policies. None is. Yet private practitioners have one of the world’s most powerful tools available: the American free enterprise system, which allows control of one’s fate. Within our offices, we get to make the rules!

The Marines motto advising, “Improvise, adapt and overcome” is an excellent code by which the wise may live. British philosophical writer James Allen offered this comment: “In all human affairs, there are efforts, and there are results, and the strength of the effort is the measure of the results.” And American essayist Ralph Waldo Emerson cautioned, “Discontent is the want of self-reliance; it is an infirmity of will.” In more contemporary terms, “If you don’t like your situation, quit whining and fix it.”

With collections, as with all else, carpe diem!

Author Bio
John Wilde After working through eight years of higher education, paying 100% of all costs, Dr. John A. Wilde spent his next two years in the U.S. Army Dental Corps before beginning a practice from scratch in Keokuk, Iowa. He was debt-free at 30 years old, owning his home and the practice he’d designed and built outright. He was financially able to retire at 40 and fully retired when he was 53. He has published six books and written more than 200 articles. Contact: 309-333-2865 or
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