Dentists take great pride in providing much-needed services to patients. In the past, patients have been able to either directly afford the required treatments, had insurance cover enough of the procedure to minimize the out-of-pocket costs or had easy access to third-party financing. As many companies have reduced or eliminated dental insurance and as the credit crisis has evolved over the last several years, many providers are finding it difficult to collect the patient's entire portion when the patient doesn't have the resources to pay all at once.
To get better results, it is a good practice to determine which patients are likely to pay you and which ones are not before services are rendered. Obviously, it's not an exact science, but for higher cost procedures, providers can use several mechanisms, such as credit reports, proof of employment, proof of Social Security reimbursement, etc., to get an estimate.
If a patient's credit information shows a history of missed payments or financial trouble, the next step could be verifying their ability to pay, requesting a year-to-date pay stub or requiring a co-signer. Even if you plan on treating the patient anyway, it is important to know the risks you’re facing. The conversation may be uncomfortable, but it can save future headaches for both parties.
Some dentists try to structure payment plans, but most find it time-consuming and tedious, with the lion’s share of the patient's portion turned over to collections. Additionally, for practices with more than one location, it is often difficult to establish a consistent policy for how the patient pay portion is handled. To address these challenges, here are five key tips for increasing the collection of the patient pay portion, thus reducing the account receivables that end up in collections.
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1. Negotiate a reasonable payment plan or payback strategy. Talk openly with patients about finances to gauge their willingness to pay. Quite often, a patient will be open about needing help to afford their portion of the fees, which makes it the perfect time to discuss options such as third-party financing or payment plans. Determine how likely a patient is to pay their portion and plan accordingly.
If a person says, “I don't know if I can afford the bill,” then have a conversation about using a payment plan that they can afford. Negotiate a reasonable monthly payment amount.
2. Stay in constant communication. Send notifications to patients before payments are due and immediately following any missed payments. Keeping the patient well aware of the payment process will help increase your chances of collecting on time. An email or text message alerting patients of upcoming payments is a quick way to notify and can save your billing department time and effort.
When a payment is missed, immediately contact the patient or responsible party and let them know you will try to collect again in approximately one week, but provide an exact date. This gives the patient some time to make funds available to cover the monthly payment. If the patient misses the re-attempt, then the following week, make a phone call to the patient.
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What you are trying to do is keep the defaulted payment at the forefront of the patient's mind. Don't wait 30 or 60 days. As you get farther out, the collectability drops dramatically.
Also, keep a record of all conversations with the patient, whether electronic or over the phone. This will allow different staff members working on the missed payment to be on the same page with the patient. It also creates a great audit trail, if you eventually need to turn the patient’s account over to collections.
3. Allow for flexibility. Payment plans are easy, if everyone pays you on time. The work starts when missed payments need to be collected. To help patients stay current with their payment plan, allow for occasional flexibility with repayment issues.
If a patient has another unexpected expense and misses a monthly payment, many systems will try to catch the patient up the next month; but realistically, the patient won’t have twice as much money when the next month rolls around.
If this is not habitual behavior, skip the payment and move it to the end of the payback term. Show the person in good standing and work with them to get back on track for payments they said they could afford.
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Take proactive steps to set patients up for success, such as using auto debit from their bank accounts and scheduling their payments around paydays and rent schedules.
While you want to make sure you get paid, focus on helping the person who wants to pay you, but is struggling because life got in the way.
4. Consider charging interest. Though the idea makes some healthcare professionals uneasy, charging interest on payment plans is part of successfully managing the plan and mitigating repayment risk.
If you do choose to charge interest, keep it modest, between 3% and 6%. Patients won't feel taken advantage of if the charge isn't unnecessarily high.
Problems can arise if payments are missed and interest has to be recalculated. Providers with in-house billing should be careful to correctly calculate interest changes or they’ll face penalties. Though facilities with outsourced billing typically have more flexibility, don't be forced into charging or not charging interest based on your billing software. Get a system that can handle your needs.
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5. Avoid going to collections. Collection agencies should be a last resort for securing patient payments. While sometimes effective, these services are costly and typically charge a large percent of the base fee.
Also, collection agencies cause dentists to lose control over patient relationships. You are more likely to have a dissatisfied customer if you outsource your collections. The last thing you want to do is lower the boom on people in the community and have a public relations problem.
Bob Richardson is president of California-based ExtendCredit.com, developers of a fully automated, online software service that makes it easy for small and mid-sized businesses to create and manage their own low-risk, in-house payment plans. He can be reached via e-mail at [email protected].
