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While today’s dental practice environment doesn’t require the dentist to have an MBA, it’s important to have enough business savvy to capitalize on revenue.
The Managing Finances module of the American Dental Association’s (ADA) Guidelines for Practice Success™ (GPS™) offers tips on managing your practice’s revenue and expenses. This unit provides a framework for handling the business side of your practice with consistency and predictability. Keep reading for more information or link to one of the topics below for more details about specific areas of interest.
Revenue
While generating revenue from your practice can be difficult to achieve, being profitable is the real challenge. Over the course of one generation, dentistry has seen a revolution in new materials, techniques and technology. At the same time, caries rates have been reduced, patients are more sophisticated and have higher expectations, and even the dental benefits arena has seen tremendous changes. New dentists in particular face a steep learning curve regarding the business side of practicing dentistry.
Successfully managing a dental practice at any stage in your career requires short- and long-term strategies that you can adjust in response to shifts in the dental landscape. Paying close attention to key performance indicators (KPIs) will help you assess your practice’s growth and profitability and simultaneously help you strategize for the future. Having this information available is important since what works today, may not work tomorrow.
Considerations in Developing a Financial Policy
Many practices have policies that explain the different methods patients can use to pay for treatment. It’s a good idea to provide patients with a written, formal financial policy that details the specific provisions of any financing options available in your practice. Options may include flexible payment alternatives from external groups, third-party lenders, prepayment and courtesy payment arrangements, as well as other internal financial arrangements. Having the information in a written format ensures consistency and clarity when communicating the options available to each patient. Always be sure to review the appropriate state and federal regulations to confirm that your practice is in compliance.
It’s a good idea to provide patients with a written, formal financial policy that details the specific provisions of any financing options available in your practice.
Use the answers to these questions as the basis for developing, or updating, your practice’s financial policy:
When does your practice require payment in full?
Do you require:
• Payment in full of the patient’s estimated portion of the fees due no later than the time that services are rendered?
• Payment in full by the end of treatment for comprehensive treatment requiring multiple visits with a minimum deposit based on the patient’s estimated portion of the fees due at the start of treatment?
• Payment on some other schedule? If so, that schedule and the circumstances around it should be clearly outlined.
It’s possible that patients may, at their own discretion, elect to provide payment in full in advance of comprehensive treatment plans. Any unused credit balance would need to be issued according to a refund policy and should adhere to prevailing regulations and restrictions.
Other issues to consider when developing your practice’s financial policy statement include:
• How do you resolve situations when the patient has paid at least a portion of the cost of services but does not complete treatment?
• What payment methods are accepted in your practice?
• Do you offer a third-party financing program?
• Do you offer an in-house payment plan?
• Do you offer additional payment options? For example, can patients pay for treatment in two or three payments? Can they pay concurrently with treatment appointments?
• Do you offer a courtesy adjustment or cash discount for prepayment when acceptable and appropriate?
• Is a minimum dollar amount required for financing treatment? If so, what’s the minimum amount required?
• How do you handle dental benefit claims?
• Do you charge for failed or cancelled appointments?
• Do you charge for returned checks? If so, how much? Be sure to review your state’s regulations on fees for returned checks before defining your policy to ensure you’re in compliance with any applicable laws.
Once you’ve answered these questions and have checked the appropriate regulations, you’re almost ready to develop a financial policy for your practice and your patients. Your next step should be to review your state’s dental practice act and any applicable state laws. With that information, you’re ready to outline a financial policy that can be used as a guide for your practice. Once you have the policy drafted, consider having it reviewed by a knowledgeable attorney in your jurisdiction to make sure it complies with the appropriate federal and state laws and regulations. It’s also a good idea to review your policy every few years to be sure it’s still appropriate and addresses currently available methods of payment.
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