Ten Steps to Improve Cash Flow
Why is cash flow so important to dental offices? You need to have money in the bank to pay the bills, including payroll. Collecting the fees for the services that you have rendered must be done at the time of service. After all, you have performed the service and made an irreversible change to your patient’s tooth or teeth. You cannot repossess the dental work if the patient refuses to pay. There are no businesses in the world that provide service and don’t expect to be paid, except for dentistry. Once your patients get into the habit of leaving your office without paying or paying late, it can be almost impossible to get them to start paying on time.
There are three basic ways to improve your cash flow :
1. Speed up cash receipts from patients
2. Slow down cash payments to vendors
3. Reduce expenses
Step 1 Require immediate payment (or commitment to pay)
It doesn’t matter as much about how much you bill – it does matter how much you collect. Dentistry is expensive to many patients, so have a policy where every person either pays or has a commitment to pay through financial arrangements. The ideal situation from a cash flow standpoint is to require payment at the time of service. When was the last time you have been billed by a restaurant, or a dry cleaner, or a post office or a hairdresser and didn’t pay at the time of service?
Step 2 – Encourage the use of debit or credit cards .
You get your money more quickly, the patient is not subject to interest on their credit card since they will be reimbursed within 30 days. You don’t have to worry about the co-payment because you have already collected it. The merchant fees to credit card companies is minimal but worth it to improve your cash flow and it is a business expense.
Step 3 Manage the accounts payable.
Always pay your bills on time, but don’t pay bills sooner than you have to. Every invoice that you receive has a due date. If your vendor has agreed to finance your purchase for 30 days for free, then take full advantage of that. You hang on to your cash longer, which has a positive effect on cash flow.
Step 4 – Make sure that your invoices are correct .
A lot of companies make mistakes. Make sure that your incoming invoices are correct . Ensure that your outgoing invoices (account statements) are also correct. If your account statements are incorrect then you are providing an opportunity for the patient to delay payment to you.
Step 5 – Invoice upon delivery
If the patient does not pay the full fee at the time of service; send an invoice immediately, that day. If you did the dentistry at the beginning of a month and you don’t send out account statements until the end of the month that negatively affects cash flow.
Step 6 – Bill more often.
When prioritizing their outgoing bill payments, patients have a tendency to think that paying the dentist is a low priority (when compared to gas, hydro, etc.). They sometimes assume that the dentist is rich and can afford to do without the patient’s money. Stay on top of your accounts receivable even if you have sent a statement at the time of service. If the patient has not paid their bill in 30 days, send an account statements and put on the dunning message “Payment is due upon receipt.”. Identify your late payers and take action immediately to get them to pay. Keep pushing, nicely but firmly, until payment is made.
Step 7 – Give an incentive for prompt payment .
If a patient wishes to prepay in full for a crown or a bridge or implant and not use a credit card, you may wish to offer a professional courtesy to thank the patient for paying in advance. The professional courtesy should be no more than 5%, which is approximately the cost of keeping it on your accounts receivable. If the patient does wish to prepay by using their credit card, then you may still offer a professional courtesy, but reduce the amount to 2 or 3%. Write this into your financial policy and discuss it with your patient. Remember, do not call it a discount! If your patients think that you discount your services, they think that you were overcharging all along.
Step 8 – Budget Your Cash Flow
A cash budget that has sufficient cash flow can help you take advantage of business opportunities and avoid nasty surprises. It is an estimate of your cash position for a particular period of time. By estimating your cash inflows and outflows (expenses) during a given period you can project your cash flow needs. Schedule your payments to vendors so that they are made when there is plenty of cash to spare.
Step 9 – Manage your expenses
Only spend money when you absolutely have to. With the exception of consumables, i.e. dental sundries, try to make capital items last as long as possible. Implement an inventory tracking system that will help prevent over ordering and waste. If you are in need of a large capital expenditure item, you may wish to defer that expense until you have cash in hand – perhaps from a large cosmetic case that you are expecting payment for.
Step 10 – Manage Your Accounts Receivable.
If you are not keeping an eye on your accounts receivable you are missing a terrific opportunity to improve your cash flow. No matter how much you love your patients, some of them don’t understand how important it is to you that they pay their bills on time. Always keep track of your accounts receivable and don’t allow accounts to go to 60 or 90 days. If any accounts do go to 60 days, send statements more frequently, i.e. every two weeks, then every week, followed with a telephone call. Keep in mind if the patient has been reimbursed by the insurance company, or even if the insurance company pays you directly, that payment will have been received within 30 days, with the exception of social services programs. If your patient has not paid you in two months or more, they don’t have any intention of paying you.
Improving your cash flow will improve the financial health of your practice. Dentistry is a relationship business and it is important to have a healthy financial relationship with your patients so there are no surprises and awkwardness. The front desk coordinator must be confident in her ability to expect payment at the time of service and talk to patients about making comfortable financial arrangements. Dentists also have bills to pay and need to support their families and staff. If you wish to receive a sample of a Financial Policy and Procedure, please send an email to email@example.com with the subject line Financial Policy.
Is Committing Insurance Fraud Helping or Harming Your Patients
Is Committing Insurance Fraud Helping or Harming Your Patients
Based on the calls that I receive from doctors , as well as analysis of my current and past client base, I have discovered that approximately 50% of dentists who have contacted me have experienced, or are currently experiencing, some level of fraud or embezzlement in their offices. The alarming statistic leads me to wonder how many dental offices are experiencing this at some level and either don’t know what is happening or may be aware that something is wrong but don’t want to take action due to the fear of repercussions from the fallout. It’s important to note that in all cases, the offices accepted assignment of benefits.
This explains why I don’t always get a warm fuzzy welcome from some staff members when I am hired as a consultant to analyze the practice. If an employee is hiding something, she does not want a ‘consultant’ snooping around and asking her questions. Although I am never looking specifically to find fraud, it always rears its ugly head when I ask questions about obvious discrepancies in the management reports. In one case, it was the reaction of the manager that provided me with a clue that I might have stumbled onto something. She became very agitated and red in the face when I asked her a very benign question. Judging by her bizarre behaviour, I decided to do a little more digging before I reported my findings to the practice owner. It’s no wonder why she didn’t want a consultant coming into the practice. She was hiding a lot and committing outright fraud.
The Robin Hood Syndrome
There is a saying that the road to hell is paved with good intentions. The person responsible for the actions was a long-standing employee who may not have started out to commit fraud. She may have been thinking that she was doing something good to help the patient receive his/her full benefit entitlement. By changing the codes to help the office or the patient receive 100% of the fees and not to have to deal with the copayments, was doing something good for the patient. After all, insurance companies are the richest financial institutions in the world and the poor dental patient who couldn’t afford treatment otherwise. Now the perpetrator has become the ‘heroine’ to the patient, because the patient did not have to pay the insurance copayment. There is also a sense of unfairness or entitlement whereby the perpetrator will justify her actions because, in her mind, the patient needed the treatment and it should have been covered.
How does she do it? It may seem counterintuitive to describe how easily fraud can be committed, but the intent of this article is not to help the perpetrator, because she already knows how to do it and has been getting away with it. The following examples are intended to help the dentist know what to look for if he suspects something is going on and then what actions he should take.
Here are some examples based on actual cases:
A client was contacted by an insurance company to verify the payments that were made for an orthodontic case. The former office manager, who had been terminated from the practice, was creating invoices for the insurance company for double the amount of the treatment because the patient only had 50% coverage for ortho. Long after the patient had completed the treatment, the manager continued to submit claims for ortho and other false claims to the patient’s insurance company. The result was that the doctor had to reimburse the insurance company $16,000 and write a letter of apology, even though he had no knowledge of these claims being submitted. In the eyes of the insurance company, the dentist is responsible for all claim submissions
A receptionist was changing the codes on the insurance submissions. For example, if the patient had coverage for 3 units of scaling and the hygienist only coded for 2, she would change the code so that more money is received at the practice. She would also add an extra surface to a filling or code for procedures that were never performed. The submissions for procedures that were never done were all for soft tissue procedures like perio surgery because insurance companies do not request x-rays for soft tissue procedures and she knew it. She made improvements to the practice production and received a nice healthy bonus, but at what cost to the dentist. The doctor in this case had to pay back in excess of $20,000 to several insurance companies.
Changing procedure codes is one of the most serious crimes that can be committed. The chart is a legal document and it must contain and accurate and complete record of the treatment that was performed. Changing codes to lead to the doctor and the hygienist losing their licenses.
Professional Courtesies and Write Offs
In this case, the perpetrator would enter write offs to correct procedural errors instead of following the appropriate steps to make adjustments to accounts accompanied by full explanations as to why the account needed to be adjusted. Some of the dental software programs make it difficult to correct an entry, so following the path of least resistance, it may be easier to write it off or delete a transaction. The perpetrator did not want you to know how many mistakes she is making which would make her look incompetent.
The danger of this scenario is that it may be tempting to write off a transaction that was a cash based transaction and won’t be missed. When a staff member is facing her own personal financial crisis, it may be too tempting to put her hand in the cookie jar to get herself out of an immediate situation. If the employee’s hand is in and out of the cookie jar too often, eventually she will help herself to a cookie. It may only be a small amount at first, but if it is easy to do and she gets away with it, this could lead to finding ways to take larger amounts and bigger cookies. Account write offs must require authorization by the dentist accompanied by an explanation about why the account is written off. Typically account write offs are only done once per year.
Using Someone Else’s Insurance Benefits
In this case, the perpetrator knew that ‘Patient A’ had not used all of his/her benefits, and ‘Patient B’ needed treatment, so ‘Patient A’s insurance company was billed. The perpetrator would know that the claim would be covered and not challenged by the insurance company. It’s important to note that both patients were members of the same family and ‘Patient B’ did not have insurance benefits.
Who Are the Victims of Insurance Fraud?
Victim #1 – The Patient
The patient is victimized by his/her insurance benefits sometimes being maxed out. If a patient realizes that something is wrong with their insurance benefit entitlement and it is the result of what is happening at your office, they will blame you, because you are the dentist. The victim will not know, or care, that you have had a dishonest employee working for you who did these acts without your knowledge or consent.
Over-utilization of insurance benefits will result in employers not purchasing dental benefits for their employees. Dental insurance is the most costly component of a group insurance benefits plan. If the costs for the premiums rise due to the inflated utilization rate that was created by false claims, employers are likely to drop dental benefits from their employee benefits packages. When employers are faced with economic stresses, paying premiums for dental benefits become too cost prohibitive to sustain. The patient is now victimized a second time because they lose their employer paid benefit.
Victim #2 – The Doctor
If insurance companies launch an investigation and the doctor is aware of some problems that exist, but does not act on them, he/she is considered the prime suspect. In other words, the insurance company will assume that the doctor is responsible and his hands are dirty. Some insurance companies can, and will, deny any future claims that come from your office. You are considered guilty until proven innocent and even then, you are still guilty.
The doctor will also be expected to pay the insurance company back all payments that were received from fraudulent claims. That can become an administrative nightmare to sort out which claims were legitimate and which were not , costing the doctor both time and money.
In some cases the doctor may have his/her license suspended or revoked if they knowingly allowed insurance fraud to occur and did nothing about it after it was discovered. You are responsible for the actions of your employees because it is assume that they work under your direction.
Victims #3 – Collateral Damage
If the doctor and or hygienist loses their licenses, who will treat the patients? Also, the jobs for the remaining staff are in jeopardy making them victims as well. A lot of honest, hard-working people can become the collateral damage of the perpetrator’s misguided actions and the doctor’s career can be ruined.
What should you do if you suspect or detect fraudulent activity? The most important advice that you can receive is get professional help – don’t try to do it all yourself.
Follow these steps:
1. Contact a forensic investigator to begin an investigation without the knowledge of any of your employees. If the investigation shows that fraud has occurred he will guide you through to let you know what your next actions should be. If no fraud is detected, that would be good news. An experienced fraud investigation service that I recommend is Prosperident.
2. Perform a complete backup on your computer system immediately. Offsite backups are best and most dental software companies provide this service.
3. Contact an employment lawyer who specializes in employment law. I recommend Mariana Bracic from MBC Legal. Believe it or not, terminating an employee is harder than you think, even if you think you have cause for dismissal. The perpetrator will have to be terminated, but it must be done carefully so that you aren’t faced with further legal problems from a wrongful termination claim. It is important to have proper employment contracts in place as well as an employee policies manual. Employment law in Canada protects the employee and not the employer.
It is interesting to note that every office in these examples accepted assignment of benefits, which is another good reason for becoming a non-assignment practice. Within the next few years, insurance companies will force the issue because they only want to deal with their subscribers to the insurance. If your practice is assignment based and insurance driven, your practice is at risk. It’s important to treat the patient according to their clinical needs and not their insurance benefits.
If you suspect that fraud is happening in your office, don’t wait, take action quickly and get professional advice. The risks consequences of not taking action far outweigh any disruptions that may occur. Perform frequent and random checks to ensure that the services you are actually performing are the same services that are being billed. Watch the observable behavioural of your employees. In every case presented, it was the unusual or overly defensive behaviour of the employee that tipped off the dentist that something was wrong. Remember, that writing off copayments, providing professional courtesies to cover copayments, overbilling and changing codes is not helping the patients, it’s hurting them. Fraud is fraud.
What to Do With Hygiene Downtime
Dental hygienists have a strong relationship with your patients and although there is an abundance of hygienists who are looking for jobs, it is important that dentists don’t take for granted the value of the patient- hygienist relationship. In most cases, the patients will see the hygienist more often than they see the dentist and for a longer period of time. There is more time to develop a relationship and patients become loyal to their hygienist based on trust. This is the type of relationship that you want your hygiene team to develop and maintain.
Some dentists pay their hygienists for their downtime and some don’t. Dental hygienists, like all employees, have financial obligations, like mortgages and living expenses, and they require a predictable and dependable income. The doctors who don’t pay anything for downtime can be assured that the hygienist is likely spending her downtime looking for another job or thinking about how to set up her own dental hygiene clinic and be her own boss.
Imagine if hygienists do set up their own independent practices, dentists could see 30% of their revenue walking out the door. In addition to this, studies show that 65% of restorative work is generated from the hygiene department. There is nothing that would stop an independent hygienist from opening a practice one block away, and although she would be restricted from directly soliciting patients, it wouldn’t take long for patients to find her. You may be able to replace the hygienist, but how do you replace the patients that could follow her? Think about how much time and money that would have to be invested into marketing and advertising to rebuild from the patients that you lost. Losing customers is economic suicide because you would also lost any potential referrals .
If a patient cancels in the middle of a day, there is very little that a hygienist can do to prevent that from happening or controlling it. It is not fair for the hygienist to have to suffer financial loss because she cannot control the behaviour of the patient. This does not, however, mean that you need to pay an employee to do nothing during the downtime. There are a lot of activities that can keep her busy.
Start by implementing a hygiene downtime policy and provide your hygienists with the tools to get the job done. The policy should provide one hour of grace time at full hygiene rate . Clinical rate may be paid up to a maximum of 1 hour of time in an 8-hour day where patients have short cancelled/schedule is not filled. This time is to be used productively, i.e. sharpening instruments, restocking operatories, making whitening trays, etc. If you there is more one full hour of downtime, the hygienist may be offered an administrative rate, such as half of their regular rate to assist in calling patients to schedule appointments or do administrative tasks as directed in order to be eligible to receive the compensation. If she does not wish to participate in administrative tasks, she may opt out of these duties and the downtime in excess of one hour would be unpaid. The administrative tasks would include calling patients on the continuing care list to make sure that the days are fully scheduled and confirmed. It is important to provide the hygienist with specific telephone skills to assist her with her calls. Remember that dental hygienists are trained in clinical skills and don’t usually learn telephone skills in school.
Here is some suggested verbiage:
“”Mrs. Smith, this is Sandie from Dr.Smith’s office. You are due for your dental hygiene appointment and I’m calling to schedule that for you. When you get this message, would you please call me back at ___________. I look forward to speaking with you. Have a great day. “
Prescheduling hygiene appointments in such a way that reduces the likelihood of short notice cancellations can help to avoid this problem. If you wish to receive a copy of Appointment Scheduling Policy and Procedure, please feel free to send an email to firstname.lastname@example.org with the subject line “appointment scheduling policy.”
X-Ray Dosimeter Badges and the Occupational Health and Safety Act
Do you have an X-ray Safety Policy and Procedure in place? I was recently asked if it is necessary to wear x-rays dosimeters. The person who asked me the question was told that it is recommended but not mandatory to wear a dosimeter and they did not use them at her office.
Employers in Ontario must take all reasonable precautions to protect their employees from any potential hazards. All dental offices and their employees are required to observe and comply with the requirements of the Ontario Occupational Health and Safety Act and its regulations, specifically Ont. Reg. 861, regarding x-ray safety. The Healing Arts Radiation Protection Act (HARP), which is administered by the Ministry of Health and Long Term Care, and the X-Ray Safety Code, passed in 1985, is applicable to the dental profession. These regulations were developed by the Dental Advisory Committee to the HARP Commission, whose membership included practising dentists and dental educators. This legislation specifies operator qualifications and technical performance standards for x-ray machines and outlines the procedures and tests that are deemed necessary and their frequency in order to ensure the highest possible level of patient and operator safety. (source, RCDSO Dispatch, Spring 2006)
Section 12 of Regulation 861 under the Occupational Health and Safety Act reads as follows:
- All X-ray workers shall be provided with a suitable personal dosimeter that will provide an accurate measure of the does equivalent received. OH&S Act, Reg. 861, 12. (3).
- All X-Ray workers shall use the personal dosimeter as instructed by the dentist. OH&S Act Reg. 861, 12. (2)
- The employer shall ensure that the personal dosimeter provided to each worked is read accurately to give a measure of the does equivalent received by the worker and shall furnish to the worker the record of the worker’s radiation exposure.
- The employer shall verify that the dose equivalent mentioned in subsection (3) is reasonable and appropriate in the circumstances and shall notify an inspector of any dose equivalent that does not appear reasonable and appropriate
- The employer shall retain an X-Ray worker’s personal dosimeter records for a period of at least three years.
To be complaint with the Occupational Health and Safety Act, dentists should require their employees who are taking x-rays to wear personal dosimeters and have a policy in place that covers x-rays safety.
If you would like a sample copy of a policy and procedure regarding X-ray Safety, please send an email to email@example.com.
REFERENCES: RCDSO.org, Dispatch, Spring 2006, Occupational Health and Safety Act
QUOTE OF THE DAY: Open the door to safety: awareness is the key!