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Richard and Caitlin dive into "metric blindness" in dental practices, focusing on how to understand and manage Accounts Receivable (AR) for financial health. Key Highlights: Understanding Accounts Receivable (AR): AR reflects the money owed for...
A bootcamp in small business ownership and practice management for dentists, giving the new graduate a roadmap to successful practice ownership. We interview the best dentists, experts, consultants and more on our weekly show. Here's the topics we will be covering in our 8 Seasons:
1. First Years as a Dentist
2. Think Like a Business Owner
3. Money and Numbers
4. Startups, Acquisitions, and Partnerships
5. Internal Systems
6. Marketing & Growth
7. Leadership, Vision and Culture
8. Beyond Dentistry
Go to SharedPractices.com to download the 8 Season Roadmap.
Richard Track: :
Okay, this is another Monday episode with Caitlin and myself,
Richard Track: :
and we are talking about metric blindness when it relates to accounts receivable.
Richard Track: :
Welcome to the Shared Practices Podcast. We are back for another episode of Coach's Corner,
Richard Track: :
and we are revisiting a topic that Caitlin and I hit last time on metric blindness
Richard Track: :
of areas of a practice that it's hard to know So if you're doing well enough,
Richard Track: :
because everyone thinks, oh, we're doing good enough.
Richard Track: :
And I'm joined here by my co-host, Caitlin. Caitlin, how are you doing today?
Caitlin Track::
I'm doing well. How are you?
Richard Track: :
So good. This is fun because we're going to do an episode that you've been saying
Richard Track: :
that we need to do for a long time.
Richard Track: :
And I've been dragging my feet because I have metric blindness.
Richard Track: :
And so we're going to address my problems and our audience's problems all at the same time.
Caitlin Track::
Yes, today we are going to talk a little bit about accounts receivable,
Caitlin Track::
specifically the metrics that we tend to miss, and just how to look at it from
Caitlin Track::
a more holistic standpoint.
Caitlin Track::
And you know, this is one of those topics I know is not most people's favorite,
Caitlin Track::
but it's such a necessary part of having a business eye on your business and
Caitlin Track::
talking about, knowing your numbers.
Caitlin Track::
It's not enough to just meet with the CPA. I mean, that's great if you're doing
Caitlin Track::
that, but really understanding the health of that in your practice itself and
Caitlin Track::
how quickly you collect a dollar after you produce it.
Richard Track: :
And this is something that a lot of dentists aren't strong at.
Richard Track: :
So I'm going to be the kindergartner here.
Richard Track: :
Explain to me what an accounts receivable is just in the dumbest version possible
Richard Track: :
so that I understand the different aspects of it if this isn't my strong suit.
Caitlin Track::
Absolutely. And I don't think you'd be alone in asking this question.
Caitlin Track::
Because I think a lot of people assume AR is inherently a bad thing.
Caitlin Track::
It's not inherently bad. add.
Caitlin Track::
It's simply the balance that's owed to your practice for services that you've
Caitlin Track::
provided, but you have not yet collected on.
Caitlin Track::
So, you know, it's measuring your uncollected production.
Caitlin Track::
And specifically, it's divided into two components. You know what those two components are?
Richard Track: :
There's insurance and self-pay. See, I'm just like guessing.
Caitlin Track::
Well, it's insurance AR and it's patient AR.
Caitlin Track::
And so insurance AR is money owed to you through in an open insurance claim,
Caitlin Track::
something that has not yet been successfully paid out or closed out,
Caitlin Track::
and we've submitted an insurance claim on the behalf of our patient, right?
Caitlin Track::
Once that claim is processed, if that patient has a remaining balance,
Caitlin Track::
it's officially patient AR.
Richard Track: :
So I think the reason that people, at least for me,
Richard Track: :
the reason that you start to think of AR as as being bad is that like in my
Richard Track: :
dental school, which Midwestern University was a fairly progressive school that
Richard Track: :
I feel like has some pretty good systems and practices in it.
Caitlin Track::
They do, they're a phenomenal school.
Richard Track: :
Yeah, so it was all collect before you do the procedure.
Richard Track: :
And I can't remember if we, I don't think they took insurances.
Richard Track: :
Maybe they did, maybe they didn't. But in a world where there was 100% collection of,
Richard Track: :
of the money due and there was no insurance involved, then someone could literally have no AR.
Richard Track: :
But then even then, I'm sure things would still happen where there would still
Richard Track: :
be circumstances, there would still be an outstanding balance owed.
Richard Track: :
So it feels like, okay, if I've got a problem with AR, I'm probably not collecting
Richard Track: :
the way I should, or I'm not handling insurance the way I should,
Richard Track: :
or we need to overhaul our whole practice.
Richard Track: :
And maybe that's where a sense of AR is bad comes from is like,
Richard Track: :
okay, well, I know in an ideal world, we would collect everything up front,
Richard Track: :
but that's not always possible. Does that make sense?
Caitlin Track::
Yeah. It's very interesting for me to hear your perspective on that because
Caitlin Track::
it's so different from mine with how I've been taught in dentistry.
Caitlin Track::
And so, yeah, I think AR aging is bad, right?
Caitlin Track::
But having an AR balance just in and of itself means you're producing.
Caitlin Track::
So sometimes I'll have a client say, my AR is really high. I know you're probably concerned about that.
Caitlin Track::
Not necessarily if it matches what you produce on an average monthly basis.
Caitlin Track::
So we're going to get into that. And I think this is where learning to use your
Caitlin Track::
metrics, to not be afraid of the metrics, turn off that blindness,
Caitlin Track::
look at the ones that are going to tell you, okay, yeah, I have AR.
Caitlin Track::
That's fine. That's a good thing. That means I'm producing, but how do I know
Caitlin Track::
if it's getting into danger zone?
Richard Track: :
Okay. Okay, good. And this is good because it's like I said,
Richard Track: :
I've never been afraid to learn on air and I will continue to make a fool of
Richard Track: :
myself. So I'm glad we're continuing the tradition.
Richard Track: :
That's my misconception. And I want to now understand, okay,
Richard Track: :
what are the major metrics as it relates to AR?
Caitlin Track::
Yeah. Yeah. So,
Caitlin Track::
Well, I guess let's talk about the more basic ones that probably most are familiar
Caitlin Track::
with that probably pull through the practice management software,
Caitlin Track::
which is you're comparing your production, your adjusted production, and your collections.
Caitlin Track::
And maybe some of us are taking those numbers and giving ourselves a collections ratio.
Caitlin Track::
Does that sound familiar? Something you've probably done in management and ownership?
Richard Track: :
Oh, yeah.
Caitlin Track::
Yeah, yeah. So that's a great metric. It's just it's not all encompassing.
Caitlin Track::
It doesn't give us enough information to know the whole picture.
Caitlin Track::
So first of all, I like looking at the collections ratio.
Caitlin Track::
It's a valuable metric. I like looking at it in a 90-day perspective as opposed
Caitlin Track::
to a monthly perspective because we may have a month that is a really high production
Caitlin Track::
month compared to a lower production month.
Caitlin Track::
And so collections kind of evens out over those two, right?
Caitlin Track::
If we are processing insurance claims on behalf of our patients,
Caitlin Track::
which I would say most offices Even those that say their fee for service pay
Caitlin Track::
up front, we're still processing claims out of network as a courtesy to the patient.
Caitlin Track::
And so all that to be said, it's typical for in a practice and AR days is a
Caitlin Track::
metric where the goal is 30 days.
Caitlin Track::
Days, that's basically saying, you know, when you produce a dollar,
Caitlin Track::
how many days does it take on average for you to collect that dollar?
Caitlin Track::
And ideally, that's going to be 30 days. And so when we look at the collections
Caitlin Track::
ratio, I just like to look at it at a little bit of a longer span so that things
Caitlin Track::
can kind of balance out a little bit and we can see a little bit more of a holistic approach to it.
Caitlin Track::
The issue with just focusing on that, though, is that it's based on adjusted
Caitlin Track::
unadjusted production.
Caitlin Track::
And so it could look really, really good, but adjustments could be really, really high too.
Caitlin Track::
So what questions do you have for me right off the bat?
Richard Track: :
You know, the first thing that popped in my head was like, man,
Richard Track: :
if you were doing financing in office, this would really screw with these metrics
Richard Track: :
was like my first ADHD thought.
Richard Track: :
So is that the that the case?
Caitlin Track::
Yes. There's two things in a general practice that would maybe alter our goals
Caitlin Track::
for some of these metrics that we're talking about.
Caitlin Track::
One is extensive in-house financing beyond like maybe pay half now, half next month.
Caitlin Track::
If you're doing anything more than like two to three payments over two to three
Caitlin Track::
months, then yes, it's going to mess with that.
Caitlin Track::
And you have to take these with a little bit more of a grain of salt knowing
Caitlin Track::
you're offering some in-house financing.
Caitlin Track::
And for that reason, I think a lot of my clients have kind of geared more towards
Caitlin Track::
that's the cutoff and anything more than that, we're talking third-party financing.
Caitlin Track::
The second factor is if you're doing orthodontic treatment, because that's the
Caitlin Track::
one code that is not going to be paid in 30 days later.
Caitlin Track::
You know, it takes longer to complete that treatment.
Richard Track: :
And this comes from the other side, from the denture implant half that I lived
Richard Track: :
in for a little while here.
Richard Track: :
In those situations, we'd be collecting upfront for a whole big case,
Richard Track: :
but the treatment wasn't done yet.
Richard Track: :
Does that shift things if you've collected for a procedure that has not been
Richard Track: :
set to complete and therefore you've got prepaid treatment?
Richard Track: :
Does that mess with these metrics at all?
Caitlin Track::
It does because what that does is reduce your AR. are like if someone has ten
Caitlin Track::
thousand dollars like credit quote right on their account then it appears that
Caitlin Track::
you are ten thousand dollars less in the hole.
Richard Track: :
So so so if you did like a weird thing that dentist owners might do of like
Richard Track: :
hey just come do the flooring in my basement and i'll you know do 10k of dentistry
Richard Track: :
for you and they've got a credit on their account like that might be messing with your AR numbers.
Caitlin Track::
Yes.
Richard Track: :
Yeah. Okay. Okay. So I just wanted to see kind of things that could swing it either way.
Richard Track: :
But you're going back to your point. You said you like to look at the collections
Richard Track: :
ratio over a 90 day period.
Richard Track: :
And you also want to make sure that we're not patting ourselves on the back
Richard Track: :
and being aggressive on our write-offs and losing kind of some of like the reality
Richard Track: :
of what's going on there.
Richard Track: :
Talk to me more about that of like areas where there might be concern if we're
Richard Track: :
either writing off stuff that we shouldn't be or stuff's getting lost between
Richard Track: :
those two metrics of the production versus adjusted production and this collections ratio.
Caitlin Track::
Show yeah and it's it might not be that we're writing things off
Caitlin Track::
that we shouldn't be but just the reason that this
Caitlin Track::
is not this isn't the only metric you can use and i'm going
Caitlin Track::
to get into my absolute favorite one soon the reason
Caitlin Track::
this one's limited and another reason is that you may be in a situation where
Caitlin Track::
you're in network with a lot of insurance companies and they get to dictate
Caitlin Track::
what the patient owes which is why it doesn't truly become patient ar they may
Caitlin Track::
pay their balance their estimated balance upfront,
Caitlin Track::
which I recommend, of course, but it's not true patient AR until the insurance
Caitlin Track::
company has said, this is the final patient responsibility.
Caitlin Track::
If you're in network, they run the show, right?
Caitlin Track::
So if we're in network with insurance and you produce and you do three crowns,
Caitlin Track::
whatever the case may be, we submit all the paperwork, we fight with them back and forth.
Caitlin Track::
And at the end of the day, an insurance company may come back and say,
Caitlin Track::
we're not going to pay for this.
Caitlin Track::
Not only are we not going to pay for this, the patient's not responsible for it.
Caitlin Track::
So, we then have to make a huge adjustment and write that off.
Richard Track: :
Okay.
Caitlin Track::
You know, and so, it's not necessarily that we're not supposed to,
Caitlin Track::
but it's just, you know, there's factors involved withâ¦.
Richard Track: :
The reality of being in network on certain downgrades that can occur.
Caitlin Track::
Yeah, yeah. So collections ratio is huge. It's very important,
Caitlin Track::
but it doesn't encapsulate everything.
Caitlin Track::
And it also doesn't show you aging categories very well.
Caitlin Track::
You know, if your collections ratio is 98% or higher, which is kind of my goal,
Caitlin Track::
then you would think in theory that you probably don't have a huge aging problem
Caitlin Track::
because clearly we've collected 98% of what we've produced over the last 90 days, right?
Caitlin Track::
It could be true, but that doesn't give us any information about our aging categories.
Caitlin Track::
So my absolute favorite metric, and you can calculate this manually,
Caitlin Track::
but PBN gives it to us, it's the AR to production ratio.
Caitlin Track::
And so what they do is they take the total amount that's in accounts receivable,
Caitlin Track::
they divide it by the average monthly production over the last 12 months.
Caitlin Track::
So net production over the last 12 months, divide that by 12.
Caitlin Track::
What's your average monthly net production?
Caitlin Track::
Take that into consideration with what's the total amount in your accounts receivable
Caitlin Track::
that's sitting there right now that's owed to you.
Richard Track: :
So in theory, this could be higher or lower than that.
Caitlin Track::
Exactly. And it often is. It's rare that it's just exactly 100%.
Caitlin Track::
So if this metric is at 100% or less, that means that the practice does not
Caitlin Track::
have an outstanding AR balance that's greater than what you produce on an average monthly basis.
Caitlin Track::
You may still have some in your aging categories, but ultimately,
Caitlin Track::
you're collecting your average production every single month,
Caitlin Track::
and there's not this huge outstanding balance.
Caitlin Track::
When it starts to get 100% or more, then sometimes that means what's sitting
Caitlin Track::
in our total AR owed to us, let's
Caitlin Track::
say it's $200,000 of total AR owed to us between insurance and patient,
Caitlin Track::
but on average, you know you're only producing $100,000 a month.
Richard Track: :
Right then.
Caitlin Track::
You know you're a 200 ratio that's an indicator that we've got some outstanding ar.
Richard Track: :
And that would be one way to make those numbers
Richard Track: :
work would be like if all of your ar took 60 days to collect you'd kind of have
Richard Track: :
two months sitting in there at any given time you'd have double your production
Richard Track: :
exactly so it's it's another way of so let me let me make sure i can like regurgitate
Richard Track: :
everything you just said because like there was a moment i went cross-eyed and
Richard Track: :
And then I'm like, no, no, I think I'm falling.
Richard Track: :
So you're saying on a month-to-month basis, stuff can get wonky.
Richard Track: :
You can have a high collections month or a high production month.
Richard Track: :
And so what we have outstanding this month versus what we produced this month
Richard Track: :
versus what we produced last month, it might not match up super well.
Richard Track: :
So instead of using just the current collections ratio, instead,
Richard Track: :
let's look at what does our practice normally do?
Richard Track: :
So let's take 12 months and find the average production, adjusted production
Richard Track: :
over 12 months and then look at our total AR balance and compare it to that
Richard Track: :
because that's not like a moving target.
Richard Track: :
That's a more average, stable target.
Richard Track: :
And we can just see, are we under 100%?
Richard Track: :
That means we're probably collecting in a reasonable amount of time what we
Richard Track: :
would expect to be collecting versus over 100% or growing or 200%.
Richard Track: :
Now we're looking at there's a lot of money owed to us more than a single month's
Richard Track: :
worth of production would normally be. Am I saying that all correctly?
Caitlin Track::
You got that. Yep. And so when this particular metric is creeping up and it's
Caitlin Track::
103% and then it's 110% and on, that's your indicator. This is where the blinders are coming off.
Caitlin Track::
And you know, there's a high likelihood that I either have too much outstanding
Caitlin Track::
and what I mean by outstanding is 30 days plus.
Caitlin Track::
I either have too much outstanding insurance AR, so I've got claims from patients
Caitlin Track::
that I saw two months ago, three months ago, six months ago.
Caitlin Track::
We're looking at 30 to 60 days. We're looking at 60 to 90, 90 plus.
Caitlin Track::
I either have an insurance AR problem or I have a patient AR problem.
Caitlin Track::
Those claims are getting closed out, no problem, but either we didn't collect
Caitlin Track::
the data service, So we're chasing them down afterward.
Caitlin Track::
Or, you know, we're just having a few patients that, you know,
Caitlin Track::
still haven't paid their bill or, you know, whatever the case may be.
Caitlin Track::
We're just, you know, between these two, maybe it's both.
Caitlin Track::
But this is that AR to production ratio gives you that indicator of,
Caitlin Track::
okay, time to dig a little bit deeper in my practice management reports.
Caitlin Track::
Look at insurance AR, look at patient AR and see where my problem lies. eyes.
Richard Track: :
So which would you say is more common?
Richard Track: :
You know, like of all the, and this is just kind of a gut check of do offices
Richard Track: :
typically have more of a problem with the insurance AR or with the patient AR?
Caitlin Track::
There's not really a slam dunk answer to that one. I think, but I will give you something.
Caitlin Track::
Yeah, there's not really one that I see more than the other.
Caitlin Track::
However, I'll tell you my favorite problem between the two.
Caitlin Track::
And my preferred problem would be insurance, because that is easier to solve.
Caitlin Track::
This is dealing with companies. This is a lot of times making sure we're attaching
Caitlin Track::
x-rays and narratives, correct the first time, submitting claims on time with the right information,
Caitlin Track::
with the right member ID number and payer ID, and all these things that insurance
Caitlin Track::
companies need to process well, so that we're not having to follow up with claims.
Caitlin Track::
And then And second of all, it's just pulling these reports and dedicating the
Caitlin Track::
time to call these insurance companies, figure out why they're sitting there.
Caitlin Track::
What do we need to do to get paid? And you can kind of badger those insurance companies.
Caitlin Track::
You can be firm with them. You can really spend a lot of time on this and get
Caitlin Track::
an ROI quickly if you just follow what they tell you to do.
Richard Track: :
It's it's funny and you say all this because like in my
Richard Track: :
mind it was the opposite like i have so much anxiety around like complicated
Richard Track: :
paperwork yeah and like following up with like big complicated systems so i'm
Richard Track: :
just like oh it'd be so much easier to fix the patient side of things because
Richard Track: :
you can just you just got to be the collections agency you just got to be a
Richard Track: :
jerk and go get your money well but see but with.
Caitlin Track::
Your patience you're trying to.
Richard Track: :
Preserve goodwill and yes and it's delicate balance of the mismatch expectations.
Richard Track: :
I think it's this like delivering the bad news and all of a sudden,
Richard Track: :
and this is actually why I don't like patient financing on larger,
Richard Track: :
longer, complicated treatment in office.
Richard Track: :
Because when something goes wrong and they're still balances owed,
Richard Track: :
all of a sudden the complication rate goes up.
Richard Track: :
They're just like, well, I still don't like Yes.
Caitlin Track::
Totally.
Richard Track: :
And so it creates this tension to the relationship immediately.
Richard Track: :
And they don't want to show up or they're mad or they're threatening bad reviews. There's just...
Richard Track: :
It's just hard. And so I can completely understand why you would say what you
Richard Track: :
said, which is the insurance...
Richard Track: :
We can be mean to insurance companies and just actually follow their book and
Richard Track: :
they have to eventually give in and do what they said they would do.
Richard Track: :
Whereas patients can misbehave and we can burn bridges and lose people and get
Richard Track: :
bad reviews if we don't handle this delicately.
Caitlin Track::
And with if we have a patient ar problem it's
Caitlin Track::
it's also we've got to dig deeper with the team and
Caitlin Track::
talk about same thing we talk about with retention this
Caitlin Track::
is another aspect that there's a proactive approach and a
Caitlin Track::
reactive approach and both have a spot in
Caitlin Track::
the dental practice but we need to be as proactive as
Caitlin Track::
possible which means signed treatment
Caitlin Track::
plans plans accurate cost estimates to the
Caitlin Track::
best of our ability and collecting at the date of service
Caitlin Track::
go back to our coach's corner maximizing treatment
Caitlin Track::
presentation from back in the day we talk a lot about why
Caitlin Track::
this matters you know doing that stuff well so that when insurance does their
Caitlin Track::
part the balance is at zero because patient already paid the the perfect estimate
Caitlin Track::
or within five dollars of it or something you know but there needs to be a reactive
Caitlin Track::
approach to you know that what's the cadence of how often we send statements?
Caitlin Track::
What's the cadence of how often we send letters? At what point do we send a
Caitlin Track::
pre-collections letter? Do we send patients to collections or not?
Caitlin Track::
All of these things are not one size fits all. And if you have these questions,
Caitlin Track::
it's where a coach really comes in because every practice is different and every
Caitlin Track::
philosophy is different.
Caitlin Track::
But what it comes down to, and I'm going to get a little preachy here,
Caitlin Track::
but as dentists, like you deserve to be paid for the work that you do.
Caitlin Track::
And when some of these systems aren't in place, I think you're often tempted
Caitlin Track::
to bend a little bit and discount and cut yourself short when there's a better solution.
Caitlin Track::
And I think taking off the AR blinders will allow you to really,
Caitlin Track::
you know, be more fulfilled.
Richard Track: :
Well, and so that does lead me to the question of when you realize you have a patient AR problem,
Richard Track: :
how much emphasis is there chasing down that aging patient AR versus changing
Richard Track: :
our systems up front so that we have less of this moving forward?
Richard Track: :
Or is it both? And where does the emphasis lie for you?
Caitlin Track::
Well, it has to be both because if we're in this problem in the first place,
Caitlin Track::
there's a reason we got there.
Caitlin Track::
So you certainly are not going to waste any time and resources by getting to
Caitlin Track::
the bottom of it and say, okay, starting tomorrow, this is what we're doing.
Caitlin Track::
But at the same time, clearly there's a cleanup project that needs to be done.
Caitlin Track::
And so oftentimes we'll kind of call this crisis mode, which makes it sound worse than it is.
Caitlin Track::
But we say to the front office team and to the doctor, you know,
Caitlin Track::
we have this mess to clean up.
Caitlin Track::
And so for the next one month, two months, whatever.
Caitlin Track::
This particular financial coordinator or office manager in your practice is
Caitlin Track::
going to need more power over time.
Caitlin Track::
The amount of time she's sitting here pouring over statements,
Caitlin Track::
calling patients, calling insurance companies is going to be double than what
Caitlin Track::
it normally really should be.
Caitlin Track::
But we've got to climb out of this hole and here is our recommended approach
Caitlin Track::
to that. And we have resources for that in our coaching toolbox.
Caitlin Track::
And then just know this shouldn't be the norm. Once we get back to ground zero
Caitlin Track::
and our AR to production ratio is 100%, we're cleaned up and then now we're
Caitlin Track::
relying on our new system.
Caitlin Track::
We all learned from these mistakes of how we got here.
Caitlin Track::
Sometimes it's a totally previous front office team and it's not even the same
Caitlin Track::
people, you know? And then now moving forward, in theory, this should be clean
Caitlin Track::
enough to where this takes five hours of the week and not 25 hours of the week.
Caitlin Track::
The same way we could say, listen, if you reappoint hygiene at 90%,
Caitlin Track::
your patient care coordinator will only need to spend an hour a week reactivating
Caitlin Track::
patients instead of three hours a week.
Richard Track: :
That makes sense. Well, and the other hard part about this too is that until
Richard Track: :
this gets cleaned up, it is sullying your data.
Richard Track: :
So if you don't address the existing stuff it's it's throwing everything off
Richard Track: :
and it's hard to kind of see what's accurately going on in your practice so
Richard Track: :
like you have to do both you have to fix the input you have to fix the the backlog
Richard Track: :
and and then you've got a clean slate to to work from moving forward or as clean as you can get yeah.
Caitlin Track::
And like you know we're talking about kind of the best metrics and if you have
Caitlin Track::
practice by numbers or a similar software there's a lot of them out there and
Caitlin Track::
they're kind of called different things.
Caitlin Track::
But I think the other one I just kind of want to speak to, which I'm not totally
Caitlin Track::
reinventing the wheel, is really AR over 90 days.
Caitlin Track::
If you're going to focus on something, focus on 90 days plus.
Caitlin Track::
And look at the patient side, how many claims are in 90 days plus?
Caitlin Track::
Or excuse me, look at the insurance side for that. Look at the patient side,
Caitlin Track::
what's the total patient balance in 90 days plus?
Caitlin Track::
Because that's going to be the hardest to collect and that's the most indicative
Caitlin Track::
of how big of a problem you have.
Caitlin Track::
At this point, if, you know, insurance claims are in really 60 days plus,
Caitlin Track::
but definitely 90 days, they're not going to move unless we call.
Caitlin Track::
There's something they're waiting on and so we have to call for that to move.
Caitlin Track::
And then 90 days plus with patients, we've got to look and see,
Caitlin Track::
well, how many statements have they received?
Caitlin Track::
You know, what do we want to do about this balance? Is it collectible?
Caitlin Track::
And so for this metric and like setting a goal for it, ours here at SP is less than 10%. So,
Caitlin Track::
the amount of accounts receivable that's 90 days or older should be less than
Caitlin Track::
10% of your total accounts receivable balance.
Richard Track: :
Right. It's funny that you say that over 90 is what to focus on and what to
Richard Track: :
focus on first, because in my mind, that's like the, okay, we just got to bury our old.
Richard Track: :
We just got to take it out back and get rid of all this, write it all off,
Richard Track: :
pretend like it didn't happen.
Caitlin Track::
See, this is the martyr in you as a dentist.
Richard Track: :
Like, oh, I don't.
Caitlin Track::
Deserve to be paid for that it's so.
Richard Track: :
Old you know yeah well i i think it's less of that and i really do think that
Richard Track: :
like i don't know why i was talking to this about i think it was too i can't
Richard Track: :
remember if it was to my wife or one of my daughters but it was it had to have
Richard Track: :
been christine because there's no way my
Richard Track: :
11 my 10 year old would follow this but it was like doctors in
Richard Track: :
a physician's you know a hospital setting there's
Richard Track: :
like no sense of like feeling bad about not only are you billing for the first
Richard Track: :
procedure but you're billing for like the procedure to fix that procedure and
Richard Track: :
like it is what it is if you have a procedure and then there's a second one
Richard Track: :
and we're gonna have to bill for both of those and we expect you to pay for
Richard Track: :
both of those or we're gonna send you to collections,
Richard Track: :
whereas in dentistry if like something doesn't go right with the
Richard Track: :
first procedure we're having to like go and fix something or
Richard Track: :
do something because we're the business owner who
Richard Track: :
is also the clinician and the patient
Richard Track: :
can kind of hold our reputation over our
Richard Track: :
head there is a through bad reviews
Richard Track: :
and all of that versus like a hospital system
Richard Track: :
if you tell a doctor like hey i'm not going to pay my balance i'm going to leave
Richard Track: :
you guys a bad review like the physician does not care like if you leave the
Richard Track: :
hospital system a bad review um so i i think a lot of it comes from that dynamic
Richard Track: :
of just feeling there's a vulnerability and a guilt in like.
Richard Track: :
If something's not perfect or there was stuff that was our fault,
Richard Track: :
like we should have built this better sooner. We should have gone to the insurance.
Richard Track: :
We should have followed up with the insurance better. We should have been more
Richard Track: :
clear upfront with their estimate.
Richard Track: :
So there is this kind of guilt of like, no, this is kind of our fault.
Richard Track: :
And if I call them up asking for a hundred dollars and it's kind of our fault,
Richard Track: :
like how's that going to go down and how is that going to look?
Caitlin Track::
Well, exactly. And this is why I say it's not every situation.
Caitlin Track::
It's not a blanket, you know, answer where there are going to be scenarios.
Caitlin Track::
And especially with those 90 days and older insurance claims,
Caitlin Track::
we're already at a place where if we finally get this processed six months later,
Caitlin Track::
whenever the case may be, patient finally has an official balance,
Caitlin Track::
we look pretty silly sending a bill six months later.
Caitlin Track::
And they're like, I would have been fine to pay $250 for this treatment had
Caitlin Track::
I gotten this bill 30 days after the appointment.
Caitlin Track::
Now I'm like, this is just poor planning.
Caitlin Track::
So the doctor kind of has to be the one to, along with the office manager,
Caitlin Track::
make those decisions in those cases.
Caitlin Track::
But it reminds me, I've met so many amazing and funny office managers through the career.
Caitlin Track::
And we hired someone that came in and the AR was certainly an issue.
Caitlin Track::
The previous OM was doing a lot of discounts, a lot of payment plans.
Caitlin Track::
And the doctor also had that vibe of like wanting to make people happy,
Caitlin Track::
wanting to give discounts, wanting to be the friend in the community and everything too, right?
Caitlin Track::
So we get to a place where AR is out of control.
Caitlin Track::
As a result of this, you're trying to be the good guy, but then you're panicked on the financial side.
Caitlin Track::
And we brought somebody in and she was kind of telling me the story afterward
Caitlin Track::
where a couple of patients had written bad reviews about her.
Caitlin Track::
And he had kind of heard through friends at church that his new manager is not so good.
Caitlin Track::
And, you know, and why? Well, he freaked out, called her in and go,
Caitlin Track::
you know, you're making people upset.
Caitlin Track::
And she very calmly said, okay, I understand.
Caitlin Track::
What I'm hearing you say is that you'd like me to write, write all of this off.
Caitlin Track::
He's like, well, no, I don't want you to do that.
Richard Track: :
We want our cake and eat it too. We want to be the good guy and we want our money.
Caitlin Track::
Yep, absolutely. And that same office manager, and I think he just had that
Caitlin Track::
epiphany, you know, and you certainly need to be cautious and make sure the
Caitlin Track::
people that you've hired to chase this money down for you are handling your
Caitlin Track::
patients with compassion.
Caitlin Track::
There's a right way to do this. There's a way to treat people with respect and
Caitlin Track::
offer them a discount and a payment plan, maybe because it was on our end for
Caitlin Track::
incorrect processing or whatever.
Caitlin Track::
But you still, at the end of the day, need to be able to stay firm and hold
Caitlin Track::
them responsible for the balance that they owe you. You provided the service
Caitlin Track::
and you deserve to be paid.
Caitlin Track::
So it's this art and it's this balance.
Caitlin Track::
That same OM, another funny story that I think she just kind of got him to think
Caitlin Track::
of things a little bit differently. And he told me this himself.
Caitlin Track::
They were in the huddle and a certain patient was coming up,
Caitlin Track::
assistant said, well, what do you want me to do about this?
Caitlin Track::
And last time he was kind of complaining about the price of this.
Caitlin Track::
And that doctor goes, okay, yeah, yeah.
Caitlin Track::
If he says something, you know, we'll go ahead and give him 10%, you know.
Caitlin Track::
And that OM goes, wow, I wish I could take my family out to dinner at Olive Garden and get 10% off.
Caitlin Track::
And he's like, gosh, you're right. Why am I just so quick to discount my services? Yeah.
Richard Track: :
No, it's something deep inside of us that we feel guilty charging for what we
Richard Track: :
do because we're helping patients directly and we need to get over it.
Richard Track: :
So I love when people can have these mindset shifts and people can call us on
Richard Track: :
it and provide Provide examples of like,
Richard Track: :
it's okay to bill for the work that you're doing to provide necessary hard tissue
Richard Track: :
surgery on a moving target.
Richard Track: :
You know, it's like, this is not just like, oh, okay, we're brushing their teeth
Richard Track: :
and packing them along the way.
Richard Track: :
So these are the types of like mental things behind these metrics.
Richard Track: :
I think AR has more more mental
Richard Track: :
like guilt and like shame than almost any other dental metrics because it's
Richard Track: :
like our past sins come to light in these these AR numbers and so that there's
Richard Track: :
like a purposeful blindness we don't want to look at them because they're going
Richard Track: :
to tell us a story that we don't want to hear.
Richard Track: :
And so then we just like pretend like, oh, we don't understand it.
Richard Track: :
And so I'm not even going to worry about it.
Caitlin Track::
Yeah, I'll give Derek Green a shout out. He said, Caitlin, I just like to outproduce my problems.
Richard Track: :
I just like to outproduce my problems. That's great.
Richard Track: :
I love it. Not ideal, but it can work for a little while. Eventually, they all will catch up.
Richard Track: :
Well, this has been an awesome discussion of really understanding the different
Richard Track: :
numbers at play here and understanding where we can improve,
Richard Track: :
where we need to focus, and getting on the same page and not pretending like
Richard Track: :
these problems don't exist or there aren't areas of improvement and having benchmarks
Richard Track: :
that we can hold ourselves and our team to.
Richard Track: :
So thank you for outlining this whole other area of metric blindness that I
Richard Track: :
didn't want to look at because I knew that I'd have skeletons in this closet
Richard Track: :
as well, along with all of our listeners.
Caitlin Track::
Yeah thanks for for promoting the episode and allowing it to happen i think
Caitlin Track::
it's a good conversation to have and and there's so much more we could get into
Caitlin Track::
and and like i said every office is a little bit different with the situation
Caitlin Track::
and also how they got to this point so um you know.
Richard Track: :
It's not one size.
Caitlin Track::
Fits all this is.
Richard Track: :
This is definitely one of those like we're gonna have to look at the mess to
Richard Track: :
figure out the solution rather than here's the one blanket recommendation I
Richard Track: :
heard on the podcast of what to do with your AR past.
Caitlin Track::
60 days or 90 days.
Richard Track: :
It's like, it depends. It all depends on what's going on.
Richard Track: :
So once again, it's one of those invites. If you're not working with a coach,
Richard Track: :
go to sharedpractices.com, book a discovery call.
Richard Track: :
If this is a problem in your office, there is immediate money to be made. This is great.
Richard Track: :
If this is the best problem to have to then need coaching, because you're like,
Richard Track: :
listen, I can pay for the coaching out of our AR problem.
Richard Track: :
Just by fixing the problem, coaching has paid for itself. And then all of the
Richard Track: :
other growth of the practice is just gravy in comparison to the issue that we started off with.
Richard Track: :
So this is actually a really good problem to have. Come to us with this problem.
Richard Track: :
We'd love to help you with it.
Caitlin Track::
Yeah, we could even help on air too. Send me an email and we'll get you on here.
Richard Track: :
Yeah. Yeah, let's do it. We will do a practice underwater.
Richard Track: :
We'll talk about it. So let's work through it together. Caitlin,
Richard Track: :
thank you so much. Thanks, Richard.
Richard Track: :
We'll talk to you guys next time on the Shared Practices Podcast.