“Within the past year or so, I’ve noticed more people have had economic trouble and are slow in paying, or aren’t paying on their past due accounts. I’m hoping you can shed some light on how to handle this situation.”
It certainly is a sign of the times that people are experiencing troublesome economic conditions in their personal lives. This certainly impacts the dental industry, as we’ve seen some practices declining in revenue, laying off workers, and having a hard time gaining acceptance to treatment from patients. Even when patients accept treatment, making good sound financial arrangements may not be as dependable as in the past.
First step is to be sure the basic elements of the practice’s financial policy are strong and orchestrated in a consistent, professional manner. To review the three key principles of sound payment systems are:
- Always practice financially arranged dentistry. Inform patients of the fee and make specific arrangements for payment before any treatment begins.
- Don’t be a bank. Avoid making arrangements that allow the patient to make payments over time. Often, this is called an “Open Account”. Sending statements to patients hoping they follow through with the “three equal installments we arranged” without any sort of written contract or debiting method is setting the practice up for disaster. And, the “half at prep, half at seat” has its pitfalls also. Patients may not return for the final delivery because they don’t have the money. Offices must finish treatment that was started regardless of the patient’s ability to pay.
- Offer flexible but firm payment options. Offer a variety of options that will meet most people’s financial needs. Consider a reduced fee for payment made in advance and a courtesy for cash payment, third party financing (CareCredit, for example), and major credit cards. A good option is to employ a written payment agreement that locks in payments on a credit card; there isn’t the likelihood of patients not performing their part of the bargain when the office controls the payment process in this way.
Having a written financial policy comes in handy when discussing payment with patients. In addition, making payment arrangements in a private place rather than the treatment room (before treatment begins) helps in forming a good understanding as to how payment is handled and tends to produce positive outcomes.
What happens if these methods are used and the account goes bad? For instance, a patient has treatment that was financially arranged, a co-payment is made by the patient, insurance is submitted and eventually pays a portion of the charges, and the end result may be an existing balance. (This may also happen in the case of a patient who has treatment, does not have dental insurance, and a balance is still due.) Now the fun part: The person who is the guarantor has lost their job, or a spouse isn’t working any longer, and money isn’t available to pay the existing balance.
Now what!?
Here are some steps to consider when managing this state of affairs. First, send a statement. Shortly thereafter, say a few days, call and talk directly to the guarantor (or patient, if one in the same). Indicate insurance has paid, and the balance is their responsibility. Be as gentle as possible; use soft yet direct language such as, “Can you make a payment of any sort?”
The important aspect of this step is to open a dialogue and try as best you can to get the patient on some sort of automatic debiting process on a major credit card. Mention to the person, “We can work with you by spreading your payments out over the next few months by debiting your credit card monthly”. If it is declined once, make contact and work with the person. If it is declined twice, then send the account to the agency, attorney, or company that will initiate collection proceedings.
Out of embarrassment, patients tend to ignore statements and phone calls. Using pre-collection letters on colored paper (bright pink, orange and yellow) has proven effective. Here’s an example of the first letter that sends a gentle reminder of payment.
Will you please give me a few minutes of your time?
Serving you, our patient, is our number one priority at {Practice Name}. We want to make sure that all of our patients are completely satisfied with our office. Since your account balance is now overdue, we wanted to contact you.
On the other hand, if you’ve simply overlooked paying this balance on your account, just send payment via personal check or major credit card. If you need help with payment, we will gladly work with you to make arrangements that meet your needs.
Thank you for your attention, we look forward to your call.
Follow up a few days later with a phone call to again attempt to form a dialogue with the patient.
The next letter may be nicknamed, “The Expedite Payment Letter”. This will use similar text as the first letter mentioned earlier, but must be a bit firmer. If after two weeks there is no response, send a firm collection letter, accompanied by a collection phone call. The message on an answering system may be something like, “This is a phone call to collect an unpaid debt.”
If after two more weeks there is no response, then send the account to collections.
It is also very important to have patients and guarantors become aware of any fees charged for past due balances and for any collection fees which are to be paid by the patient and/or guarantor. A disclaimer for payment of fees charged could read something like this:
I have read and understand the above financial policy for {Practice Name}. I also understand that I am responsible for all charges which my insurance company may or may not cover at the level anticipated.
Should collection procedures become necessary, I agree to pay all collection agency costs, (amount charged by collection agency), and/or reasonable attorney’s fees including late fees.
Put this in the written financial policy and/or in the financial arrangements section of the treatment plan produced by the office’s practice management software.
Be clear about how the office handles insurance; use something like:
We are happy to file the forms necessary to see that you receive the full benefits of your coverage; however we do not guarantee any estimated coverage. Because the insurance policy is an agreement between the patient and the insurance company, we ask that all patients be directly responsible for all charges. Please know that we will do everything possible to see that you receive the full benefits of your policy.
Have the financial policy signed up front, by the patient during their first visit. Include it as part of the patient file. Scan the document for the record, or include it in the chart.
Consider adding a missed appointment policy where you feel it would be beneficial to charge for missed appointments. An office can charge for missed appointments, but cannot collect on these charges as they are not a bad debt. The charges can be written off if uncollectable; however, if and when the patient returns, collect the fee at that time.
Another question that comes up is, “Can we send a patient to collections if they haven’t paid their full portion and the crown isn’t seated yet?” Or, better yet, “Do we have to seat the final restoration if they are unable to make a full payment?”
First and foremost, a dentist must finish that which he or she started – regardless of the ability the patient has to make full payment for services. This gives a lot of credence to having the patient pay in full at the preparation appointment rather than making arrangements such as asking for “½ at prep; ½ at seat”, or some other arrangement which runs the risk of having the office finish treatment without being paid in full.
If a patient has a balance due on an account, remind him or her of the amount owed when making the confirmation call. Politely inform the patient that the balance will be due when arriving for the next appointment:
“Just confirming your appointment for tomorrow. The balance due for your treatment is $300. Please bring a method of payment; we’ll see you then.”
Do not leave this on a messaging system; due to HIPAA regulations, your voice mail message should be something like:
“Hi, this is Vicki, I’m calling from Dr. Smith’s office regarding your dental appointment. Please call back as soon as possible; our phone number is 555-1212”.
Make sure the conversation regarding payment is made directly on the line with the patient/guarantor, or parent if the patient is a minor.
On the collection call, make sure you identify yourself and where you are calling from; that is, the name of the office or of the dentist. If you’re not speaking to the patient because the patient is a minor, confirm you are speaking with the parent or whoever signed to be responsible for payment of the account. Confirm with that person their name, date of birth, and their address.
Incidentally, there is some question as to who is responsible for a minor brought in for treatment. On occasion, mom will bring her child and complete the paperwork indicating dad is the responsible party. Not true. Dad may very well be the responsible party outside of the practice; however, the person who signs the financial policy at the time of admitting the patient to the practice is responsible for payment. As another example, grandma brings this same child to the dentist’s office, mom didn’t drive but signs the paperwork, and claims dad is responsible. In this case, mom signs the paperwork; mom’s responsible.
Managing payment during tough economic times can cause stress and frustration. Use these methods to ward off potential conflicts before they become serious problems and your office will run smoothly.
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