Episode 653: The Cashflow Solution

Kiera and Brit tackle accounts receivable in this episode, and why your practice might have a cash flow issue because you’re not collecting money properly. They touch on AR basics, how to best deal with claims, why doctors can’t out-produce an AR problem, where your collections should be for different time periods, and more.

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0:00:05.8 Kiera Dent: Hey everyone, welcome to the Dental A Team podcast. I'm your host, Kiera Dent and I have this crazy idea that maybe I could combine a doctor and a team member's perspective because let's face it, dentistry can be a challenging profession With those two perspectives. I've been a dental assistant treatment coordinator, scheduler, biller, office manager, regional manager, practice owner, and I have a team of traveling consultants where we have traveled to over 165 different offices coaching teams. Yep. We don't just understand you, we are you. Our mission is to positively impact the world of dental. And I believe that this podcast is the greatest way I can help elevate teams grow VIP experiences, reduce stress, and create A teams. Welcome to the Dental A Team podcast.

0:00:53.0 KD: Hello, Dental A Team listeners. This is Kiera and you guys, today is the day where I actually get to bring on my favorite people, the consultants. So today I have Brittany Stone, our one and only no BS, Brit, if you've heard her before on the podcast. Brit, how you doing today?

0:01:08.4 Brittany Stone: I'm doing great. I love that I'm no BS and tiff is spiffy. Like it just fits the personality so well.

0:01:15.3 KD: It does and I hope that you're okay with that because I genuinely love calling you no BS Brit. 'cause guys, if you don't know Brit, If you don't even know culture index, let's just step it back to that Culture Index has this thing where it actually will tell you like how much emotion you bring to the workforce. And we were on a call and this guy was describing it for Brit and I and he basically said like if you're really far to the right, that's like a heart in the box. And if you're really far to the left, that's like every decision is made for emotions. Well, Kiera Dent comes in basically like five, six. I'm a little more like I've got more heart to me, but I'm not like crying all the time, Emotional. Brit, where's your number?

0:01:56.1 BS: I'm pretty far to the right. That's why I'm no BS 'cause I can remove that emotion and just kind of look at the facts and make the decision.

0:02:05.1 KD: Exactly. And that's why I actually love Brit because she, the way the guy described it was heart in a box. So Brit will bring that into our meetings and say, Hey guys, remember heart in a box girl. This is what we need to do and there's no emotion to it. That's why I call you no BS Brit. And I love it because for me and for a company guys, you gotta have logical decision makers, you've gotta have people who can make decisions around what is best for the business, what's going to move it forward. And then you need people who have heart who are the fun, the playful. So that's why Brit has the nickname, well her initials are Brittany Stone. So I think it's a definite clever play on words no BS Brit here today to take over the show. So no BS Brit, how you doing?


0:02:47.8 KD: But yeah, offices and people love Brit. Like Brit, you were just in an office the other day and like you just offices, team members flock to you. What do you think it is, Brit? I'm gonna put gonna put you on the spot. Like why do you think people love to come chat with you and hang out with you? 'cause I'm the same way. I've tried to convince you to be my best friend for as long as I've known you. So what is it Brit, what is it about this no BS Brit that people are just, they they're drawn to. I have my opinions by the way.

0:03:15.5 BS: I think our heart in the box people, it's like it's genuine. Like if I'm sitting there talking to you like it's genuine, I'm there with you, I'm spending time, it's not fake. And so I think that's what it is. That's what I try to be, that's what I hope it comes across as. And that's, we don't fake it very well. So.

0:03:34.2 KD: That's fair. And I would agree. I think it is that like very, it's just a very genuine piece about you and I know when you're gonna have a conversation. The thing I love about you in my life and in our company is you're a person who will go toe to toe with me and it's not an emotional conversation. Like I still remember I was in my car, we were having a conversation, I think you know the one I'm talking about and I was like, hey, we need to like hash this out. And you're like all right, let's hash it out. And it wasn't emotionally charged. It was very logical. And I remember the comment you said to me that like made me just like you even more is you're like, you know what? I can see that that's fair and I should change that. And I was like, jaw drop. Most people get defensive and Brit's like no that's fair. You definitely can. I can see that. And then I think that Brit, you just really bring that non-emotional side but yet to the listeners listening to the officers who work with Brit, you'll be like Brit's not a heart in a box. Brit's one of the nicest people I've ever met. So it's not that they're not nice people, it's just that their decision making is more logical rather than emotional. Would you agree Brit?

0:04:32.7 BS: Right, I would agree. And I think that's for our heart in the box people, I'll always defend them like they, you make a connection. But I look at for like managers and leaders, I can look at the best for the team overall. Like I care about everyone as an individual, but like ultimately our success as a group is most important.

0:04:52.4 KD: And I think that that like I'm so glad Brit, you brought that up because I do feel when you guys are looking for managers, when you're looking for schedulers, when you're looking for TCs, I am a killer TC. The way this culture index person described me was I have a velvet hammer and I can get people to go wherever I want them to go and fill like a million bucks. I don't know how I feel about it. I don't know how Brit feels about heart in a box, but hey, it felt very fitting. So like my personality is a really fantastic treatment coordinator, amazing for that position. Brit I actually think makes probably a better manager than I do. Brit is very logical. She can see the direction of where you're going to go. She's very numbers driven. She can figure it out from that. So pending upon who you are as a leader Brit and I make a good yin to yang when it comes to leadership because we're, I feel like we're kind of like the Oreo. Both of us have a cookie. Both of us have some filling and both of us bring two different parts to that cookie. Like that was my best Brit, we're an Oreo. So the next time I see you, I'm definitely having my right arm white to my left arm black. And then if you can come with the opposite, it'll be great.

0:05:52.1 BS: That's the next Halloween costume. We've got it all ready to kill.

0:05:54.6 KD: I feel pretty good about that. But with that, that Brit and I, I think that this is a conversation that's actually a pretty logical conversation. And so your emotionally charged people might not love this and it's going into billing and I am a person who hates billing. Brit learned it for the mere sake of being a great manager. But it really is about your AR and I think both of us have a love for AR. Because AR, for those of you who don't know is your accounts receivable. So this is the money coming into your practice. So it's from patient portion and insurance portion. And I think the reason I was excited for today's podcast is one, it's with no BS Brit, but two, I feel your AR is the secret treasure trove to being a profitable practice. So that's why I was excited to get on today and talk AR especially with our over 90 and kind of give you guys some percentages. But Brit, that's why I'm obsessed with AR. Any thoughts as to why you might dig AR maybe a different perspective? Maybe it's the same, but that's why I love AR.

0:06:50.6 BS: I love AR because one, it is numbers and it's numbers that I can see move. So it's not a feeling of something changing like it's concrete something that I can change and impact. So that's part of why I love it. So some people look at that number, maybe it's gotten a little out of control and they're like, oh my gosh, like I don't even want to look at it. And I'm like, oh, that's the opportunity. It's gonna be so fun when you see that number drop and drop and drop to where we want it to be.

0:07:18.2 KD: For sure. And Brit, I remember we did a podcast before and I've thought about this so much. It was one where we actually were talking about numbers of a practice and Brit you really talked about how like figuring out the levers you can turn in the business and this is a lever you can turn with a logical process behind it and also to see those results of your labors. So for me as a TC type personality, gosh I just am a competitive person so I'm like let's get that freaking lever down. I'm gonna collect this money. But truthfully, like you said Brit, it's something that you can mathematically, logically see and then your efforts really are paid off and then you can see are people putting forth the efforts? Do we need to change the processes? How can we make this really accurate? And to be honest, I think another reason I love AR is when I first started the company, I had a threshold.

0:08:04.3 KD: I could never ever, ever break 30,000. Like that was the amount of money coming in. That was all I had. Like I could not, and the number was 30,000. I could not break past 30,000 as a company and some of you might be in my same boat. And then I found the secret treasure trove 'cause I asked my CPA and I said, what the heck Preston, I don't have money. Like, and he's like, Kiera, you're doing so well. And I'm like, what do you mean I'm doing so well? I'm at 30,000 all the time, whether it's a good month, a bad month, like I cannot break this ceiling. And then I found out I had hundreds of thousands of dollars sitting in AR we're talking, I remember my jaw dropped and then I wanted to throw up a little bit and then I said, how can I fix this?

0:08:45.9 KD: So if that's how you are. So doctors, if you're feeling like your bank account's just sitting stagnant, it might be AR or if you're feeling like I have, I just talked to a, a potential dental A team family member, a new client coming in and she was talking to me and she's like, Kiera, I feel like I'm on cash flow row. I have no cash flow, no money's coming into the business. And she mentioned to me she had several hundreds of thousands in AR but didn't know how to collect it. And so that's why I wanted to get on because I do feel this can be a cash flow issue for a lot of offices. Not because you're not producing enough, it's because we're actually not collecting the money into the practice. Brit, any thoughts on that?

0:09:24.6 BS: Yeah, and I think we've seen it before where doctors think they can just like outproduce a problem, right? Like I just need to keep producing more. But if you're not actually collecting what you're producing, then you're, you're not gonna have that cash money that we need to do all the things that are necessary for the business. So Agreed. And I like one fun thing about like AR and it's just kinda like business in general but it's, it's a puzzle to me, right? Like AR is a puzzle. So it's like how do I figure out the puzzle? What's going on with it? What do we need to fix in order to get it under control? And AR I love because it's kind of, it's two ends, right? How did we get here is always a question we need to ask when we've got a lot of money sitting in our over 90 AR we've got a lot of stuff like how did we get here so we know how to fix it. And then two, how do we go after the money that's sitting in there?

0:10:13.8 KD: And Brit you just made me think of our next retreat should probably be puzzle building and like, let's see who's the fastest puzzle builder? 'cause I agree I love puzzles and AR really is, it truly is a math equation like Brit just spelled it out for you guys. Like how did we get here and then what do we need to do to collect it and not get here again? So again, if you're having cash flow issues, I'd suggest go look in the AR and then we're gonna really talk about today especially that over 90 because I feel what's scary about practices is you send it out to insurance and insurances do have a deadline of when they'll pay you back. And if you don't go after it and you don't collect the money and they can deny it for any myriad of reasons, like I don't feel, I don't feel the the cross to die on is this one where it's like well insurance denied my claim. So what they're freaking an insurance company guys like that's the game they play. So let's figure that piece out.

0:11:01.6 BS: They're going to.

0:11:02.9 KD: That just like have that be an assumed piece. But the piece we as a practice need to really dive into is can we actually collect the money and have a process and especially that over 90. So just to give you guys who maybe don't know about AR, a quick little AR summary. So AR like I said is patient and insurance portion. So we did dentistry, we did the production and then we need to get paid for the work we did. So you guys have a really fun trick where some of the money will come from insurance and some of the money will actually come from patient portion. Again depending upon how much insurance is contracted to pay, will it determine the amount that the insurance is going to pay us? So let's pretend Brit is my hygiene patient today. She was a hygienist in a prior life.

0:11:43.4 KD: Now she is a consultant/operations/no BS. That's who Brit is today. I don't know who she'll be in the next three years guys, but today that's who she is. So she's my hygiene patient. She comes up and let's say we did an SRP today. So insurance is only going to cover, let's say our total is $500 insurance is going to cover estimated, remember they'll never guarantee that they'll pay let's say of our 500, maybe 300, we'll be a very generous insurance company. So $300 of that 500 that means Brit owes me $500 and insurance owes me $300. Okay? It's much more complex than this but I'm trying to make it very simple for you guys. So then on my AR, my account's receivable, I need to collect $200 from Brittany and I need to collect $300 from insurance. Well I can collect from Brit as a patient over the counter.

0:12:33.8 KD: So realistically when you're looking at your AR, your patient portion in my opinion should always be very low. If your practice is doing what they need to be doing, that portion should be low. Insurances on the other hand we have to send them a nice little claim and hope and pray that they don't deny it, which they probably will and then resubmit it and get that $300 back hopefully. And then if not, we've gotta make a decision. Do we go to Brit? Was it because we didn't do our work as a practice? But what happened there? But of that $500, 200 came from Brit, $300 comes from the insurance. That's what makes up your AR. So when looking at the AR really diving into how much is patient portion aka our practice isn't doing in my opinion, elite practices like we're not collecting over the counter 'cause that patient portion should be very low if you do this correctly. And then the insurance portion are we following up and collecting? So that's my like quick AR, Brit did I miss anything? Anything you wanna add on my AR analogy of of patient and insurance portions?

0:13:29.0 BS: No I think you gave the good like basics. I am a math, I'm an algebra brain so lots of things come back to like an algebra equation for me. So yes, what insurance pays, what the patient pays, that should be the total fee for that service. You got it.

0:13:42.8 KD: There you go. And imagine if Brit and I had a like whiteboard one day we'll get cooler and on this video we'll be like this plus this equals AR. So exactly right patient and insurance is what's gonna collect there. So when you're running this there's also a thing called zero to 30, 31 to 60, 61 to 90 and over 90. So what that means is how long that money has been uncollected in the practice. So your zero to 30 should be hi guys, you did dentistry, you sent it out to insurance, they have not paid us. Typically insurance pays on about a 30 day cycle. So then they should be sending us insurance checks back. But as a patient, so let's say I see Brittany today when we're recording 30 days from now, if her insurance hasn't paid me that $300, she'll move from zero to 30 into 31 to 60.

0:14:24.9 KD: And so what's crazy, a lot of people think like it's a calendar rolling and it's not a calendar rolling of your zero to 30, 30 to 60, 60 to 90. It's when you see those patients. So this rolling is ticking every single day. It's kind of like, I think of AR tricking as like interest rates. Like it, interest just collects all night long guys in your zero to 30.

0:14:43.6 BS: Every day.

0:14:44.8 KD: Like it just keeps ticking along which is why you really gotta be on top of this every single week. Otherwise if you just work on it once or twice a month it will keep trending. So Brit, any thoughts you've got on that? Anything you wanna embellish, expand? We're kind of breaking it down and then we'll get into that over 90 for sure.

0:15:00.5 BS: Yeah, no I think that's good. Yes, knowing that the, the clock starts ticking as soon as that treatment's done so make sure you're getting those claims submitted every day. Go get them sent, don't let them sit there for too long 'cause it just delays things. My only other addition is little tip knowing that like electronic payments are gonna come usually a little bit quicker and cleanings usually get paid quicker than restorative treatment does. So if I've got a cleaning, really the honestly, especially if it's electronic goes about two weeks like something's going on so.

0:15:29.7 KD: So then Brit can you break down this like how do we like, okay so we are this practice we have a cashflow issue. We realize we have, let's just do a nice number guys 150,000 sitting in AR past the zero to 30. Okay? And a good ratio just so you guys know is a one-to-one is a healthy number in your AR meaning one month's worth of production. You shouldn't have more than one month in collection. So if we're producing a hundred thousand, we don't want more than a hundred thousand sitting over in our AR again, your outbound is gonna be high, I get it. That will be very high. We should be collecting over but that's just a good ratio. So let's say this practice only has 150,000 in there, where do they start? Like how do we even get this over 90? What do we do? 'cause I usually like try to attack the over 90 but Brit take it away. Explain like what the process is. How do we even start tricking this down?

0:16:16.3 BS: Yeah so to start going after the over 90, one, just what is your process for collecting patient balances, right? Do we have a system for it? Which is usually a great system to follow is as soon as you post that insurance payment, if there's a balance, give that patient a call, let them know the great news that insurance paid, let them know what the balance is that's remaining, see if they wanna pay it over the phone 'cause then the great news is I don't have to do anything beyond that. It's as easy as that. If you have a text to pay option or like an option to pay on your website, then you can even like text them a link or send them a link to your website so they can go there and pay and make their life super easy. So I don't even have to mail out a statement to anybody. So that's a good first step. And then sending statements every 30 days, right? So sending that statement to the patient. Usually initially when I call I either text or mail that statement right away as soon as I know that that balance is there and then follow up with it every 30 days, you know, next 30 days send a statement. I'm also calling in between. So I'll send a statement two weeks later call, two weeks later send a statement, two weeks later call. And then eventually...

0:17:22.8 KD: But can you actually expand on that. Can you explain why you make the phone call? 'cause I feel so many billers, so many offices, like we've almost turned into a day and age where it's like no, I like texted and I emailed and I did all these things but they just don't call. Why is it paramount that people call with AR?

0:17:37.8 BS: So with AR I think it's paramount that people call one you never know like what form of communication they're gonna answer. So phone might be the way that they're gonna answer text and mail can be very easy to avoid. Or they just don't even look at them to see what it's for. So at least if I call them I can talk to them, answer any questions if there are questions, make sure they've received the communication that we're sending to them. And then also I can leave a message so maybe they'll listen to that. I'm gonna try any way I can to get in touch with that patient to get that balance collected.

0:18:09.3 KD: Absolutely and I really think guys, it's paramount when you see that balance just call right away because it's so much more fresh in their minds. Like Brit knows she just came in for an SRP, we already talked to her about it, she already has the estimate. So if I just give her a quick phone call before I send the statement, like my process was enter checks, print the statements, call all the patients before I mail the statement. So I had my stack and I didn't have to remember who had a balance, just call the patients collect over the phone and then anybody who I didn't get in touch with, I would then mail those statements. So that was kind of my process to make it very simple but so many offices don't want to call and I think of you Brit often, if you guys missed this podcast, go back and listen to it.

0:18:47.2 KD: Brit, when you told me like you were very new into dental A team and you said choose your hard and I think about this like what is harder? Is it harder for me to chase money from month after month after month after month or pick up the phone and do a 30 second phone call and try and collect right then and there. To me I'd rather just pick up the phone and call rather than chase it for the next three to six months and then have to explain to my doctor why they are selling their house because we're imploding at the dental office and we can't afford anything anymore.

0:19:12.9 BS: Also same advice to anyone who struggles with collecting all the patients in the office. Gosh, just collect before they leave. Are you kidding me? You're gonna go chase them down afterwards and try to text them or mail something or call them. Ugh, it's easiest while they're in the office. So don't let them leave without collecting from them.

0:19:31.7 KD: And this is coming from Brit who also like is like I don't necessarily, if I don't have to call someone I'm not going to call them. If I can text I will. But for Brit Stone to say collect while they're in the office, I'm like guys listen that's a warning cry for you.

0:19:44.4 BS: Yeah. That's how important it is, so listen.

0:19:48.7 KD: So I really love that process Brit and I wanna give you guys just some quick parameters. We like the over 90 to be less than 5% of total collections. So if we collected a hundred thousand, less than 5% is going to be $5,000. Okay? Think I did my math right? So our over 90 is five and we're gonna make it very simple for you. Over 90 is 5%, our 60 to 90 is 10% and our 30 to 60 is 15% of total collections. Okay? So 15, 10, 5, if you're already better than that, cut those numbers in half. So then it'd be like 7, 5, 3, those aren't totally in half guys but you get the idea because those numbers don't really divide in half. So super nice so that way you can kind of scale it down that way. But the goal is really have that over 90 at that 5% or less of total collections because then we know the money that's out there isn't going to go into our well past over 90 into a 120, 150, 365 days times like four years and then we just have to write it off as bad debt. So I don't know Brit, that was at least the process and I liked for me again let's do some math equations here. What are the goals? What are the targets? What are healthy numbers to have? And then also like Brit just told you guys what is the process to do it? So Brit, any other thoughts you've got around AR how to get this below 5%. Any other thoughts you've Got?

0:21:10.5 BS: So we talked through like statements to the point of like sending a letter like at the point that something's at 90 days, you've gotta then determine, all right, are we going to use a collection agency? Are we gonna try to collect from that patient as much as we can within the office and then write it off as bad debt. So decide how you wanna handle any balances beyond 90 days. And if you haven't been doing anything like sending a collection letter or sending a letter where if I'm not using a collection agency then what I'll usually do is let them know before any further action is taken on the account. I can't say I'm gonna send them to collections and not actually send them to collections. So we have to be honest there. But send them some sort of letter that's a little bit, you know, stronger words, always inviting them to call if there's any questions or or if they feel if something is not correct.

0:21:55.3 BS: But make sure we're sending that letter out at 90 days and then we have a process of what we're gonna do from there. Whether it's once we've worked it we feel like it's not collectible, we write it off or we send it to a collection agency at that point. So know your plan. So if we haven't been doing that and that's part of the reason why we've got a bulk of stuff in our over 90 I would say then kind of you're gonna run through the process with those over 90 balances, which usually I'm gonna try to call them at least three times. I'm gonna send them a collection letter and then determine what you're gonna do from there. Whether you've worked out some way for them to pay for that balance or if you determine it's un-collectible. The other thing I've seen in offices that can kind of throw that over 90 into a really high number is they'll just let balances sit there forever. And we don't have a process for what we do when we send them to collections, which you should be writing it off as bad debt when you send it to collections. And then if you determine it's not collectible, write it off as bad debt and dismiss that patient. If we're either way collections or you're writing it off as bad debt, go ahead and follow the process, dismiss that patient so they're not coming back to the practice trying to incur more of a fee. And we've handled everything appropriately.

0:23:05.8 KD: And I'm so glad you said that and I wanna just like really put like a massive push for doctors. I understand as a business owner that sending someone to collections feels beyond yucky and terrifying and Google reviews. So like I'm just gonna empathize right there real quick. I will also then, I'm onto team side that if you don't have a process of what we do with this bad debt, you actually make your team's lives very hard and you make patient collections very hard for us. So we don't need, like I'm okay if you don't send them to collections, that's fine. That's your decision. You get to decide what you wanna do. I'm like a 50/50 kind of gal like hey you pay today, I'll write 50% off. You have 50% and moving forward you gotta pay in full for all treatment. That's kind of my style.

0:23:44.2 KD: So it's, it's middle of the road I'm still collecting but if that's your case doctors, I'm gonna beg you right now to create a policy so your team can just feel confident otherwise they're sitting there with angry patients, they're sitting there with other people and they don't know what to do. And so this is where then doctors you are like, Hey, what's going on? Why are we not collecting money 'cause we don't have a policy. So your team then just calls for years and years and years and years and years and this money never gets collected but it also never gets written off. So it's like funny money where we think we have a lot of money in AR but it's none of it's collectible. So if you're at that state, it's the beginning of the year guys. So you're not too far into this year.

0:24:23.4 KD: I would just say if you haven't written this off, we haven't done collections, do a clean dump right now. So any balances I say below $10 if you haven't done this, just write those off completely as bad debt. Like those pennies, those 5 cents, like they just get junky in there. So just clear it off. I know it's a sad day. Anything that you guys haven't collected, first of all like try to send the statements to them. I always say like try to collect even if it's been two or three years, like send the statement, send the text, let's try and get the money back in. But then after we've exhausted those efforts and I'm gonna say for like a month to two months, just write it off and create a policy so we don't get there in the future. So doctors please just give your team that, those parameters so they feel confident they know what to do and they're not having to come ask you questions and you can also get it collected. So that's like my, my warning cry for doctors Brit's got the warning cry for team members collect while they're in office and then just create those policies. So Brit, I think it was a pretty solid one. Any, any last thoughts you got around AR.

0:25:16.8 BS: Another tip is to know like when ultimately you need to write something off, every state's gonna have their laws about how long you can try to collect from someone on medical debt. So easy Google search, you should be able to find it, but just double check. So some it's three years, some it's five years. Some it's longer. So double check it and then you know, if you've got a lot of old stuff in there, like you're not, you can't collect on that whatsoever. So like that stuff is just gone, go in, write it off as bad debt but just double check for your state.

0:25:43.3 KD: Great tip there. There's our compliance queen. Brit hates it that I call her the compliance queen, but she really is and does a great job. So I would say check into those things guys. And then, there's so many other things if you guys need help with AR, one, if we can help you guys collect it, that covers our consulting fee. So you know, right there we guarantee we'll cover your fee if you've got an AR issue, but also truly getting these systems in place so you're never there again, like Brit said, it truly is just a, a simple equation and where, why are we here and what are we gonna do in the future to not get here? Those are systems. So if you guys need help with that, if we can help and serve you guys, email us. [email protected]. This is literally what we do for a living. This is what we do to make your life easier, to help your practice run smoother, to help your team have a happier time and to also help your patients have a better experience. So Brit, thanks for being on the podcast today. I super appreciate you.

0:26:34.0 BS: Thanks for having me.

0:26:35.5 KD: Of course. All right. And for all of you, thanks for listening. I'll catch you next time on the Dental A Team podcast. And that wraps it up, up for another episode of the Dental A Team Podcast. Thank you so much for listening and we'll talk to you next time.



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