If fees are well overdue and cash flow is tight, it might be time to implement some clearer financial rules with your patients, writes John Burfitt.
On the topic of financial responsibility and cash flow in a dental practice, straight-talking Dr Georges M. Fast refuses to mince words about the dollars and cents of being in business.
“I know of one practice with high fees that has up to half a million dollars owing in outstanding fees,” Dr Fast, a Melbourne-based industry veteran, says. “I also know of others that have up to six months of fees outstanding.”
Dr Fast is a former ADA councillor and past chairman of the Private Dental Surgeries Association of Victoria. He has been practising for over 40 years, in that time, he claims, he has never had any outstanding debts. Ever.
“My simple advice to other people has always been the same—stop giving credit. We are not in the credit business and we are not money lenders. We are dentists,” he states.
“I don’t think you should ever have problems with payment as long as there is a clear understanding between you and your patients over what the rules are. We never have any outstanding debts, as we get paid when we do the work—that expectation is clear to everyone.
“That also solves two problems—the financial issue and the one of informed consent. Everyone knows what is involved in the service and there can’t be a dispute about fees. But, it is up to the dentist to set the rules.”
Not everyone, however, is so upfront on the topic of money. Some will do anything to avoid the tougher realities of dealing with patients who cannot pay fees, and may end up offering credit which, can take a long time to be settled—and in some cases, is left outstanding. None of which assists the practice owner, who has to deal with their own realities of paying salaries, taking care of leases and staying in business.
“The problem remains that many dentists just do not know how to do this,” consultant Julie Parker, of Melbourne’s Julie Parker Dental Management, says. “The dentist must work out a way of smart client liaison; being great in dealing with the patients and equally great as a smart business person. The solution is that the dentist should never be the one having that conversation about money. There needs to be another member of the team who takes care of all that so a clear division is drawn between the service you do in the surgery and the payment for it at the front desk.”
Payment options need to be many and varied, with the practice readily offering to accept a range of credit cards, cheques, money orders, direct transfers and, of course, cash.
While many patients choose to put larger fees onto a credit card, having a conversation about a payment plan must be handled in an appropriate manner—and discreetly.
Julie says it is a matter of always dealing with the patient in an upfront way. “In the case of discussing money, this is a time for clarity—nothing wishy-washy,” she says. “A delicate conversation like this needs to be private, one-on-one and focused on the outcome of how this person is going to pay for the procedure.”
“It also needs to be followed with a written agreement of the plan you have worked out, with details of how you will follow it up if any payments are not made. Every possible avenue needs to be covered off so the patient understands completely what they are agreeing to if they proceed, and just as importantly, what the consequences are if they do miss a payment,” she explains.
A one-size-fits-all approach to payments doesn’t work for Dr Vas Srinivasan, of Invisible Orthodontics on the Sunshine Coast. Dr Srinivasan explains he expects dental patients to pay directly, while orthodontic patients are given the option of a monthly payment plan. Any follow-up is completed by an agency, so his clinic is never involved in any negotiations.
“As a business owner, I feel a bit awkward chasing up money on behalf of the practice, so these guys do a great job for us in collecting the dues and then passing the payment back to us,” he says.
Experience with a few past patients who changed their mind during a procedure, leaving the practice to carry a hefty lab bill, made Dr Srinivasan change his approach. “By obtaining a deposit to cover your initial lab bills, time and material spent, you at least cover for any last minute changes of mind,” he says.
“Every possible avenue needs to be covered off so the patient understands completely what they are agreeing to if they proceed.”—Julie Parker, Julie Parker Dental Management
Dedicated follow up of payments and complete knowledge of the accounts at all times, Janna Fikh of Fletcher Tax Accountants advises, are the key to successful management of finances for any small business.
“It is often not until tax payment time or when something big is due that many businesses realise there is no money in the kitty, and the reason it has been allowed to become such a big problem
is because no one has tracked it,”Janna says.
“This is something that must be done weekly, not left as a monthly task, because far too much can happen in that time. This is something you should be checking and something you should know because something will always be due, and often overdue. And that is often where the real problems start.
“Unless it has been followed up, nothing is going to magically appear. You need to know what is going on in your business and take appropriate action all along the line.”
The final word on ensuring strong financial flow for a practice is Dr Fast’s, who confesses he has been offering the same advice for years, but is astounded how often it is ignored.
“I often hear people say, ‘I have to give credit because the dentist down the road is offering credit’,” Dr Fast says. “Well then, let him go broke or not be able to pay his bills on time because of all that outstanding money. It shouldn’t matter to your business what that guy is doing. It needs to be more about you building your own business.”