When it comes to making a dental practice profitable, some financial mistakes are all too easy to make. This is largely because dentists get very few if any business classes in dental school. Yet launching a private practice makes you the CEO of your own company while you’re also working in your company.
It can be very difficult to see the financial mistakes you’re making and the opportunities you’re missing. The good news is you can learn to avoid them and gain the financial freedom you’re looking for.
As a dental billing company that has helped dentists be more profitable since 2012, Dental ClaimSupport has seen a few common financial mistakes dentists make just because they’ve had so little guidance to go on. Taking a few steps to learn some best practices can make huge differences in your financial well-being.
In this article, we will share 3 common financial mistakes we’ve seen dentists make, from taking financial health for granted, keeping the same fees for years, and holding onto old software or outdated systems. By understanding these financial mistakes, you can see how to avoid them for your own sake, and for everyone in your practice.
Now let’s get into 3 common financial mistakes made by dentists.
1. Believing all is well without regular review of your practice performance and staff billing processes
When the dental practice is doing fine, it’s easy to become complacent. This is risky, though. There are too many dental teams work long hours without tracking how productive and profitable the practice is. It’s important to let the numbers tell you how efficient your team is in collecting payment for all the services you’ve produced, even when it looks like everything is going well.
Now we’re not telling you to do a weekly one-on-one with every staff member. No one should be micromanaged. However, it’s not unreasonable to run certain reports and take note of each team member’s performance to see where changes may need to be made.
Regularly run reports at your dental practice
Reporting should be a regular occurrence at the dental practice, but we’ve seen many fail to do so. When you keep an eye on production, your collection rate, your aging report, what your write-offs look like, and more, you can gauge what adjustments need to be made.
You or your admin team should run the following reports (all of which can be done in your practice management software):
- Production report (gross and net)
- Write-offs report (insurance)
- Adjustments (courtesy, no charge, etc.)
- Collections report (gross and net)
- A/R report (insurance and patient and the aging)
- Daily Deposit report (broken down by cash, patient checks, patient credit cards, insurance checks, EFT, ERA, insurance credit cards
- Total outstanding insurance claims by insurance company over 0 days
- Total outstanding insurance claims by insurance company over 30 days
These are all financial reports, showing how well your dental billing process is working. If your process is efficient, you’re going to see good numbers such as:
- Insurance claims over 30 days = 10% or less of outstanding claims
- Write-offs are within a consistent range month to month
- Collection rate is 98% or higher
If one or more of these looks different than you anticipated - you’ll need to pinpoint where the issue is. It could be an issue with your team’s schedule of performing tasks. For example, if your total amount of outstanding insurance claims over 30 days old exceeds 10% of the total amount of outstanding claims over 0 days, you may want to explore why.
Why are there so many unpaid claim payments on your books that are not in your bank account?
To find out, ask yourself:
- How often are the claims over 30 days being worked by your team?
- Why are your claims getting denied?
- Are successful appeals being sent?
How often is someone figuring out why claims are denied, and working to get them appealed? If it’s less than once a week, that process needs to be revisited and addressed. This also means addressing the performance of your team members. It’s what they don't know about running a clean, efficient billing system that can hurt your bottom line.
Assess whether training or a change in operations is necessary
It’s very common for dental practices to have long-term team members. We’ve seen office managers stay at dental offices for 20 years.
Unfortunately, 20 years of loyalty can sometimes cloud judgment. If collections are low or processes seem old-fashioned or inefficient, some outdated skills or habits might be holding you back. Some training to update current staff or maybe a change in how you take care of certain tasks can improve your cash flow.
This doesn’t necessarily mean firing anyone, but perhaps you need to make sure whoever handles your insurance claims is devoted to staying up-to-date on insurance codes, regulations, and best practices.
Think about looking into dental billing training or outsourcing some part of your billing process. Dentists are sometimes resistant to using a dental claims service because outsourced billing is relatively new in the dental industry.
But it can help your team improve their processes, while also bringing in more money. Most medical practices outsource their billing, why shouldn’t dentists?
2. Not balancing your dental fees annually
When was the last time you assessed the fees you charge at your dental practice? If you haven’t adjusted your procedure fees in your system in more than a year, that’s already too long.
Your fees are determined by:
- Time,
- Laboratory and material expenses
- Total overhead used for the procedure
- The practice's overhead
- Education and training to continue to provide quality dentistry to your patients
A general dentist should balance their fees to the 75th to 85th percentile for the zip code of the practice, while a specialist would balance their fees in the 85th percentile and higher.
Many practices only update the hygiene fees every other year while the dentist’s fees are updated annually. Patients may notice the increase during the hygiene visit, but they rarely know how much an MO composite on tooth #3 is. Balancing your fee annually helps to avoid big jumps in your fees.
Take a look at some of your Explanation of Benefits (Non-Participating Plans), do you see your full fee accepted or are you slightly higher than their accepted fee? If your full fee is accepted your fee may be low for your zip code. To continue to grow your practice and maintain your profitability, it is necessary to increase your fees.
3. Using outdated systems and software
You know the term, “if it ain’t broke, don’t fix it?” Well, we happen to disagree!
You might think as a dental professional you don’t have to think about evolving and adapting your software and systems, but it’s pretty crucial to your profitability, productivity, and professional growth as a practice.
Is your dental practice management software, patient communication software, or insurance verification software up to date? Are there software updates that have some great new features to explore with new service offerings?
Do you use your software charting program for clinical notes, perio charts, tooth conditions, treatment plans, etc., or are you using paper charts/files? Is your current internet connection strong and fast or are you using an outdated internet provider?
Your choices make a huge impact on efficiency, which saves time and money. All of these factors can affect your profitability. It can also improve your patient’s dental visit experience.
Always be adapting, evolving, and changing with the times
If everything in your office seems outdated, especially your methods of payment or scheduling system - your patients are going to notice. Many patients, regardless of age, want to feel confident that your tools and techniques are up-to-date with the latest and best treatments in dental care.
Not only does your hardware and software need to be up-to-date, but your team needs to be continuously educated on the insurance industry.
Insurance rules, regulations, and policies are always changing and you can also count on codes changing every single year. Keeping up with this information and always taking time to learn it is going to be what makes or breaks your claims process.
If you choose to ignore the ever-present changes in the insurance industry, you’re going to face more claim denials, and possibly even commit fraud through noncompliance.
Ready to run a profitable dental practice?
When it comes to your dental practice, you deserve to enjoy going to work every day with confidence your systems are promoting your financial health. When you do, you’re better able to provide a great patient experience, help employees make their best impact, and also feel proud to take great care of your patients and increase your revenues.
Avoiding financial mistakes common in private dental practice can help you in reaching your goals. The overarching theme is to always be open to seeing how you can improve your processes, run your reports, evaluate your team’s performance, make necessary changes, assess your fees according to the economic environment, and always evolve your systems.
Dental ClaimSupport has helped dental practices take better control of insurance income through our billing services, but also through our educational platform, Dental Claims Academy. There are training options for your team.
To learn more about how your dental practice can bring in more revenue, visit our Learning Center.
Related Posts
Dental billing resources