Cash Flow should be a River of Regular Revenue

Practices cannot survive without a regular healthy cash flow yet many practices seem to think that practice collections happen after statements are sent out or after insurance companies send the bulk checks.

For most practices, an ideal collection ratio is 98 percent of adjusted production, with 85 to 90 percent of payments received within 60 days. The standard benchmark for accounts receivable should be no more than a month’s production.  

The number of past-due bills can be greatly reduced by implementing a formal financial policy. The policy should clearly outline the patient’s financial obligations and indicate whether and how often billing statements will be sent, whether the practice makes collection calls, and whether past-due bills will be turned over to a collection agency.

 Essentially you should be collecting everything that is produced minus contractual adjustments from insurance companies.

Reduction in cash flow also affects the recall or continuing care system.  When patients owe you money they are less likely or not likely to return for their regular care until the bill is paid.  If you have high accounts receivable and send out 100 to 200 plus statements your hygiene schedules will be wrought with open time and last-minute cancellations when the pre- scheduled patient realizes they still owe you money from last time.

Collecting at the time of service plus sound financial agreements will increase cash flow and patient compliance to treatment and to recall appointments.