We are receiving more and more calls from potential clients. That’s good news, of course, but many of the calls we have been getting are dramatically different from those we have historically received.
  In the past, the great majority of our clients have fit into a certain mold. They tended to be rapidly growing practices that were having difficulty managing the growth and the signs of weak management were starting to become painful. Most typically, our new clients had great case acceptance but they also had relatively high delinquency, an increasing accounts receivable, and cash flow that was 85% to 90% of gross production. Although production and income were both increasing, overhead, workload, and headaches, were increasing disproportionately. They also were often understaffed, with poor job descriptions, little accountability, and no “system” to ensure patients and their accounts were handled in an efficient manner. Basically, stress among the doctor and the staff was increasing and the quality of life within the practice was beginning to suffer. This type of client has been our “bread and butter” since 1980 and we are proud to say that we have been virtually 100% successful in turning the situation around for these practices.
  Today, we are faced with an entirely different type of potential client. Today, the typical doctor calling us is almost always collecting 100% of net production. Delinquency is practically non-existent and the accounts receivable are extremely low relative to production. Many of you might say, “sounds like a good problem to have…why call a consultant?” The problem is that these practices are failing to thrive. Case acceptance rates are down and continuing to decline. New patient flow is not only declining but the quality of the new patient is declining as well. Instead of seeing a healthy (75%) number of new patients coming as referrals from existing patients, that source of patients has markedly declined and the practices are ever more dependent on patients referred from other doctors and from other external sources such as Yellow Pages, direct mail, etc.

The rate of case acceptance on patients from those sources has always been poor. In general dental offices, the number of failed appointments is up and the number of “single-tooth” appointments is at an all time high. Orthodontic case acceptance in many practices is at an all time low and we see an amazing number of finished Limited and Phase I cases that will not come back to get started into Phase II care.
  It is no coincidence at all that we are seeing a solid increase in practices with these problems and it is no coincidence at all that virtually every one of these practices

  had changed their financial policies within the past couple of years to promote and encourage their patients to finance their treatment anyplace except within the practice. When these practices grudgingly do allow their patients to finance within the practice, it is often only under the condition that they have an “auto-debit” arrangement to charge a credit card or to have an outside company debit their bank account, and even then the practice often required restrictive down payments and short term contracts.
  Universally, these practices had forgotten that when you are “selling” an elective service, you have to make it easy for the customer to buy what it is you want to sell! Telling your patients that you do not trust them to write you a check and that their account must be auto-debited does not win you any friends (or referrals!). Trying to convince a patient that financing with OFP, CareCredit, etc., over 24 or 36 months with no down payment and at whatever interest rate these outfits charge is a better deal than financing with you doesn’t fly with 70% to 80% of your patients and the doctors we hear from daily are living proof of the folly of believing that outside financing is an appropriate substitute for carrying your patients’ accounts.
  The bottom line? If your goal is overall, not just clinical, patient care,

and if you want your new and existing patients to accept your diagnoses, refer their friends and relatives to your practice, and stay in your practice, start taking care of their financial needs and concerns just as well as you care for their clinical needs and concerns. There is no substitute for the traditional method of handling patient accounts, as long as you leave a little room for granting credit proportional to risk. Offer third party financing, but only when a patient/parent is incapable of paying in any reasonable manner. Offer auto debit as a service to your patients who wish to use it. Never “require” your patients to use it. Treat your patients not in a manner that you personally might be willing to live with, but rather treat your patients in a manner that you would like to be treated!
  Treatment and Financial Coordinators, who do not have the skills, the focus, or the commitment to negotiate with patients, to “close” the sale, to do the intense follow-up necessary to obtain great case acceptance, and to manage their accounts, will universally reject this line of thinking. It is simply a great deal easier to quote the fee, hand patients/parents a written list of financial options and rules, and to tell the patient to come back if they would like to start into treatment under your terms. Does this approach work? Sometimes. To find out for yourself, ask yourself one question. "Am I reaching my goals related to practice growth and is my recent trend in new patient flow and case acceptance improving at the rate I desire?"
  If you are not happy with the trends in your practice, give us a call. We’ll take great care of you and the result will be excellent and consistent practice growth, along with healthy receivables, cash flow, profitability, and most importantly, a great quality of life!

Transition Counseling

  My friend, Sonny Elliott, has expanded his consulting and I want to tell you about it. Many practices are in transition. Some practices are dramatically growing and are bringing on salaried doctors to help with the growth. That's transition. Other practices are bringing on partners and selling the partner half the practice. That's transition. Some are beginning a "phase out" to retirement and are in the midst of selling their practice to another doctor. That's transition as well.
  The problem is that transitions often create friction. Sometimes it's friction between the new doctor and the "old" staff. Sometimes its friction between the two doctors. Friction comes from all sorts of issues but weak communication skills are the greatest single source. Sonny is an expert in communication and relationship issues. His job is to assist doctors and staff in their ability to communicate effectively with one another and to be able to be in a quality, nurturing, business and personal relationship with one another. He also has a few tricks in his pocket that can truly enhance relationships between parents and their kids, but that's for another article. Consider giving Sonny a call at (808) 889-5275.

Credit Bureau Inquiries

  As a reminder: The primary credit bureau in this country, Equifax, does not report a dental office's inquiry as an inquiry on a patient's credit report. Equifax has taken the position, almost certainly due to an ultra-conservative interpretation of HIPAA rules, that the fact that a doctor has inquired about a patient's credit is confidential and therefore should not be information available to other creditors. So, although the patient will always see your inquiry if they should get a copy of their own credit report, that information is suppressed (hidden) when other creditors obtain the same report. As an added bonus, a doctor's inquiry, since it does not show up on the report, will have no impact on a patient's credit (Beacon, Fair Isaacs, etc.) score!

Dismiss Your Patients!

  I am always surprised when I see one of our orthodontic clients who does not formally dismiss patients from care. I am not speaking of the type of dismissal that is done for financial or clinical cooperation reasons. I am speaking of dismissal done upon the completion of treatment.

  The term "dismissal" has a negative connotation that is undeserved. Consider the following opening statement of a typical "dismissal" letter.

  "Congratulations Mary! With your last retainer check appointment, you have completed both the active and the inactive phases of your orthodontic treatment in our practice. While it is necessary that you continue to wear your retainer, it is no longer necessary to come in for regular retainer check appointments although we will always want to see you if the retainer were to cause any discomfort or other difficulty. We have been proud to have you as a patient and we trust that you will send us one or two of your friends or relatives to replace your place in our practice......."

  The purpose of such letters is to bring to an end, the sometimes "endless" retainer check visits we see that often clutter the daylights out of some of our clients' appointment books. Your diagnosis and treatment plan should include one year of retainer checks at whatever appointment interval is customary for you. At the end of that year, the patient is dismissed with a letter such as the sample above.

  One of the worst policies is to offer your patients free retainer checks for a year and then tell the patient they need to continue coming for retainer check visits but at a fee per visit. It's a great way to kill off any referrals from these patients and ensure your schedule will be permanently cluttered with such non productive and non profitable visits. So start dismissing your patients! It's a safe and profitable policy that also generates a lot of positive PR!

"Change your thoughts and you change the world" Norman Vincent Peale

How's Your Cash Flow Been?

  Most of this country's orthodontists have had terrific cash flow during the past 8-12 months, cash flow that far exceeded any past experience and cash flow that in almost all cases even exceeded production. What has been happening is that far more patients than normal have chosen to pay in full at the beginning of treatment.
  For eight months we were in a tough recession. In a recession, poor people and people who have lost jobs and people who are at serious risk of losing their jobs, reduce their spending, but this is not the source of patients for most orthodontists. The great middle class also changes its spending habits in a recession but not for health care issues and surely not where their children's health and well-being are at stake. This group continues to come to the orthodontist, they just spend differently. During a recession, the most typical group of orthodontic patients/parents wants to avoid debt during weak economic times so they tend to pay in full more than during strong economic times. Since 1980, when I first started consulting, we have tracked three national recessions and a large number of local recessions (ex. Spotted Owls closing the logging industry in Southern Oregon, Caterpillar layoff in Peoria, computer industry melt down in central California, etc.) and in every single case, paids in full as a percentage of total starts dramatically increased.
  This last recession was different! In addition to weak economic times, interest rates were at historic lows. Doctors were offering 5%, 6%, and even 8% discounts to patients who were earning 1% on their savings and patients/parents "lined up" to pay in full.
  A good thing? Many consultants and seminar leaders, especially those "in the pocket" of the third party financing companies or the "auto-debit" group, tell you that the more people who pay you in full the better. However, the economy is rapidly improving (thank-you GB!) and many practices are starting to pay the price in the form of rapidly declining cash flow caused by fewer paids in full. As the FED raises interest rates in the very near future, the down side of having had heavy paids in full will become increasingly apparent. The heavy paids in full have eroded the accounts receivable which are now too small to support strong cash flow, especially when production has declined due to vacation or due to simply having a bad month. The practice has grown to become too heavily dependant on paids in full for its monthly cash flow and, when starts are down or, when the economy changes and paids in full decline, cash flow goes in the tank! The revenue coming from patients making monthly payments has declined to the point that the practice is no longer supportable from that source alone.
  Our clients are goaled to keep paids in full at no more than 20% of total starts. The amount of the discount offered is changed, on a quarterly basis if necessary, in order to maintain paids in full at a level of no less than 10% of starts and no more than 20%. As of the date I write this (June 15, 2004), few of our clients offer discounts greater than 5% and most are at 3% or 4%. A dozen or so are down to 1% and 2%! That is simply because during this economy that's all the discount that is needed to keep paids in full at a healthy level. In turn, the accounts receivable remain at a healthy level and the consistent cash flow coming from insurance and patients making monthly payments sustains the practice through thick (good months) and thin (the weaker months).
  I fully expect that our clients will be raising their discounts as patients/parents become more confident in their economic future and as increases in the interest rates make them want to keep their savings in the bank. That is simply good financial, practice, and patient management, something our clients are very good at!

Accepting Insurance

  We have seen an increase (a small one fortunately) during this past year in the number of doctors who have chosen not to accept assignment of insurance benefits. Some seminar leader or guru of the moment had convinced them that accepting insurance was too much workload or otherwise damaging to the practice well-being. Of course, these same gurus don't teach their clients how to recover the significant loss of case acceptance resulting from refusing to accept assignment!
  Accepting assignment of insurance benefits is a true pain in the behind but doing so is always worth the effort in the form of much improved case acceptance, increased patient satisfaction, increased referrals, etc. Besides, they sell cushions for sore bottoms.
  Accepting assignment does not mean accepting any form of Managed Care (PPO's etc.) and accepting assignment does not mean you need to accept assignment on every patient who has insurance. I would decline, for instance, to accept assignment on a "C" patient with 5 months on the job, even if I called and confirmed the patient had coverage. If you don't know why then you are reading the wrong newsletter!
  Likewise, I would decline to accept assignment of insurance benefits on a second policy in divorce cases when the non-custodial parent's insurance is secondary. I would virtually never accept assignment on a third policy (step-parents?).
  In each of these cases I will estimate coverage and I will be happy to complete insurance documents and bill the insurance companies on my patient's behalf, but I would not accept assignment!
  Accepting assignment of traditional insurance benefits is simply too good a deal to pass up. Just be smart about it and never, ever, let insurance receivables or delinquency get out of control!

Workshop

  For 25 years we have offered a single product - a full consultation with two visits to our client offices, three days in the office and a full year of unlimited follow-up support. That format works just about perfectly and obviously our clients have great results, but over the years I have spoken to lots of doctors I would love to have as a client but who were simply not prepared to have a consultant come into their office and tell them how to run their business, so I have created an alternative!
  You and your administrative staff can come here (to Oregon) and I will tell you how to run your business!!!
  Call us for details (800 845-4766) but basically we are offering a 1½ day (you can fly home the second day or stay and play in Oregon) focused workshop. We promise to provide detailed training and instruction on each of the credit management, administrative management, and case acceptance/TC related issues that concern a dental/orthodontic practice. The workshop includes focused training on issues related to practice growth and case acceptance, along with credit and collection issues, six months of close follow-up, including unlimited telephone support, and comprehensive conference calls with both Paul and Cheri discussing your practice statistics and results to date.
  Our workshop cannot replace the impact and value of a full consultation but it is an excellent second choice that will generate tremendous results for your practice. Give us a call with any questions!

"Character is doing what’s right when nobody’s looking"
J.C. Watts, Jr.