Winter 2000 Newsletter
Five Steps to Enhance Case Acceptance • Muffin Runs? • Third Party Financing • Handling Divorced Parents
ALL STARS! • Referral Integrity • THATLOOK.COM • Watch Your Receivables
Five Steps To Enhance Case Acceptance
Zuelke & Associates, Inc. teaches credit management, the science of using the credit granting process to improve case acceptance and productivity while also maintaining total control of patients and their accounts. By maintaining control over patients and their accounts, you eliminate delinquency, have fewer emergencies and missed appointments, and have a higher rate of patients referred from existing patients. Each results, indirectly, in better case acceptance and productivity. However, the very best case acceptance comes when a practice attracts quality (good dental IQ) patients and has learned how patients should flow through the office, and when, where, and how to speak to their patients about the treatment plan and the fee for that treatment.
Many doctors believe that the answer to increased productivity lies in the ability to generate ever increasing numbers of new patient exams. However, doctors who understand where net income comes from have learned that strong production (great case acceptance) on a relatively small number of new patients is much more satisfying, and profitable, than is equal production on a large number of new patient exams. Practices do not generate high net by having lots of patients. They do so by being productive on the patients they have.
Because case acceptance and productivity has been our focus since our first client was seen in 1980 I have been able to identify many procedures that contribute to great case acceptance. Here are five that are significant:
Only Administrative Staff Should Quote Fees Or Discuss Finances – During the 70’s and early 80’s it was common for doctors to quote their own fees but orthodontic case acceptance back then was in the low 50% range and in general dentistry was even worse. We have not seen a doctor quoting fees in a few years although we have heard stories that some still do. The doctor’s responsibility lies in the diagnosis and treatment planning. Leave the fee quoting and financial discussions to the Financial/Treatment Coordinator.
Quote Fees And Negotiate Financial Arrangements In A Consult Room – If you don’t have a consult room, do whatever it takes to build one! I have always been amazed at the disappointment of doctors and their staff when their patients choose not to schedule a $2,400 three unit bridge or a $2,500 Palatal Expander, when the conversation about the fee and a financial arrangement was attempted in an operatory or at the front desk. Use a consult room, all the time!
Accept Assignment of Insurance – This is a "no-brainer" but we continue to see doctors who seem to believe that insurance is a scheme from Hades and that somehow their practice will be damaged if they accept assignment. In other cases, the doctor is inclined to accept insurance but is a "prisoner" of the staff who have "refused" to deal with insurance, arguing that the workload would be crushing, that additional staff must be hired, and that it is impossible to accurately determine insurance coverage. In fact, almost every practice we have ever seen and every practice that we have ever heard of that does not accept assignment of insurance benefits is struggling with weak case acceptance and poor new patient flow. Less than 1% of our clients accept any form of Managed Care (PPO’s etc.), yet all accept assignment of insurance benefits. Yes, there is a bit more workload (ten hours a week in an $80,000 a month office) but the increase in revenue, the decrease in receivables, the increase in patient satisfaction, in referral rates, and in the rate of case acceptance, are substantial. It is relatively easy to accurately estimate insurance benefits, and since insurance filing and follow-up is, with electronic claims, becoming less and less of a burden, there is no good argument against accepting assignment.
Eliminate Formal Consultation Appointments – Requiring your patient to have a formal consult is like trying to teach a pig to sing – it simply annoys the pig! Consults are rarely necessary and your staff will confirm that your patients/parents are often disappointed if they do not learn the fee for their treatment plan, and how they can pay that fee, at their first appointment. Consults should be reserved for analytical patients, patients with extremely complex clinical needs, and any other patient your Treatment Coordinator believes would need a consult in order to say "yes" to treatment. Basically, that should be no more than about 5% of your patients.
Eliminate Financial "Option" Sheets – "Option" sheets have, once again, become extremely popular as a method of presenting finances to patients. We saw them often until the late 80’s and now, with the help of some marketing from third party finance companies, they are back in vogue. Typically the patient is presented the fee for the diagnosed treatment and then handed a sheet of paper with three or four financial options. The first option is often to finance the balance outside the office through one of the third party finance companies. The usual second option is to pay in full with a small discount. The third option is to make relatively short-term monthly payments to the practice, normally with a huge down payment. The fourth option, if present, is to pay with a credit card. Many Financial and Treatment Coordinators love Option sheets because they feel awkward discussing financial arrangements. With the Option sheets they are no longer required to negotiate financial arrangements with their patients. The patient/responsible party is simply presented the Option sheet and invited to go home and call once they have decided which option they like the best. The Option sheet has also become the procedure of choice when the Treatment Coordinator has run out of time after the clinical exam. In this situation, she commonly sacrifices a quality financial discussion and hands out an Option sheet, leaving the real issue, improper scheduling and/or improper use of time, unresolved. In both cases, all too often, the patient is never seen or heard from again!
The use of Option sheets has substantial negative impact on your case acceptance. Eliminate the Option sheets! Negotiate, with flexibility, financial arrangements with your patients, and you will see an immediate and substantial increase in the rate of case acceptance and your monthly production and income.
"Be the change you wish to see in the world."
-Gandhi
Have you been to a seminar, or read an article perhaps,
promoting new programs to market to your referring doctors? Many doctors,
including many of our own clients, have allowed "Muffin Runs,"
flowery thank you letters, big gifts at Christmas, etc., to be the core of
their marketing efforts. Yet consider this question: Would you rather see
a new patient who was referred by one of your existing patients or a new
patient referred by a dentist? Both would be welcome, but which would you
prefer?
Pay attention to your own results! We have new patient exam and case start
numbers from more than 500 orthodontic practices going back twenty years.
We study this stuff! We have learned that 80% to 85% of new patients
referred by other patients are in the "A" risk category. Only
60% to 65% of patients referred by general and pediatric dentists are in
the "A" category, and then only if you have quality referring
dentists!
The rate of case acceptance by patients referred by other patients is a
full ten to fifteen points greater than the rate of case
acceptance by patients referred by general and pediatric dentists. Why
then, with this history, do orthodontists often spend the lion’s share
of their marketing dollars on catering to their dental referral sources?
I recommend continued marketing to dentists but your annual marketing
budget should be 80% dedicated to internal and external marketing to your
patients and 20% dedicated to dentist referral sources, and stay out
of the Yellow Pages and any other form of "retail" advertising!
There is a financing company on the scene, CareCredit, that appears to be offering better overall terms to practices than OFP, NorWest Finance, and other plans we have reviewed. One feature of the CareCredit plan that I especially like is that your Treatment Coordinator or Financial Coordinator can telephone CareCredit directly, while the patient is in the office, and get immediate (3-5 minute) approval for the contract. This can also be done over the Internet if desired. They also offer 12 month interest free financing to patients, but at a higher discount to the practice. CareCredit is a solid company with 14 years experience in dental financing. As with OFP et al, we don’t want you to substitute internal financing on your good "A" patients with third party financing, but CareCredit deserves a look.
I wrote on this subject in this newsletter four years ago but since divorce related issues continue to reside at the top of the "most often asked" list, I thought an updated reprint is in order. First, understand that there is no single issue that creates more delinquency, more patient upset, and more lost patient relationships than divorce. Granted, handling the issue of divorce as I recommend is uncomfortable, but that discomfort pales in comparison to the discomfort caused when you have no-shows and cancels, moms waiting in the parking lot for their child, "deadbeat dads" you are trying to collect from, etc. Follow the five divorce "rules" when discussing your case fee and financial arrangement and divorce related problems will become a relic of your past!
1. The custodial parent is always legally responsible for the entire case fee, without regard to a divorce decree or any separate agreement that may exist with the non-custodial spouse.
2. There is no situation where splitting the case fee, and/or making two financial arrangements for one case fee, is acceptable or appropriate.
3. Less than 1% of American divorces result in true joint custody, but even if presented with such a case, only one of the two jointly custodial parents will be allowed to be accountable for the fee. That is the only person who signs a contract and that is the only person to receive statements. Collection activity, if necessary, will be directed to that person only.
4. Statements are never sent to non-custodial parents and collection activity is never conducted with non-custodial parents.
5. You must not obtain credit reports on step-parents without their direct permission. You must not obtain credit reports on non-custodial parents at any time, with or without their permission.
Zuelke & Associates’ clients tend to be in the top 10% of their field with respect to production, income, delinquency control and, we believe, in the quality of care provided to their patients. The "All Stars" are those whose individual practice statistics (delinquency, for instance) are not necessarily the lowest or "the best," but whose overall practice performance has the most perfect balance. In each of these practices, every statistic we track is in great shape and among the top 10% of all our clients. To be among the top 10% of the top 10% is quite an accomplishment! Congratulations!
Randall K. Bennett, DDS MS
David J. Birdwell, DDS
William L. Chambers, DDS, MS
Jerome S. Cohen, DMD & Steven H. Schwartz, DMD
Gene Dellinger, DDS, MSD & Co. Ft.
John I. Esterkyn, DDS, MS
Stephen D. Hanks, DMD, MS
Drs. Paul Hanrahan, Charles Spry, & Geoff Stanton
John F. Harrington, DMD
Mark W. Joiner, DDS, MS
Greg J. Jorgensen, DMD, MS
Scott T. McPherson, DDS
David W. McSurdy, Jr., DMD
Richard Meyer, DDS
Roger C. Schmidt, DDS & Pamela A. Schmidt, DDS
Gerald P. Tadej, DDS, MS
Robert J. Weber, DDS
Edward R. Zanca, DMD
Oklahoma City, OK
Asheville, NC
Budd Lake, NJ
Wayne, IN
Antioch, CA
Las Vegas, NV
Townsville, Australia
South Bend, IN
Santa Cruz, CA
Rio Rancho, NM
Peachtree, GA
Collegeville, PA
Rapid City, SD
Rockford, IL
Bakersfield, CA
Wheaton, IL
Camden, ME
If you would like more information on how you can become a Zuelke & Associates, success story, call us at 800-845-4766!
When you seek the counsel and advice of people and organizations you respect, wouldn’t it be nice to know that the recommendation you receive is based exclusively on their firm belief the product or service they are recommending is the best there is? Wouldn’t it be nice if the AAO and the ADA "endorsed" products that have been thoroughly investigated and had the seal of approval, untainted by referral or endorsement fees paid? Isn’t it reasonable to expect that "Independent studies" purporting to show the benefit of a product, were truly independent? Wouldn’t it be nice if doctors could count on respected seminar leaders, consultants, etc., to have the integrity to only recommend products they have verified to be the best, instead of recommending products and services based on the amount of the referral fee they are paid or whether or not their seminars are "underwritten" by the company being referred?
The next time a seminar leader, an accountant, a consultant, the head of a "super" study club, or even your own professional association, recommends a product, a service, another consultant, etc., to you, take a moment and ask them first, "Is there any financial relationship whatsoever between your organization and the product or service you have recommended?" When you hear responses such as "they contribute to our operating budget," "they assist in our marketing expenses," "they help fund our seminar," etc., then you know the true reason why certain products are being recommended.
THATSMILE
Watch for (or watch out for!) this company just starting to market to our clients. Few facts are available so far but for a substantial monthly fee, the company promises to generate large patient quantities for the practice. The problem is poor patient quality plus the practice agrees to finance patients in a fashion similar to OCA (ex. $300 down and $100 per month). We do not like what we have seen and heard so far so do not sign up without checking with us first!
We continue to find both orthodontic and general dental offices with receivables that are very low relative to the average monthly production in the practice. "Very low" is less than 1.3 in a general dental office and less than 5.0 in an orthodontic office. In such cases, the practices become overly dependent on paids-in-full, on down payments, and other "counter" collections in order to collect well. During months of low productivity, cash flow crashes no matter what the counter collections are!
Healthy receivables happen as a result of balanced financial arrangements. Just enough paids-in-full, just the right average down payment, and just the right average contract length for patients making financial arrangements, will keep the receivables healthy and, in turn, those healthy receivables will provide healthy and consistent cash flow. Just the opposite of what you have been taught in the past perhaps, but too many paids-in-full and an average down payment that is too high does a great deal more damage than good!
We wish you a healthy, happy, and prosperous New Year!
"When you come to the edge of all the light you have, and must take a step into the darkness of the unknown, either there will be something solid for you to stand on, or, you will fly." Patrick Overton