Winter Spring 1999 Newsletter

Flex Plans- Are They Good For Your Practice • New Patients- Quality or Quantity 

Telephone Collection Tape Available • What Does it Mean to be On the Leading Edge? • MSO Update 

 Doom and Gloom? • Traveling Man • Hiring a Consultant • Third Party Financing Update  

  Lectures and Workshops • A Great Consultant • Best Performance by a New Client • ALL STARS

Five years ago, few people had ever heard of a flex or a cafeteria plan. Today, up to 25% of "insured" patients have such plans and we see more and more instances where patients have traditional insurance as well as a flex plan. While there are variations on the theme, a flex or cafeteria plan allows employees to dedicate a pre-determined portion of their paychecks to be set aside for the purpose of paying for health care. Once the employee (patient) provides proof of payment of a health care bill to the employer, the dedicated funds

are paid to the employee without federal or state tax deductions. It behooves doctors and their staff members to learn all they can about how these plans work and, more importantly, to learn how they can use the plans to help their patients accept a higher level of care.

Flex/Cafeteria plans have caused some of our doctors and their administrative staff to become really creative in filing claims and assisting their patients in dealing with these plans. Unfortunately, a few offices have crossed the line from simply being creative and helpful to committing out and out tax fraud.

Consider these telephone calls that have come into our office support program during the past couple of months:

"Our Phase II case fee is $5,000 but the patient gets a 20% ($1,000) discount for having been in Phase I. The patient has asked us to leave the fee at $5,000 so he can file a claim for the full case fee with his flex plan. Then, when the entire $5,000 account balance is paid off, the patient wants us to write him a $1,000 refund check. Will we get in trouble if we do that?"

"The patient has written us a post-dated check for $2,100 for payment in full for a bridge we have already done. She has asked us for a receipt showing the payment so she can take it to her flex plan administrator for payment. When she is "reimbursed" by the flex plan, she will make a deposit and cover our check. Since this is one of our best long-term patients, the doctor said to go ahead and give her the receipt. Should we?"

"We started orthodontic treatment right after Christmas but we have found out the patient’s flex plan won’t pay in 1999 for treatment started in 1998. Since it is only a couple of days difference, can’t we just tell the flex plan that treatment was started in January?"

In each of these cases, the practice has assisted, or is being asked to assist, the patient in committing tax fraud!

Remember that flex plans are federally inspired mechanisms to allow people to pay for health care with before tax dollars. Any "manipulation" that is done to get patients flex benefits they would otherwise not be entitled to is actually assisting them in defrauding the US Government. This is not simple insurance fraud. The IRS is not likely to slap your hands, send you a warning letter, or give you a small fine, which is often the case with first time insurance "billing errors." Even if the doctor were not convicted of a crime, how would you like the headlines in your local newspaper to say, "Local doctor under investigation for assisting his patients to commit tax fraud!" This is a far-fetched scenario but some of the flex/cafeteria plan manipulation I have seen recently makes that scenario all too possible.

Flex plans are a terrific benefit for patients and for dentists and there is every reason to believe there will be more employers offering such plans in the future. You will have far better case acceptance if you agree to work with your patients to identify the amount of flex coverage they have available, exactly how that coverage will be paid, and whether or not the benefit will be paid directly to the practice. With that information in hand, it is perfectly reasonable to accept assignment of a flex plan benefit just as you would with traditional insurance, assuming you are able to confirm those three issues.

"Welcome the flex plans as a true benefit…"

Our overall recommendation is to welcome the flex plans as a true benefit to your patients and to your practice, to learn all you can about them, and never, never, fudge the rules, never change dates, and never give receipts for money not actually paid. Play it straight with these plans and you will do very well with them.

I continue to be amazed at the number of doctors, including a few of our own clients, who are caught up in the new patient numbers game. It often seems that these doctors use the quantity of new patient exams as their measurement for success or achievement. These same doctors, again believing that high numbers of new patient exams is the key to success, pay exorbitant amounts of money for a Yellow Page ad, for Direct Mail marketing, "1-800" marketing, Discounts and Coupon marketing, etc., all of which are designed to do one thing only – attract large numbers of new bodies into the practice. Some doctors hire Marketing Consultants but even they tend to teach marketing simply to get more patients into the practice. Is simply getting "more patients" into the practice the answer?

Many of the efforts to attract new patients do pay off in the form of significantly greater new patient flow, but doctors are often left unsatisfied, with higher overhead, less net, and a reduced quality of life to show for their marketing efforts.

The problem is that little consideration is given to the quality of patients attracted by these forms of marketing. With eighteen years of experience in identifying the quality of new patients and the sources of those new patients, we have also been able to identify the sources of the

weakest patients. We know, for instance, that the sources of new patients I referred to in the previous paragraph attract overwhelmingly the weakest "B" and "C" patients. Yellow Pages and "1-800" marketing, for instance, attract 75% "B" and "C" patients.

At one time we thought that Direct Mail marketing, tightly focused and directed toward select groups of people, homeowners above a certain income level perhaps, might be successful. Unfortunately, that has turned out not to be the case! We have recently had the opportunity to review the results of some selected practices who have utilized highly focused Direct Mail. The quality of patients was little better than with the other forms of "retail" marketing.

Even with the knowledge that a high number of the new patients will be in the high risk category, some doctors have chosen to engage in this type of marketing. The quality of their patients is not an issue to them. This article is not written for those practices.

Other doctors market in this manner with the thought, "I am willing to

put up with larger numbers of "B" and "C" patients in order to get the "A" patients." Some years ago, my staff and I thought that philosophy may have some merit. That too turned out not to be the case. For instance although tightly focused Direct Mail marketing does attract about 50% "A" patients, the dental "IQ" of those "A" patients is so weak that the rate of case acceptance is abysmal. Overall, our investigation has found that the case acceptance rate on all new patients who came from retail marketing is about 10% to 20%. Basically, that means that you have used up a large amount of your marketing budget to fill your valuable new patient slots with patients who have a 80% to 90% chance of saying "no" to your diagnoses and treatment plan.

What’s the answer? Just look at your own history. What is the rate of case acceptance in your practice among patients who have been referred by an existing patient? Zuelke & Associates recommends that not one dollar be spent on Yellow Page, Direct Mail, or any other form of "retail" marketing until you can truly say, "I have exhausted the possibilities for internal marketing to my own existing and past patients." In eighteen years consulting, I have yet to see the first practice that could honestly make that statement.

Telephone Collection Tape Available

We have produced a 45-minute audio tape that covers the details of effective telephone collection techniques. This cassette tape has sample phone calls and presents sample situations where appropriate verbal skills are used to collect past-due accounts. The tape teaches a highly effective technique of telephone collection activity that you have probably not been exposed to in the past. It is an excellent training aid for your Financial Coordinator or any staff person responsible for delinquency control. Please call us at (800) 845-4766 to order your tape and instruction manual at $29.95 each.

If you produce $1,000,000 a year or more, is that the leading edge? If you use the finest crown material or the newest in orthodontic brackets, is that being on the leading edge? If you have a spectacularly designed 4,000 square foot office, is that being on the leading edge? If you have three satellite offices and four other doctors working for you, are you on the leading edge?

Depending on your point of view, I suppose that each of these could be part of being on the leading edge of the profession. It’s tough to produce $1,000,000 a year if you are not taking good care of your patients and a personal commitment to using the finest materials is surely part of being on the leading edge. However, at Zuelke & Associates, Inc. our goals are a bit different. We have about 700 clients in 49 states. Their monthly production ranges from a low of $24,000

per month to a little over $200,000 per month. We have clients with 900 square foot offices producing and collecting more than $100,000 a month. The longer I am in this business, however, the more convinced I become that productivity, size of practice, etc., has little impact on quality of life within the practice.

Consider this comment from a recent client. "I am not just interested in doing well with respect to production, cash flow, delinquency control, etc. My intent is that my practice be on the leading edge of health care in this country. Although I am interested in reaching my potential for production, etc., I am far more interested in the quality of life within my practice – how much the staff and I enjoy our day in the office – than I am simply producing or collecting more."

This doctor's commitment to quality extended beyond the normal, more visual, trappings of the quality practice such as big production, a beautiful office, and quality clinical care.

All too often we accept mediocrity or, at the very least, something less than true excellence as being acceptable in our practices. We accept mediocrity or less than true excellence quite often because operating on the leading edge is hard work. It's much easier to operate in our "Comfort Zone," where we may have acceptable performance but rarely impeccable performance.

Our experience has shown that, while it may be a difficult job and a lot of hard work to get a dental practice to the state where it is operating on the leading edge, once you have reached that level it becomes far less difficult to sustain. This is because, along the way, you have eliminated many of the negative influences that have restricted your ability to operate on the leading edge in the past.

These are the goals we expect each and every one of our clients, no matter what specialty, to reach.

A noted and well respected consultant recently sent his clients a three page, "SPECIAL APPROACHING YEAR-END BULLETIN." The heading of this bulletin was "BEWARE OF 1999" and it went on to say, "…..the most optimistic period of my lifetime is about to end." The three pages ended with the statement, "This is NOT a happy outlook!" (The emphasis and caps are his).

This consultant was speaking of a coming recession and the hardships such a recession will bring on his clients. He should know better!

He has been around this profession longer than I have and he has watched the profession, and his clients in particular, continue to prosper through each of at least the last three recessions.

Will there be a recession in 1999? Maybe. Will we have a recession again in the relatively near future? Of course we will! That is the nature of our financial system and our economy. Rather than be doom and gloom about the future, I choose to be aggressive and pragmatic. In a recession, patients are less certain about their financial futures. They tend to be less willing to spend money, to get into debt, to take financial risks, etc. The number one recommendation to survive the recession, in this bulletin I am referring to, was to "move rapidly into the use of third party financing." You all know my opinion on aggressive use of third party financing, which is presented elsewhere in this newsletter.

In a recession, when patients are much less willing to go into debt, they will be far more willing to finance in your office, which is a more social and more personal environment, than they will to finance at a "finance company." Especially when the finance company has a healthy interest rate and is many miles away and with no personal connection to your practice.

This is not rocket science! Eventually a recession will come again but with common sense, granting credit appropriate to the risk, a liberal financial policy, and great patient care, any recession will have little identifiable negative impact on your practice.

There is still not a shred of evidence that the retail, commercial dental and orthodontic offices, many of which are MSO’s, are damaging the productivity, new patient flow, case acceptance, etc., of the traditional practices in the same towns. Quite the contrary in fact. The aggressive marketing of these organizations is serving to educate the public of the availability and the affordability of dentistry and orthodontics. Just as you and I, and your staff members, are unlikely to choose an advertising physician, so also are the great majority of potential dental and orthodontic patients unwilling to choose an advertising dentist or orthodontist. Yes you will lose a few patients to MSO’s, but consider the quality of most of the lost patients and you will realize the good news that fact presents.

Paul and his wife Betty love to travel and they have taken Zuelke & Associates’ clients on a number of trips to locations all over the world. Last spring, they organized a trip and served as escorts for ten couples to the lush and beautiful jungles of Costa Rica. Other adventures have been rafting in the Hell’s Canyon wilderness of Idaho and fishing trips to Canada and Alaska.

A few of the ways Paul and Betty like to spend their time off are scuba diving, underwater photography, and bungy jumping from unusual locations.

This September, they will lead a small group on a tour of ancient castles in Ireland.

Hiring a Consultant

You have made a decision to hire a consultant. What type of consultant depends, of course, on what practice issue you want to get handled. Whomever you hire, there are four promises that a consultant needs to make to you, and to deliver on, if you are going to get your money’s worth!

Promise number one: To teach you and your staff the specific nuts and bolts that will allow you to get the results you want.

Promise number two: To identify any and all barriers, physical barriers, staffing and job description barriers, attitude and commitment barriers, etc., in place in the practice that may prevent the effective and timely implementation of what has been taught.

Promise number three: To provide a proper level of motivation, of encouragement, or even a "foot in the fanny" to get you to exit your comfort zone and overcome those barriers.

Promise number four: To provide an adequate level of long term support so clients can continue to get answers to questions and learn how to resolve the problems that come up after the consultant has left, as the practice implements the new systems and procedures.

Most doctors who have hired consultants will agree that the final two are the most important and significant to the ultimate success of the consultation. Next time you are checking a consultant’s references be certain that each of these four promises have been made and kept.

Third Party Financing Update

Nothing much has changed here. The bad news is that OFP, Ortholine, NorWest Finance, Care Card, etc., are continuing their aggressive and, from my perspective, misleading advertising promoting the benefits of eliminating your in-office financing program. The good news is that these companies are buying a great many weak ("B" and "C") patients. These are patients that a reasonable in-office financing program would not be able to finance, so being able to send such patients to a third party is of tremendous benefit to health care practices.

However, sending your quality "A" type patients to these companies is a mistake. True, you will get that particular procedure or case financed, but far more often than you will be willing to accept, you will not see these patients back in your practice, nor will you see siblings or other family members or referrals from these patients. The "in office" financing of dental and orthodontic case fees is a key part of the patient experience. Don’t let slick marketing confuse you on this issue.

Paul Zuelke is available for both half and full-day lectures for your study groups and local, state or national meetings. Paul is an exceptional speaker and brings his material to life in an explicitly informative, entertaining way. He is also available for one or two day, limited attendance workshops for Doctors and their administrative staff. For more information, please call us at (800) 845-4766.

My friend, Sharon Tiger, PhD, is a noted consultant in the general dental field. She focuses on effective communication skills, patient relationships, team building, scheduling the "perfect day," goal setting, and creating successful partnerships. She gets great results and I strongly recommend her. Her telephone number is (972) 250-2228.

Dr. Greg Jorgensen, Rio Rancho, NM

Financial Coordinator: Lynette Í Treatment Coordinator: Laurie

Initial Zuelke & Associates consultation 6/16/98

Profile of results for six-month period ending 12/31/98 compared to the same six-month period ending 12/31/97.

Average Monthly Production increased 46%

Average Monthly Income increased 38%

Accounts Receivable declined from 6.5 to 5.1 months of production

Delinquency reduced by 69%

Case Acceptance Rate increased from 54% to 76%

Only part of these results were accomplished directly as a result of Zuelke & Associates recommendations. Dr. Jorgensen also hired Karen Moawad to install Dr. Time Scheduling. Here is a great example of the results that are possible for a committed doctor, with a committed staff, who is willing to be taught, to learn, and to implement new ideas.

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. This quarter’s "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!

Jay D. Marriage, DDS

John N. Briles, DMD & Gerald Fujii, DMD 

Roger Schmidt, DDS & Pamela Schmidt, DDS 

William L. Chambers, DDS, MS 

Robert W. Kidd, III, DMD 

Alton C. Bishop, DDS, MSD 

Kathy A. Arkwell, DMD & John Schuler, DDS 

Robert J. Weber, DDS 

John A. Gerling, DDS, MSD 

Howard M. Freedman, DDS & Stephen L. Danchok, DMD 

Minden, NV

Portland, OR

Rockford, IL

Asheville, NC

Dover, DE

Bedford, TX

Peoria, IL

Wheaton, IL

McAllen, TX

Canby, OR