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Dental Office Collections
A Policy for Handling Patient Financial Issues

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You have to deal with collections to run a successful dental practice. Owning and running a dental practice causes you to be part businessman and part politician. You need to make a profit. Overhead is high. You deserve to be paid for your work. But in this world there are people who don't agree with the way you see it. There are patients who feel that you make enough money anyway and they don't need to pay you, and there are even employees who feel uncomfortable with any policy that is too strict with patients whom they perceive as more needy than you and deserving of a break. In addition to this, you have your sympathetic side, too, and want to help certain people. All of these factors complicate the dental office collections issues. Here's how we dealt with that in my office.

Upon registration, the patients were given two forms: a medical/dental health history form and an account registration form. The account registration form asked such questions as who was responsible for the account, got address and phone number information as well as insurance information from the patient. Then it asked the patients to choose among six payment options.

The first three were under the heading: "I do not have dental insurance." Under that heading they could choose one of three payment options:

  1. I would like to pay by cash or check at the time of service.

  2. I would like to pay by credit card at the time of service.

  3. I would like to apply for an extended payment plan so that I may take up to three years to pay.

Then there were three additional options under the heading: "I have dental insurance.":

  1. I would like to pay my estimated portion by cash or check at the time of service.

  2. I would like to pay my estimated portion by credit card at the time of service.

  3. I would like to apply for an extended payment plan so that I may take up to three years to pay.

While these six options are perceived by patients and staff as being very flexible, they set down a couple of hard and fast rules. First, they communicate very clearly that whether a patient has dental insurance or not, payment issues are going to be addressed. Before we added the second set of three options, patients would often scrawl over the choice of options that the options didn't apply to them because "I have dental insurance."

Second, the presentation of these options indicates that if the patient is not going to pay at the time of service, then they need to apply for the privilege of not paying. Once the idea of an application for credit is introduced, many people will choose to avoid the hassle and just pay. But if they do choose the application option, you give them the credit application and go through the whole procedure. In our office, we came to not finance anything in house because our staff was too tender-hearted to deal with delinquencies. We let the bank or finance company hire the hard-nosed collections people, while we hired the sympathetic compassionate types.

But the most important part of this system is in the follow-up. If a person elects the extended payment plan option, then they need to apply for the credit and be approved before you ever open the appointment book for them. Don't take the application and then say, "Well, it will take a couple of days to get an answer on that, so we'll schedule your appointment for a week from Friday." That doesn't work. What if their credit is denied—is your compassionate, tender-hearted staff going to cancel their appointment? I don't think so. Instead you say, "You said you can get that application back to me tomorrow. Once you bring it in it will only take fifteen minutes to process. We can schedule your appointment then." Oh, as far as the examination appointment, we didn't make a big fuss about paying for that right away. We would ask for the money, but if they tried to slither out of that and procrastinate, we wouldn't get nasty or anything. But we wouldn't proceed with any treatment until it was paid or we had a signed credit deal.

On the other side, for the patients who selected a "pay at the time of service" option, you must constantly reinforce that you are serious about that. We would mark the patient's computer file with a code indicating which option they had chosen. Then, whenever we make an appointment we would let them know that we remembered what they said and we would say something like: "Mrs. Egbert, we see that you have chosen to pay each time by cash or check at the time of service. Would you like an estimate of what your next appointment is going to cost?" You have to do this, or people will try to sneak by. People don't believe forms and signs. Your staff has to verbalize your policy to them because they've seen too many cases where the form or the sign wasn't followed in real practice.

Then there is one more case to deal with: The person who wants the extended payment plan but doesn't pass the credit check. What do you do with these people? Your compassionate tender-hearted assistant overhears their plight and you just know she's watching you to see if you'll be a meanie and turn them away. The staff, if they're outspoken enough, may even gang up on you and beg you to give this poor person credit. We had a hard and fast rule in my office—never let a needy person owe you money. It just doesn't work. It ruins so many great relationships. If they didn't pass the credit check, our policy was that we would never, under any circumstances, grant them credit. Here's what we would do instead:

Let's say your patient needs a root canal and a crown. The tooth is throbbing with pain. He doesn't qualify for any government program. What do you do? Here's what we would do. Let's say the root canal fee is $500, and then the buildup will be another $250 and then $950 for the crown. $1700 total. He flunked the credit check. The treatment coordinator would approach him as if we just might grant them credit. "We're not too sure about granting credit, Mr. Fossum. We've got your application working through the system and we'll hear back shortly. How much down payment do you think you could come up with?" "Oh, I could come up with $175, maybe," he'd say. We're feeling him out here. Maybe it would take another question or two to get a picture of how desperate he is. So, he can come up with $175 toward the $1700. Then the treatment coordinator would come to me, tell me that he flunked the credit check, and ask what I wanted to do. I would ask her to relay the following offer to him: We'd maybe double his best down payment offer and then say, "Tell you what, Mr. Fossum. We don't want you to have this bill hanging over your head. If you can come up with $350 and pay it at the time of service, we'll do the essentials, the root canal and the buildup, and then we'll call it square. Then, when you can afford it, we can do the crown for you."

If, by chance, he absolutely can't make this payment, you can still negotiate with him. But it has to be paid at the time of service. Again, don't have people who are in financial straits owing you money. It ruins their day and ruins yours. They don't come back in for checkups or follow-up care. Too often it just doesn't work. Life is just too short to monkey with those kinds of sure-to-fail arrangements. But with a deal like this, most patients would go out, maybe he'd ask his father-in-law for help. He's getting $750 worth of work for $350—you'd be surprised how resourceful people can be to come up with the money, as long as the amount isn't totally out of reach, knowing they'll have no further payments hanging over their head, especially if they're in pain. And they'll be grateful, because, after all, you are being truly compassionate.

Dentists who grant credit to non-credit-worthy individuals aren't compassionate in my mind, they're just soft. If you're going to be compassionate, be compassionate. Make the transaction clean, and then move on. Decide what it is that absolutely has to be done to keep this person out of serious trouble, and then do that for the fee they can afford. In this case, you're getting him out of pain and protecting the tooth somewhat with a buildup. The crown isn't as urgent—that can wait until next year when hopefully he can afford it or he has dental insurance or something.

So this is what we would do. If a person flunked the credit check, I, the dentist, would decide what was essential for this person to have to do right away. Then I would do it for whatever they could afford, and I would accept that as payment in full. It worked. It made friends. My staff felt comfortable. My conscience didn't bother me. The patient was appreciative. It helped turn many of them into good patients. You know what happens when you give credit to someone who can't afford to pay—you run into them on the street and they look the other way or go to the other side of the street. They miss their recall appointment. Whatever. This system is much better. If they need charity, then give them the charity. Don't have a soft payment policy and mistake that for charity because it isn't.

Have a strict, clean, and kind financial policy. Life is too short to do anything different.

—David A. Hall, D.D.S.

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