Is your practice collecting at 100%? If not, why?
The first step in determining your collection percentage is to divide your payments/collections by your adjusted production. The result should be 100%. A possible cause of a low collection percentage are poor collection systems.
You can improve your collection percentage by:
- Ensuring the staff is clearly communicating financial agreements with your patients.
- Following up on outstanding insurance claims.
- Reviewing the accounts receivable aging reports daily or weekly.
- Using third party collection systems such as Care Credit, etc.
Next you should divide your payments/collections by your gross production. This gives you an idea of the percentage of work that is not collectable due to insurance adjustments, courtesy discounts, etc. According to the ADA, the industry average is 93%. It can be eye opening when you look at the level of adjustments the practice provides each year. In some cases it may be enough to fully fund a retirement plan!