Cash Receipts, Cash Disbursements & Delinquent Patient Accounts
Under the terms of the contract all patients (including those with insurance) are required to make a deposit equivalent to the cost of the last three months of services. If a patient transfers or terminates his/her services, the deposit will be reimbursed. Collections have always been steady and the practice has generated plenty of cash. Dr. Haines recognizes that something as simple as a local business closing its doors could result in a sizable amount of patients having to terminate their treatment. Given the uncertainty of the economy, Dr. Haines (this year) decided for the first time to invest a substantial portion of the cash received in a three month CD at the local bank. Although the return is low, Dr. Haines feels more comfortable knowing that funds have been set aside should higher-than-normal deposit reimbursements be requested. When the CD matures she plans to roll the funds over in to another certificate with a similar term.
Dr. Haines understands that purchasing braces is a substantial financial investment, in order to make high-quality orthodontic treatment affordable she offers a variety of payment options, including the most popular, a zero interest monthly payment plan. Because of its favorable terms, virtually all patients choose this option.
Once a patient is enrolled, monthly billings start with the second month of service. Patients are obligated to pay 1/24th of the cost of the orthodontic treatment each month. Bills are mailed on the first of the month and most (but not all) patients pay when they are in the office for their regular monthly appointment. Although it is not a written policy, Dr. Haines is pretty generous about providing those patients who need it, with some extra time to pay. She understands that orthodontic treatment is elective and is just one of many items competing for the family's disposable income. She has found that a little flexibility with payment terms may make the difference in whether or not a patient finishes treatment. Plus she has her "secret weapon"...her office manager, Paddy.
Paddy is what some people would describe as a "busy body". But Dr. Haines knows better. She admires the way Paddy knows every patient by name and although she seems to spend much of her day "chatting up" the patients she runs a tight ship and Dr. Haines knows that with Paddy in charge, the office will run smoothly. As it turns out Paddy's "reconnaissance" proves incredibly useful when it comes to handling collections. Paddy never ceases to amaze Dr. Haines with her ability to keep everyone's life story straight. She knows who just had a baby, whose husband has been laid off and who is taking out a second mortgage. Despite being a softie at heart, Paddy takes "her" collections very seriously (almost personally) and possesses a keen sense of awareness which allow her to know when it is the right time to push a patient for collection and when they should be allowed a little more time. Once Paddy decides that a particular account should be paid, she is very diligent about following up and can be firm with patients that are "taking advantage of Dr. Haines kindness". It is not unusual for Paddy to drive on her lunch hour to the patient's house to pick up a payment. Although uncollectible accounts are unavoidable, Dr. Haines feels confident that when an account ultimately is written off, that it is truly a lost cause and that nothing more could have be done.