The fundamental truth about your business

I recently read this article about the costs of running a dental practice.  Including owner’s pay in the computation of cost for a dental practice or orthodontic practice is not unique to those practices.  This is the case for any small business.  As we proceed into the financial statements portion of financial accounting week(s), we must begin with the main fundamental truth of running your orthodontic business or dental business: you, as the owner, are almost always the last one to get paid.

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Deposits don't add up? Investigate!

At this point, hopefully, you are the point at which you’ve set up the 4 part process for controlling collections and done your deposit reconciliation.  You’re going through the information and you notice a discrepancy.  On one particular deposit day, your practice management software shows a deposit of $3,500, but the corresponding amount on your bank statement shows $3,000.  What happened?

Here’s a process you can go through to get to the bottom of the problem.  Before continuing, I will state that I am not a certified fraud examiner or other licensed agent, but I have seen quite a number of these situations to know how find out what happens.  You may decide that your problem is severe enough to warrant bringing in an outside expert, but for the others, here are some things you can do before bringing in someone else and incurring some additional cost.

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4 steps to preventing theft and protecting your cash

Following up on yesterday’s deposit reconciliation post, today we present a strategy for a more comprehensive policy to ensure that your funds get from point A (the payor) to point B (your bank account) without interruption.  A system of good collection controls is not paranoia.  It isn’t draconian.  This is simply a strong business practice employed by the best small, medium and large sized businesses.  Obviously, there are a number of ways to protect yourself.  We’ve adapted the processes described below for orthodontic and dental practices and have found excellent success with them over the years.  

The process has 4 parts to it.  While no part has a dollar cost, it may require a time investment for you and/or a trusted member of your staff.  But once this becomes part of the daily routine, you will find that this occupies a lot less of your time than originally thought.  And, with the comfort it provides, engaging these processes should be time well spent.

Let’s get to the process:

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The best defense against theft

You work hard.  You go out of your way to provide your patients with an outstanding experience both in terms of their comfort level and treatment outcome.  You tirelessly effort the addition of new patients to your practice.  You manage the day-to-day processes to keep everything running at the highest level.  You deserve to be paid for your effort.

When you are paid, you need to ensure that the funds make it from the patient/insurance company to your office and into your office’s bank account.  Unfortunately, as we see on occasion, the process of funds going from your office to the bank get interrupted when someone takes money for themselves.  We call that stealing and in at least 49 states, it’s against the law and can decimate your practice.

To avoid having to be the doctor who lost money to this person, you want to have processes in place to protect against potential theft (or simple sloppy handling of funds).  In our next post, we’ll lay out a whole control process, but today, I’d like to focus on an important part of the process: doing a regular deposit reconciliation.  In other words, you need to have a regular process to ensure that collections entered into your practice management system actually make it into the bank.

Regardless of the other processes you may have in the practice, you should be doing this on at least a monthly basis as a check to provide some comfort that cash is flowing to where it should. 

A deposit reconciliation is very simple in theory, and if you stay on top of it, it is very simple to do in practice as well.  Here are the basic steps:

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Marketing Monday: The 4-step marketing plan

Our first post of financial accounting week merges with Marketing Monday to bring you the following presentation on setting a budget.

Let me start this post with an obvious statement: if you have a dental or orthodontic practice, you will almost certainly need to market to attract patients.  And if you are going to market, you need a plan in place.

With the obvious out of the way, here are the 4 steps to developing a useful marketing budget.  The process won’t take very long at all, but has proven to be useful for a wide variety of markets from the size of Brunswick, GA to New York, NY:

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Financial accounting week is coming!

Financial accounting week starts on Monday, August 12.  And yes, financial accounting does sound somewhat boring, but it is a substantial, important aspect of the business side of an orthodontic practice.  Will it be some sexy financial accounting?  Awwwww, ye...Well, no, but we will cover some key topics like:

- Reconciling deposits between your patient accounting software and bank to ensure that no one is walking off with your funds.

- Key factors in preparing financial statements

- Preventing theft

- Financial statement analysis

- And so much more!

(Did the exclamation marks help?)

Case study: Running a successful Medicaid practice

We’ve all heard it before: “Medicaid?  You can’t make any money with Medicaid in most states.  Yeah, Texas, New Mexico, Tennessee and Arkansas make it easy –for now—but most other places, the reimbursement is way too low for a practice to handle the volume and earn a decent profit.”

In a number of ways, that statement rings true.  Your expected fee and monthly payment will be lower.  And since the market for Medicaid is generally very underserved (because of the lower fee and patient compliance issues), volume for practices accepting Medicaid can swell very quickly.  That can create a new list of headaches (some of which we discussed earlier).

But what gets lost in this discussion –and frankly, in the whole Obamacare-reduces-remibursement discussion-- is that solid business and efficiency systems supporting a practice enables you to earn a good living and provide top notch patient care to a patient population crying out for quality care.

For evidence of how this works, we take you out to our case study bureau for a closer examination of one such situation.

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