Practical Tips from Shawna Aho, CEO of STAC Bizness Solutions

Running a dental practice involves more than just providing excellent patient care. It also requires solid financial management. One of the most critical aspects of financial management is cash flow. Proper cash flow management ensures that you can cover expenses, invest in new technologies, and ultimately, provide the best possible care to your patients.

Unique Cash Flow Challenges for Dental Practices

Dental practices face several unique challenges when it comes to managing cash flow. Unlike many other businesses, dental practices often deal with a lag in receiving payments. This delay occurs because insurance companies can take weeks, sometimes months, to process claims. Additionally, patient payments can be unpredictable, as they may not always have the funds to pay their portion of the bill immediately.

Another challenge is the high cost of dental equipment and supplies. Dentists need to invest in high-quality tools and materials to provide effective treatment, and these costs can add up quickly. In addition, regular maintenance and updates to equipment are necessary, leading to substantial periodic expenses.

For these reasons, the most successful practices give cashflow management the extra attention it deserves!

Strategies for Better Cash Flow Management

1. Establish Patient Payment Policies Up-Front:

Before a patient comes in for their first visit, it is advisable to ensure that schedulers establish expectations, which include:

• The Payment methods that will be accepted such as credit cards and online payments
• How to bill the treatments that the patient will pay out of their pocket if insurance won’t cover the full claims.
• Patient’s responsibility to confirm the extent their insurance provider will cover for simple preventive examinations and additional services that may be necessary during visits such as X-rays

When patients are held responsible for the treatment cost before entering the office, you can reduce the amount of the account(s) that you ultimately turn over to collections, have to charge off entirely or become the past due.

2. Implement a Robust Billing System:

A well-organized billing system can significantly reduce the lag time in receiving payments. Ensure that your practice submits claims to insurance companies promptly and follows up regularly. Implementing an automated billing system can help streamline this process, making it easier to track outstanding claims and payments.

3. Offer Flexible Payment Plans:

Providing patients with flexible payment options can encourage timely payments. Consider offering installment plans or financing options through third-party providers. This approach can make dental care more accessible to patients while ensuring a steady cash flow for your practice.

4. Maintain a Cash Reserve:

Setting aside a cash reserve can help your practice weather periods of slow payment. This reserve can cover essential expenses like payroll, rent, and supplies, ensuring that your practice continues to operate smoothly even when cash flow is tight.

5. Monitor Expenses Closely:

Regularly reviewing your expenses can help identify areas where you can cut costs without compromising the quality of care. Negotiate with suppliers for better rates and consider bulk purchasing for frequently used items. Keeping overhead costs under control is essential for maintaining a healthy cash flow.

6. Leverage Industry Expertise

It is advisable to engage a certified and professional bookkeeper. If you are currently not working with a bookkeeper specializing in dental industry practice, you’re missing out on an opportunity to learn how to optimize your processes.

Also, prepare a regular cadence on cash flow reports. Furthermore, outline the major factors that are the most important contributors to challenges of cash flow. This will enable you to be ready to course-correct and regain cash flow on track.  You may want to consider:

• Optimizing scheduling process to minimize patient no-shows, and improve the amount of time it takes to schedule patients, handle check-in, and complete cure treatment.
• Cross training of full-time staff to manage other tasks outside their primary duties.

Wrap-Up…

Effective cash flow management is vital for the success of any dental practice. By addressing the unique challenges faced by dental practices and implementing strategic measures, you can ensure a stable financial foundation. This stability not only supports the day-to-day operations of your practice but also enables you to invest in new technologies and provide high-quality care to your patients. Prioritizing cash flow management will ultimately contribute to the long-term growth and success of your dental practice.

If you’d like some strategic advice/recommendations or need ongoing support to measure and optimize your cashflow, we’re here to help!  Feel free to call us at 844-424-9637 or email us at info@stacbiz.com.