The Fuel of Your Practice: Collections = Profits + Expenses

Episode #326 with Dr. Ann Marie Gorczyca

If your collections were a bathtub, how much of it are you letting down the drain every month? You may be surprised once you find out! And to help you minimize your expenses and maximize your profits, Kirk Behrendt brings back Dr. Ann Marie Gorczyca with tricks and advice for collecting payments and getting your accounts receivables to zero. It’s possible with just a few changes to your practice! For more, listen to Episode 328 of The Best Practices Show!

Main Takeaways:

Collections are the engine of your office. Collect what is owed to you!

Don't keep a financial coordinator who doesn't have the ability to collect.  

Minimize your expenses, but don't skimp on value or quality. Cut expenses by cutting waste!

Look through your own mail. You may find errors on invoices.

Use the “magic pink stickers” from SmartPractice.

Don't wait 30 days until your patients’ payments are past due. Call them at 21 days.

Send an invoice to overdue patients every week until it is paid.

Have the doctor sign the invoice. It works like magic!

Electronic fund transfers are the best things you can do.

Don't get carried away with giving discounts. Keep track of them each month.

A weekly meeting is the best investment you can make with your team.

Quotes:

“I realized having a weekly meeting, one hour every week, is really the best investment you can make with your team, because you can go over all the scores, all your numbers, everyone can report their KPIs. You can say, ‘What are we working on? What's our top priority?’ And you have the ability to change things on a very fast pace, like that day.” (08:31—09:01)

“Collections equals profits plus expenses. Now, you might say, ‘Dr. Gorczyca, why are you so focused on collections?’ Well, because that's your bottom line. That's the fuel of the engine of your office. You'll hear a lot of dentists talk about production, production, production, production. But that's not really your fuel. Your fuel is your cash. And if you're only thinking about production, maximizing production and not focusing on your collections, you might be wasting time doing things that you're not profitable in, or maybe you're not getting paid for.” (11:31—12:20)

“I think the first 10 years of my practice life, I was very focused on production. But then, the older you get, the more you realize to be profitable and to truly work in the most efficient, smart way that you can, I think it’s a more direct focus for you to look at your collections and understand that collections equals profit, which is your salary. And I include my team salary in there as well, because if my team is getting a raise, I'm getting a raise. We’re in it together.” (12:51—13:41)

“Your profits are determined by how high your expenses are, so it is your goal to minimize your expenses as much as possible. Now, I'm not talking about skimping on value, if there are certain materials that you need that are the highest quality materials. I'm not talking about cutting expenses by cutting quality. I'm talking about cutting expenses by cutting waste, by cutting shelf life, by cutting things sitting on the shelf that you're not using or may never use, and also price checking. If you can get the same product from a different vendor and it’s exactly the same thing, why would you pay more money for it?” (13:43—14:34)

“Think of your collections as a bathtub, and your patient payments go in the bathtub and your insurance payments go in the bathtub. But there is that drain — your write-offs and discounts, or courtesies — that's letting the money out of the drain. So, the more you let out, the less collections there are there.” (15:19—15:51)

“When I started working with [Bassim Michael], the first thing he told me was, ‘Dr. Gorczyca, get your own mail. Do not have the front desk get your mail. You get your own mail, you go through everything in your mail, every invoice, every insurance payment, and you look over that mail, and then you give it to your financial coordinator.’ So, I started doing that. And it was quite an educational process for me because, immediately, I found a lot of surprises. I found some services that I had ended that I was still being charged for that I didn't even know about. I found some invoices that had errors in them. I found invoices that weren't even for my office. They were for the office next door, or for another orthodontic office.” (16:18—17:15)

“If you're using a credit card, the best credit card you can get is from your bank. So, my credit card is from Wells Fargo. And should anything go wrong with that, which I hope it never does, because I always pay my credit card bill first, but if it ever did go wrong, it’s 7.5% interest, versus a commercial credit card is between 12.99% interest, and it can go up as high as 21% interest. So, you’ve got to get the best credit card that you can.” (19:00—19:45)

“Another wonderful thing that I did recently that has been very helpful for my office is, I got my ordering assistant her own credit card at Wells Fargo. And her credit card has a limit of $1,500. Now, the reason I think that's wonderful is that when she is paying for things with the credit card, first of all, she has a better feel for how much things cost. She has a better feel for how big the orders are, and she has a limit. So, variable costs are the next category of things; you want to have control of your variable costs and a feel for how much you're spending on that.” (19:46—20:37)

“[My financial coordinator] said, ‘I think the most important thing is knowing your patients and letting your patients know, ‘We are here to help you. We are not here to put you in a financial bind. We don't want to do any service that you're unable to pay us for. And if you're behind on your payment, tell us why and tell us how we can help you work it out.’ And she thinks that is one of her secrets to being able to collect the money, that she knows her patients, they know that they're going to call them, and they pay her.” (23:10—23:50)

“The queen of collections, her name is Rhonda, and she works at R-Computer, which is a computer company that we deal with in our community. It’s in Concord, California. And if you have an invoice from R-Computer, you can be guaranteed that if that payment is 30 days, one hour past due, you are going to get a call from Rhonda like clockwork. And dare I say, it’s actually a pleasant experience getting a call from Rhonda.” (24:15—25:01)

“[My financial coordinator] says, ‘Don't wait until your patient is 30 days past due. Call them at 21 days past due because you don't want them going on the 30-day past due list. If they have a date when their payment is due, in our office, the patient picks a date. And we use electronic fund transfer, usually, so we can see in their contract that their date is the first of the month, or whatever. And if we don't get payment, or let's say their credit card declines, or insufficient funds, or whatever, we call them immediately, as soon as we get a decline.” (25:46—26:37)

“The second tip is from the king of collections, and that's a guy in my community. His name is Will, and he owns a business, Minuteman Press, where I get a lot of postcards and forms and things done for my office. And his invoice says, ‘Payment due upon receipt.’ And I know if I get an invoice from Minuteman Press, every single week until that invoice is paid, I am going to get that invoice again. And the second I get one of their invoices, I'm like, ‘I'm going to pay this right now because I know I'm going to get another one in one week if I don't pay it.’ And he is excellent at collections.” (27:01—27:45)

“Let's say you don't get payment, so you send out an invoice that you print out of your computer system. Buy the magic pink stickers from SmartPractice. Now, what is the magic pink sticker? The magic pink sticker is the fluorescent pink sticker that says, ‘Friendly reminder. Your payment is past due.’ Then, there's another magic pink sticker. It’s bigger. It’s a really big one. It says, ‘Your payment is 60 days past due.’ We actually cross that out. We’ll write the exact number of days. It might be 61 or something. And then, if you really, really, really want your patient to pay, have the doctor sign the invoice. So, I would write, ‘Thank you for your payment. Dr. Ann Marie Gorczyca.’ That works like magic. You will be paid immediately.” (28:08—29:12)

“There are times where a dentist or an orthodontist wants to give someone a courtesy. You've got to really watch that, because you can get carried away with that to a point where you could be actually losing money giving too much away.” (34:35—34:57)

“There is another magic pink sticker from SmartPractice, and I love this magic pink sticker. It says, ‘My insurance has paid in full. The rest of this balance will be paid directly by you.’ So, there is a sticker, when the insurance, you get the notice, ‘Payment in full,’ and if there's a little balance, whatever that might be, the patient needs to pay that final balance.” (39:06—39:36)

“If the person at your front desk does not have the ability to say, ‘Will that be cash, check, or credit card today?’ they should not be at your front desk. You cannot have a person like that. If they cannot ask the patient for payment that day, then they cannot be a financial coordinator.” (41:04—41:26)

“One of the best books you could ever read about cash flow is Profit First by Mike Michalowicz. And one of the things I loved that he said in that book is, order the small plates. When you go to a restaurant, you have a temptation to order the big plate. Don't order the big plate. Order the small plate. Make sure you eat it. And if you do eat it, you can always order a second plate. Well, it’s the same in your office. When the rep comes in and they want to sell you a six-month supply of something and they tell you, ‘If you order six months of braces, you can get 10 cases free,’ or whatever, you do not want things sitting on the shelf that you are paying for, because there is an opportunity cost of that money that you could be using to put into your 401K or paying off some loan or debt. There's an opportunity cost to where you put your money.” (44:16—45:30)

“The most profitable companies have a shelf life on product of two weeks. And I tell my ordering person, ‘I want you to order for the next two weeks.’ And I really don't want orders over $500. Anything over $500, for me, is a big surprise. I certainly don't want orders over $1,000, $2,000, $3,000, $6,000, $10,000. That's a bad day, for me to get something like that.” (45:32—46:02)

Snippets:

Introduction to Dr. Gorczyca. (03:01—03:48)

Preview of today’s topic. (04:33—05:47)

Create your success as a team. (06:15—09:03)

Ways to do a morning huddle. (09:06—10:30)

Collections equals profits plus expenses. (10:41—14:34)

Think of collections as a bathtub. (14:37—20:37)

Secrets to getting 30-day accounts receivables to zero. (20:48—30:59)

Electronic fund transfer is the best thing you can ever do. (30:59—33:06)

How to discuss care credit with patients. (33:13—34:00)

Best practices on courtesies, a.k.a., discounts. (34:04—37:34)

A trick for orthodontists. (37:36—40:49)

Your financial coordinator needs to collect today. (40:55—42:16)

Advice for young dentists. (42:40—50:55)

Where to find Dr. Gorczyca’s book. (51:14—53:01)

Reach Out to Dr. Gorczyca:

Dr. Gorczyca’s website: www.clubbraces.com

Dr. Gorczyca’s Facebook: https://www.facebook.com/GorczycaOrthodontics

Dr. Gorczyca’s Twitter: https://twitter.com/DrGorczyca

Dr. Gorczyca’s YouTube: https://www.youtube.com/channel/UChpbJpv0mkAHSzRJc7yGj-Q

Dr. Gorczyca’s Instagram: @gorczycaorthodontics https://www.instagram.com/gorczycaorthodontics/

Further Reading and Resources:

Take Action by Dr. Gorczyca: https://www.amazon.com/Take-Action-Treatment-Coordination-Successful/dp/1949642372

Other books by Dr. Gorczyca: https://www.amazon.com/Ann-Marie-Gorczyca/e/B00EJ3J98S%3Fref=dbs_a_mng_rwt_scns_share

Bassim N. Michael, dental accountant: https://www.linkedin.com/in/michaelcompanycpa1

Andy Grover Cleveland, Dental Ninjas: https://dentalpracticeninjas.com/

Vanco: https://www.vancopayments.com/

Profit First by Mike Michalowicz: https://www.amazon.com/Profit-First-Transform-Cash-Eating-Money-Making/dp/073521414X

Dr. Ann Marie Gorczyca Bio:

Dr. Ann Marie Gorczyca has been a clinical orthodontist for over 25 years. She wanted to be an orthodontist since she was in the seventh grade when she had her own orthodontic treatment! After completion of her orthodontic residency program, she worked with world-renown orthodontist Dr. T.M. Graber in Evanston, Illinois. Since moving to California, she has taught at both UCSF and University of the Pacific Dental Schools and worked in a multispecialty group practice prior to opening her own orthodontic office in Antioch, California.

In addition to her private practice, Dr. Gorczyca is an adjunct clinical professor at the Arthur A. Dugoni School of Dentistry at the University of the Pacific. She has also taught at UCSF Dental School and Northwestern Dental School.

Dr. Gorczyca is an avid reader and has a passionate interest in business management. She lectures on business management topics at the University of the Pacific Dental School. These topics include Marketing, Teamwork, Treatment Coordination, Customer Service, Management Systems, and Human Resource Management. She has published her first book, It All Starts with Marketing - 201 Marketing Tips for Growing a Dental Practice, which is now available on Amazon.

A graduate of Wellesley College, Harvard School of Dental Medicine, and Harvard School of Public Health, Dr. Gorczyca completed her advanced orthodontic residency and received a Master of Science degree in oral biology from Northwestern University. She also has a master’s degree in Public Health.

Professional affiliations:

American Board of Orthodontics

Edward H. Angle Society of Orthodontists

Advanced Education in Orthodontics (Roth Program)

American Association of Orthodontists

Pacific Coast Society of Orthodontists

California Association of Orthodontists

World Federation of Orthodontists

American Dental Association

California Dental Association

Contra Costa Dental Society

Delta Implant Study Club

Seattle Study Club

National Board Testing Construction Committee for the American Dental Association

American Association of Dental Office Managers