Improving Cash Flow with Better Financial Arrangements
Episode #535 with Kirk Behrendt & Ariel Juday
Money is a good thing to talk about, but you may be the wrong person to do it! You need confident, competent team members to collect what you're owed, and today’s episode will teach you how to build that team. Kirk Behrendt brings back Ariel Juday, one of ACT’s amazing lead coaches, to share some guidelines around how money should be talked about and handled in your practice. To start creating a better system for better financial arrangements, listen to Episode 535 of The Best Practices Show!
Links Mentioned in This Episode:
Episode 510 - Are You Billing Your Full Fee?: https://www.youtube.com/watch?v=Qp-V9D540D0
Episode 511 - Say This, Not That When Collecting Money: https://www.youtube.com/watch?v=-k3Uo-1_Khw
Invest in your team members’ training and education.
Get rid of limiting beliefs about your patients and their money.
Overcommunicate with your patients about financial arrangements.
Anything you want to collect should be in writing and signed by patients.
Offer CareCredit. It will help patients afford treatment with less risk for you.
“[The problem dentists have is] limiting beliefs, that they don't want to talk money, or, ‘Patients can't pay,’ or that they're not involved and they say, ‘Oh, my team’s got it,’ but they don't know what questions to ask to make sure. And money is not a bad thing to talk about. I don't want you giving everything away for free. You need to be paid. And trust me, your team members want to be paid, so they're going to want to collect the money if they understand and they have the support on how and when and what to collect.” (3:37—4:09)
“I can't go to school to be a dental receptionist or learn dental insurance and accounting. There are courses, but they're hard to find. They can be expensive. And so, team members don't go out and search it for themselves. As teams and doctors, we have to provide that for them because they don't come with that experience already. And if they do, it’s because it’s from another office. Good or bad habits, we don't know until they're in the practice. So, we have to invest.” (4:50—5:20)
“A lot of the times, we say, ‘Hey, go answer the phone. Collect money. Schedule,’ and those are their three guidelines. It’s much harder than that.” (5:20—5:29)
“What are our financial agreements with ourselves and our practice? What do we want? List out the questions and ask yourself, what forms of payment do we want to take? Do we want to accept checks? Do we want to accept all credit cards? Do we want to accept third-party financing? Do we want to allow payments? And then, once we say yes or no to those things, then we dive deeper into, what type of payments do we want to take? When does it make sense for us to use outside financing? Because it’s all a balance. We know if we go to outside financing, there's going to be a fee. But we know collecting money over several months ourselves is much harder. So, we have to ask those questions.” (5:53—6:45)
“We have to ask, what type of discounts do we give? When do we give discounts? We have to set guidelines because doctors and dentists like to give discounts. And I always ask, ‘Why? Why are we giving that discount?’ And so, really start thinking about, why would we give a discount? When would it be? Who is okay to give that discount to, and what amount? Because the more we can get all of these questions answered ahead of time, the less you have team members coming to you throughout the day asking, ‘Oh, Mrs. Smith wants to pay this. Mr. Jones wants to do this.’ It helps them. They have their guidelines, and they know. Then, we can turn that into educating our patients on, ‘This is when we collect. This is how we collect. And this is how we can help you.’ Anything outside of that would be a further conversation.” (6:46—7:35)
“You have to have the person who assumes everyone bought that couch off of the yard sale and it’s got millions of dollars in it. You don't know. You don't know if it’s stored in their walls. I'm still hoping that happens to me one day. You assume that everyone has [money] until they tell you they don't. And once they say that they don't have it, that means they don't have it right now. So, then, ‘Okay. Let's go to my financial arrangements and see, what can I offer you and how can I help you afford this.’ But you have to go in believing that you've provided enough value and you've educated them enough that they're going to want to pay full fee for it. Because if they do value it, then they will pay. Maybe they can't pay today. And that's okay. That's when I go to my arrangements that I've already preset.” (8:57—9:46)
“If [patients] want [treatment] and I don't want to make finances a barrier for them, let's find a way within the guidelines that work for both of us. It has to be mutually [beneficial], that it benefits them, and it benefits us as a practice. I cannot agree to a patient who says, ‘Yeah, I'll get these two crowns done and I'll pay you $5 a month.’ I'm going to be retired before those crowns are paid off. But for them, it’s, ‘Okay, what's within your budget?’ And if it’s not something that I can accommodate, that's when I would look at my outside financing and see. And even if they say they can't pay it today, we don't know what their situation is going to be in a month. Do they get an end-of-the-year bonus? Do they just have some things that they have to pay off? So, we don't want to ever assume that they don't want it just because they can't do it that day. They're always going to remember how you made them feel. If you judge them when they do have the financial means, they're not coming back to you.” (10:35—11:33)
“With [CareCredit], you want to help more patients be able to financially afford it. CareCredit and other outside financing is a way that some of them can, because maybe they're on a monthly budget that doesn't fit your monthly budget. Maybe they're on that $50 a month, whereas you don't want to take that risk, but an outside financing will. And that's where you have to say, who takes the risk? Let the outside financing take the risk because they’ve been doing it — they're in the industry. They know how to collect money. They charge the fees. We are not a bank. We are not a credit card company. All I know is how to collect today. And if they need help doing that, then that's what I'm going to use, my resources.” (11:58—12:43)
“I hear, ‘Well, [CareCredit] charges a huge fee.’ Well, they have to get paid somehow as well. But what is the fee of me trying to hunt down payments from my patients, sending the statements, doing the phone calls? And we all know the time value of money. If I can get 90% of my money today, then I will pay that 10% fee. But if I'm spreading it out over a year, it’s not worth the same. And how many hours have my team members spent reminding Mrs. Smith, ‘Don't forget, you have that payment coming up,’ or, ‘Your credit card was declined.’ It’s a lot of hassle, and it puts the conversations in a negative tone with your patients and your team members. It’s easy to talk money when it’s positive, ‘Hey, this is the crown you're getting. This is your investment.’ But when I'm telling you now you owe money, and then you have to tell me you can't pay today, it hurts the relationship because patients don't like owing you money.” (12:43—13:41)
“Everyone can make their own threshold. I say anything that you want to collect should be in writing. The only thing I would say is, a hygiene appointment that is typically covered 100% by insurance, sure, maybe not. But anything restorative or outside of your prophys should be in writing. And if you say, ‘No, I don't need it signed. I don't need it in writing,’ that tells me you're willing to write it off.” (14:23—14:50)
“If I don't have it in writing, now you've made it very hard for me to collect. And when we get into a disagreement or conflict with a patient, I don't have anything to back me up proving that I showed them this investment, proving that they agreed to it. It’s very easy for me to collect when I say, ‘Hey, Kirk. Today’s portion is $1,500,’ and you say, ‘I didn't agree to that.’ ‘Oh! Well, on November 7th, you signed this treatment estimate saying . . .’ ‘Oh, yeah. I did.’ It’s very hard to deny when you see your own signature on paper. And then, even if it gets to the point of collections, if I'm sending you to collections, I need a way to show that I went over this with the patient. And it’s all about informed consent as well. If they want to make a fully informed decision on the treatment, that includes the investment.” (14:51—15:46)
“If you are at the point where you're sending the patient to collections, you know that you're not getting that money back. There's a very small chance that you're getting it back, and very small chance you're getting that patient back. I'm more on the principle of, if you get a service, you should pay for it. So, I'm not opposed to sending patients to collections because, to me, it’s trying to hold them accountable for that, and in hopes that I do get some return. But you have to do your due diligence of having that upfront communication, having the financial arrangements signed in place. Even if they're making payments, it needs to be signed. We need to know exactly what those payments are and when those payment dates are coming out.” (16:06—16:47)
“If the doctor has done a good job presenting the treatment and the value of it, [patients] already have an idea of how much it’s going to cost. They may not know the exact dollar amount, but they're going to know, $18,000. They shouldn't be expecting $5,000. They already have an idea. So, let them process it. Let them think through in their mind, because I don't know what's in their bank account. I don't know what's in their investments. Let them have that 30, 45 seconds, even a minute of thinking, ‘Okay, where can I pull this from?’ Let them be the first ones to say anything. Because some patients say, ‘Oh, I can't do that.’ And then, that's when I say, ‘Oh, okay. What can you do?’ And then, they say, ‘Well, I'd be able to pay that next week. I have to move some things around.’ So, before I even offered anything else, I figured out, ‘Oh, they actually can pay it in full, just not today.’” (18:14—19:08)
“Taking a deposit is fine. The patient is going to know that, and that's where the communication comes in. And then, if they say, ‘Oh, I really need to split this into payments,’ ‘Okay. Our typical is, we do half at the prep, and then half at the seat date. Is that something that would work with your budget?’ And then, pause. Only give them one option at a time because I don't want to talk them out. I always start with my most ideal, which is collecting in full. Then, I will go to my second ideal option, which is still collecting payment in full before seating. If they say, ‘Oh, two payments, that's not . . .’ ‘Okay. What if we push your treatment out one month, and then we divide it into three payments?’ Go in baby steps and say, ‘What would work for your budget?’ And they say, ‘Well, you know what? I can do $5,000 a month.’ ‘Okay. Can you do a $3,000 down payment today, and then we’ll do the $5,000 a month? Then, when you come in, you'll get your final product. You'll be all caught up.’ And that's how you'll talk them in.” (19:19—20:23)
“For me, going past three months is a lot for you to be collecting in an office. That's when I would say, ‘We can talk about outside financing if that's something you're interested in,’ and let them know, ‘We utilize CareCredit in our office. We can apply today and get approved if you want more information,’ and see where their mind is at. I see a lot of team members go instantly into giving them all these options. And I tell everyone, if I'm the patient and you give me the options to make payments, I'm doing it.” (20:28—21:01)
“As long as you're collecting the final dollar before the final placement, then you're in a good spot.” (21:34—21:41)
“When [the patient] walks in to get that full-mouth rehab and you say, ‘All right, you're taking all your teeth home today. Let's go ahead and get you squared away,’ they know they're going to pay before they go see you in that chair. Because once they have that final product, they have those shiny new teeth in their mouth, then they come out, what are you going to do when they say, ‘Oh, I don't have it today’? I mean, I would tell them, ‘Well, then you can't take the teeth home today.’ But that's harder.” (21:51—22:19)
“I want to talk to the patients before the appointment to see where they're at, to get that collection. And ideally, I've already had the conversation with them over the phone. It’s not a surprise. But if it is a surprise, it’s much easier to have the face-to-face conversation, get it squared away before their appointment, before they're adding more of a balance. Because if they owe me $800 and they're scheduled for a crown today and they can't pay me the $800, well, now they're going to walk away, and now they're going to owe me a lot of money. And that hurts the relationship. They're not going to want to come in for their hygiene visits. They're not going to want to answer the phone, even if I'm just calling to tell them happy birthday. It hurts that relationship because no one wants to owe anyone money. If I owe you money and I have a financial agreement, and I know that I'm paying you, and it’s already squared away, then I'll show up for my appointments.” (23:44—24:38)
“I personally don't think any dentist should be talking money because they don't know the ins and outs. I always caution even clinical team members. And it’s not the actual dollar amount. Everyone can say, ‘This investment is $18,000.’ It’s the after part when patients start having questions and they start asking you, and you don't know those answers. Now, the patient is losing trust in you. So, I always say stick with what you're good at.” (25:12—25:42)
“If you're strong enough, and you really value the work you do, and you're confident, and you know the answers, go for it. I'm not saying you shouldn't present it. But I also say, let and back up your admin team members, especially if they’ve already had the conversation, ‘Well, Mary told me I owe $18,000.’ ‘Well, then you owe $18,000. Mary is the one that knows. I leave that all to her.’ Give them that authority.” (26:26—26:53)
“There are lots of reasons why [credit cards are] declined. So, don't get that prejudgment in your mind of why it was declined.” (30:43—30:51)
“If I don't get into contact with [a patient who owes], they are no longer on a payment arrangement with me. I take them off. They go into my collections, and then they get my statements. They get the phone calls as a normal patient would. And then, I make a flag that they are not able to create more financial arrangements with me. I'm not going to allow them to make more payments in the future because they didn't uphold that relationship and that agreement that we made prior.” (31:48—32:14)
“Overcommunicate. Let them know so many times. Even if they are on a financial arrangement and a payment plan, let them know what their current balance is. ‘Okay, Mrs. Smith. I know you're coming in tomorrow. We do have that agreement that you're going to pay the $200 towards the total balance.’ Or, ‘Mrs. Smith, you're coming in, and I noticed that there is a balance on the account from your last appointment. I'm not sure if you received the statement or not, but we can go ahead and take care of that when you come in tomorrow for your hygiene appointment.’ Let them know, and overcommunicate with them to the point where they're like, ‘Yeah, I know. I've got it.’ And it’s like, ‘Okay, perfect.’” (32:52—33:30)
“The problem isn't that you told them too many times. The problem is they say, ‘Oh, I didn't know about that.’ And that's where it gets uncomfortable. And then, they say, ‘Oh. Well, I'm not going to do my crown today.’ Now, the doctor has a hole in his schedule because they didn't know about that previous balance. So, I overcommunicate with them. And if they're not contacting me and they know that they have that balance — I've sent them statements, I've sent them phone calls — that's a good indication they're probably not showing up for that appointment. And now, I can be proactive of trying to fill that spot for them instead of having a cancellation and, ‘Well, I knew he wasn't coming because he had this balance. He hasn’t talked to us.’ Then, that goes into the whole scheduling and how you can be proactive. So, that's why financial arrangements are very important.” (33:32—34:19)
“You need to give your team members the confidence. Because sometimes, money is hard to discuss. Patients don't like it all the time. Team members don't like it. But if I have clear guidelines, and it’s written, and we’ve agreed, patients have signed, I know what I'm able to do, I have the confidence of when to collect payments, when to give discounts, it helps. And then, it makes me spend the energy on building that relationship and communicating instead of trying to figure out, ‘How can I do this?’” (34:20—34:47)
“It’s okay to joke with [patients], ‘Yeah, we kind of are [expensive].’ Or, they say, ‘Doctor must be trying to get a new car.’ You're like, ‘Yeah. Trust me, have you seen my car? He must be taking it, not me! I'm not getting this.’ Have fun with the patients. Because when they say it, most of the time, they don't mean it in a harsh way. They're just like, ‘Huh. Wow.’ And if you lighten the mood of like, ‘Yeah, we get it,’ or, ‘Well, then you won't get to talk to me.’ So, I like to lighten it because then they chuckle, and then they're like, ‘Yeah, you're right.’ They start seeing all the value of what they're receiving. It’s not just the dentistry that they're receiving, it’s the relationship, the other services that we provide, the comfort that they get. Especially if they like that massage chair, say, ‘Someone’s got to pay for it.’” (35:41—36:38)
1:34 Ariel’s background.
3:25 The problem dentists have around money.
4:09 Your admin needs more support and...