Are you collecting everything your practice produces, and do you know how much dentistry you are writing off before those dollars ever become collectible? In this episode, Kirk Behrendt talks with Carlie Einarson, an ACT Dental coach, about the difference between gross collection rate and net collection rate and what each metric reveals about your practice. You’ll learn how to calculate both rates, identify gaps in your collection systems and business model, accurately track write-offs and adjustments, and use your production and collection reports to establish a clear financial baseline.
To understand which collection metrics matter and what your numbers are telling you, listen to Episode 1105 of The Best Practices Show!
Main Takeaways:
- Gross collection rate measures collections divided by gross production and reflects how much of total production ultimately becomes cash.
- Net collection rate measures collections divided by net production and shows how effectively the practice collects the dollars it expects to receive after adjustments and write-offs.
- A low net collection rate can point to gaps involving patient balances, insurance accounts receivable, financial arrangements, same-day collections, or inconsistent collection processes.
- A strong net collection rate paired with a low gross collection rate can indicate significant write-offs from PPO adjustments, discounts, redo dentistry, membership plans, or other adjustments.
- Practices should bill their full fees and accurately categorize write-offs and adjustments to understand the financial impact of their business model.
- A practice should aim to collect 100% of its net production because net production represents the collectible dollars owed to the practice.
- Reviewing gross production, net production, and collections over the previous six to 12 months provides a baseline for identifying problems with write-offs, adjustments, collections, and accounts receivable.
Episode Chapters:
00:00 Metric Monday intro
02:02 Defining gross and net collection rates.
04:13 What a low net collection rate indicates.
05:17 What a low gross collection rate indicates.
06:00 Using the numbers to understand your practice.
06:54 What strong collection performance looks like.
08:11 Accurate fee schedules and write-off tracking.
10:13 Calculating gross and net collection rates.
12:13 Why practices should collect 100% of net production.
13:25 Final tips and wrap up
Guest Bio/Guest Resources:
Carlie Einarson is a lead practice coach who has a passion for helping others succeed in the dental field. She loves helping to create a stable foundation for practices so both professionals and patients have a great experience every time they walk in the door!
Carlie graduated from Utah College of Dental Hygiene. She has ten years of experience in the dental field, including clinical dental hygiene, front office, and leading teams.
In her free time, she enjoys spending quality time with loved ones, traveling, skiing, playing volleyball, and golfing.
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