Pay Associates By Collections To Improve Dental Practice Revenue

Kiltesh Patel
October 1, 2020 | 3 min read

Cash flow is the lifeblood of any dental practice, without which you can’t pay for things you need to run the business. But for many offices, balancing the money going out with the money coming in can be a challenge.

Dental offices have to pay for rent, equipment, materials, staff salaries, and other operating expenses before they can deliver services (i.e., productions.) Yet, they typically don’t get paid for the service performed (i.e., collections) for another 30 days or more.

If you consistently have a gap between your revenues and expenses, your cash flow is unhealthy and your business could be in trouble.

One of the best ways to balance cash flow is to pay dental associates by collections, instead of by productions -- a common practice adopted by the majority of dental offices, especially DSOs and larger practices. 

If you pay associates by production, you have to pay them before your practice gets paid by insurance companies or patients. On the other hand, if you pay associates by collections, you’re only paying them after you have collected the money for the services they have performed. This allows you to better balance revenues with expenses so you’d less likely have negative cash flow.

The Pros and Cons of Paying Dental Associates By Collections

The most obvious benefit of the “pay by collections” compensation model is that dental practices can better manage cash flow. When you have a positive cash flow, you can invest in new technologies and marketing to scale up your business and deliver better treatments to your patients.

Paying on collections also puts more emphasis on the patient experience because happy patients are more likely to pay their bills. This helps incentivize associates to deliver outstanding services that will keep patients coming back.

This model encourages associates to educate patients and obtain clear consent when discussing treatment plans to get patient buy-in. This can help ensure that patients complete their treatments, achieve the desire outcomes, and therefore, be more likely to pay their bills.

However, paying on collections isn’t without its challenges. Most associates prefer to be paid by productions, so they get compensated for all the work they have performed and get paid sooner. Also, some associates are averse to the risk that they may get penalized if the front desk or back office doesn’t do a good job of servicing patients, filing claims, and collecting payments.

Get the Best of Both Worlds: Mitigating the Potential Down Sides of “Pay by Collections” 

The “pay by collections” model is a common practice among DSOs but it’s also beneficial for smaller practices. While it’s often easier for DSOs to attract talents with their patient volume and infrastructure, dental offices of any size can benefit from this model if they can effectively manage the collection process to ensure that associates are getting paid for the work performed.

To get the best of both worlds, support the “pay by collections” model with a system, like tab32, that helps you collect payments in full and on time so associates can get compensated in a timely manner. 

  • Collect payment before or after an appointment while patients are still in your office. You can also send out e-statements via text or emails immediately after a visit with a link to pay online. Make it easy for patients to pay by using mobile payment solutions to send instantaneous electronic statements and collect same-day payments.
  • Use a dental practice management software to automate the process of sending out reminders for unpaid invoices via texts and emails at regular intervals to make sure outstanding payments don’t fall through the cracks.
  • Use e-forms to collect patient’s insurance information, so you can check eligibility prior to their visits while minimizing errors associated with manual data entry, which can delay claim processing.
  • File insurance claims electronically to get reimbursed faster. tab32’s billing module allows you to seamlessly consolidate all electronic claims and attachments to eliminate the hassle of managing multiple vendors and payer portals.

An efficient front office can help you improve total collections, which also make your practice more attractive to associates as you adopt the “pay by collections” model to improve your cash flow. Request a demo to see how tab32 can help.

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