Using risk identification and credit granting to build your practice

Patients are pushed to pay in full or to use third-party financing.

In fact, many of the practice management consultants who are active today are recommending their dental clients be “cash only” and only provide third-party financing (finance company, bank, credit card) for their patients.

The result is simply horrible rates of case acceptance, postponed/phased treatment, more single-tooth treatment than ever in the past, significant increases in failed appointments, a reduction in the number of new patient referrals and a net reduction in production per dentist hour worked in many practices.

This defensive behavior is unnecessary because credit granting, internal credit granting, is safer and more productive today than it has ever been in the past!

While choosing not to grant credit, to be a cash-only practice, solves some delinquency and cash flow problems, that policy often makes other problems worse. Failed appointments do not improve and often become worse because when money is tied to appointments, patients often find good reasons to postpone or cancel the appointments, and in more serious cases they simply become a “no show.”

Although collection rates are good, actual cash flow does not improve because of the single biggest problem with being a cash-only practice, weak case acceptance.

If your patients are not having you perform the work for conditions you have diagnosed, or if they only accept work covered by insurance, your production will be down and cash flow will be down as well. Ultimately, being a cash-only practice contributes to the biggest problem of all: poor referrals and weak new patient flow.

Let me note that there is no legal, ethical or moral reason why any dentist needs to grant credit. The only reason to grant credit is the obvious and practical one: You will have more patients who will accept more of your treatment recommendations.

It is not a coincidence that during the last three years, while our economy has been less than stellar, practices that routinely allow their patients monthly payments for their treatment have experienced significantly less of an impact from the economy than have the cash-only practices.

Appropriate credit granting is often the answer to building a consistently growing, productive and profitable practice. Of course, “appropriate” is the operative word.

While you cannot afford to have your great patients postpone their treatment because of your financial policies, neither can you afford the financial loss and other problems associated with granting credit to the wrong patients.

Obtaining credit reports on patients was the answer to this dilemma in 1980, and it is still the answer today. The difference today is that learning a patient’s potential risk to the practice is much less expensive, less intrusive, less time consuming and much more accurate than it has even been.

The Zuelke Automated Credit Coach (ZACC) is a Web-based tool available from DentalBanc that has been specifically designed for the dental profession. ZACC evaluates stability, maturity and credit integrity in exactly the same fashion as a bank loan officer, but ZACC does it in a few seconds.

Once ZACC has evaluated your patient/responsible party, ZACC assigns a credit grade and even makes a recommendation regarding the most liberal financial arrangement that you can safely offer the patient.

Although ZACC reads and interprets every line and every column on a credit report, a ZACC inquiry does not affect a patient’s credit score nor does a ZACC inquiry show up as an inquiry to your patient’s other creditors.

You can grow your practice with safe and appropriate credit granting.

Paul Zuelke is president and founder of Zuelke & Associates, a management consulting firm specializing exclusively in teaching credit management and accounts receivable control techniques to health-care practices.