Understanding Your Metrics: Collections

If production is the heartbeat of your practice, then collections are the lifeblood. A strong production number means very little if you’re not actually collecting what you produce. That’s why collections percentage is one of the most important metrics to track each month.

What is Collections Percentage?

Collections percentage is the amount of money you collect compared to your total production.

Formula:
Collections ÷ Production = Collections %

Why Does This Metric Matter?

You can have great production numbers, but if money isn’t being collected, cash flow dries up quickly. This creates huge stress, and if ignored for too long low collections can get you into a situation where you are having to borrow money in order to complete paryoll.

How to Track and Benchmark

Most practice management software will run this report for you. The benchmark you should aim for is clear: collect at least 98% of what you produce.

Many offices don’t believe this is possible, but with the right systems in place, it absolutely is.

How to Increase Your Collections

So how do you get there? It comes down to systems and consistency.

1. Collect at the time of service.

• This doesn’t actually start the day of treatment. It starts at scheduling. Patients should receive a treatment plan estimate and be informed of your policy: payment is due at the time of service.

• To do this well, you need accurate insurance estimates. That means entering allowed amounts (especially if you’re out of network) and updating benefit tables. The computer can only estimate based on the information you give it.

• Even with accurate estimates, there will always be exceptions. That’s where a card-on-file system saves you. Collect the estimated patient portion at the appointment, then say something like:

  “We're estimating your portion for today is $x. We’ll know in about two weeks if your insurance companies pay or less than we are estimating. Would you like us to keep your card on file for you so if there happens to be a remaining balance we can let you know and then take care of it right away?”

  This sets clear expectations, prevents statements, and keeps your cash flow steady.

2. Submit clean claims.

• Many offices accept rejected claims as “normal”—but they’re 100% avoidable.

• Study your most common rejections, then make sure you’re putting the right information into your software to populate in the correct spot on the insurance claim form field every single time.

• A rejected claim slows down your collections dramatically, so get it right the first time.

3. Have a follow-up system.

• Collections fall apart when offices wait too long. The longer you wait, the less likely you are to collect, and be forced to refer to a 3rd party collection agency, that may or may not be able to get the money.

• Your process should start immediately—whether that’s following up with a patient who forgot their card the day of service, a patient who did not pay their statement on time, and those who may have promised a payment at a certain date. Following up with patients when they fail to pay is an important key to collecting payment. Have these guidelines established in detail for your team carry out. 

Collections don’t have to be stressful or awkward. By setting expectations upfront, tightening up your processes, and being consistent, you’ll keep your collections percentage where it should be—98% or higher.

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