by Eric Ploumis, DMD, JD
Making sure your patients pay on time will help you deliver better treatment
Money and ethics often conflict, but there is nothing unethical about charging a fair fee, rendering competent services, and collecting your fee. Being attentive to a patient’s balance and requesting payment in a timely fashion strengthens the doctor/patient relationship. This article will explore issues that impact fee-collection efforts from both the practical and ethical perspective. The legal nuances associated with fee collections and the process for terminating nonpaying patients from your practice will also be discussed.
Before you make any attempt to collect a delinquent account, indeed before an account even becomes delinquent, three background essentials need to be in place to ensure successful collections. They are the following:
• a clear understanding of who the patient and the financially responsible party are;
• a clear understanding of when an account is delinquent; and
• a clear understanding of what the fees are.
Who the Patient and the Financially Responsible Party Are
Before you can collect a fee, you need to know who is responsible for paying it. If you need to undertake a collections effort, you need to know as much about the responsible party as you possibly can by the end of the initial visit. You will never have a better information-gathering opportunity than during the initial encounter. Check over your patient-information form. At a minimum, for collections purposes you should be asking the following:
• name of patient;
• age of patient;
• address of patient;
• name of financially responsible party (even for adults);
• address of financially responsible party;
• home, work (if the patient is a minor, the mother’s and father’s work), and emergency phone numbers;
• name of the person who referred the patient;
• name of the patient’s dentist;
• name of the patient’s physician; and
• the patient’s social security number.
Each of these pieces of information has a specific collections purpose and will help you to collect from a patient who is in arrears. With all of the above in mind, review and revise your patient-history form. Make sure you are asking for enough information to enable you to put a collections effort into play if necessary.
When an Account Is Delinquent
Have a clear office policy of what constitutes a delinquent account and what steps you need to take to address one. The further behind a patient’s account gets, the less likely you are to collect it. As orthodontists, we usually bill monthly. An account that is two billing cycles behind should be considered delinquent and deserves immediate attention.
You should personally look over your statements every month. It is your money that is not being collected. Your staff gets paid each week regardless of who hasn’t paid you. If you stay on top of your accounts and begin your collections efforts promptly, the number of accounts you have to deal with will shrink to next to nothing. Then, and only then, can you delegate the job of reviewing your statements to a trusted staff member.
What the Fees Are
Either you or a trained staff member should review the fee plan with the patient as carefully as you do the treatment plan. Make sure that your fee presentation complies with the Federal Truth in Lending Act. Very often, patients listen more attentively to your fee presentation than to your case presentation. My preference is to have the orthodontist discuss the fees with the patient. If you delegate this duty, train your staff to pick up the clues that may indicate that a patient may be a slow payer. No matter who discusses the fee structure, make sure you leave nothing to the patient’s imagination.
The Collections Effort
Your collections effort needs to be systematic and timely. The following is a suggested protocol.
First Effort: Your first contact should be when a patient’s account is 30 days past due. Begin your collections effort by jotting a note on the patient’s statement that reads something like, “Please call if you have any questions about your account,” or “Please bring your account up to date.” The orthodontist, not a staff member, should write the note and either initial or sign it. The response from those patients who “just forgot” is dramatic. This will be your single most effective collections tool.
Often, the orthodontist is seen as distant from the financial concerns of the practice. The orthodontist either believes that discussing money is unseemly (something I will address in the final section) or feels embarrassed about bringing it up. Patients pick up on this, and those looking for a reason not to pay you will have it. Unless you let your patients know that you expect them to pay you promptly, you should not expect to be paid promptly. That is why it is important that you, not a staff member, initial this first collections effort. Try not to do this by phone. A phone call takes too much of your time; is usually delegated to a staff member who really doesn’t relish the job and will not do it well; and, more often than not, it requires repeated efforts to successfully contact the debtor. All you want is for the patient to bring the account up to date. A letter invites only this response.
Second Effort: Although your first effort will bring in many of your easily collected overdue accounts, you will still have a handful of accounts that require your attention. At this point, you are in the 60- to 90-day past due range, and you need to be a bit more decisive. (After 90 days, an uncollected dollar is worth only 72 cents.)
You need to send a real collections letter. It should inform the patient how much he or she owes you and welcome them to call your office to discuss their account. Be sure to keep copies of all letters you send the patient. Keep in mind that no matter what your fees, patients think orthodontics is expensive. Your statement will often be permanently positioned at the bottom of the patient’s pile of bills, and unless you take some action to move yourself to the top, you may never get paid. Unlike the utility, cable, or private school bill, your bill does not have a “must-pay” imperative attached to it. We have not conditioned our patients to take it seriously, and there is very little penalty attached to paying us late.
The Truth-in-Lending Statute does not allow for retroactively adding a penalty for paying late. I suggest that you inform the patient, in writing, at the initial fee presentation that there is a penalty for paying late, whether it is an interest charge or a late-payment fee. You can always waive the penalty, but you cannot add it. Virtually every other creditor charges late fees, and people are conditioned to paying them. There is no reason we should not keep the option available to us and use it.
Third Effort: If your patient becomes more than 90 days plus in arrears, you need to send a very decisive letter, one that spells out the potential penalty in store for failure to pay. Like the last letter, this should not say too much, but it should inform the patient that you will not be able to continue treatment unless the account is brought up to date. Be careful not to give patients the idea that you are abandoning them, but do let them know that you reserve the right to dismiss them. What usually happens at this point is that the responsible party will call to discuss developing a new payment schedule. You are under no obligation to accept this overture and, very often, fairly but firmly insisting on being paid will get you paid. If you do choose to work something out with the patient, try not to accept smaller payments over a greater number of months.
These efforts at collecting overdue accounts will resolve most of your outstanding account balances—but remember, successful resolutions decrease exponentially with the amount of time the account is in arrears. If you still have not been successful in working something out by this point, you either have to accept the fact that you are working for nothing or you have to cut your losses and dismiss the patient from your practice.
Dismissing the Patient
You have no obligation to continue to work for nothing. If you follow the guidelines discussed above, you will be perfectly within your rights to inform the patient that you will not continue his or her treatment.
Notice is the key element in patient dismissal. To be sure that the patient gets fair notice, this letter must be sent by certified mail, return-receipt requested. The legal presumption is that the addressee received the letter even if it is returned to you. The addressee is responsible for knowing what is in that letter, and failure to pick it up does not absolve a responsible party of that burden. Send another copy of the dismissal letter at the same time you send the certified one, but place this copy in a plain white envelope and handwrite their address. More often than not, this is the letter to which the patient responds.
Virtually without exception, your office will get a call right after the letter is received. Most often, the response is one of incredulity: “I never knew I owed you money,” or “I never received a bill.” Take it in stride and insist that the account be brought up to date before you continue with treatment. Dismissing the patient is a tactic of last resort, but it is one that is certain to get results as long as you do it by the book.
Suing a Patient
Suing a patient to collect your fee is not an option in my collections protocol. If you implement the collections protocol that I have previously described, you should never have an account that is delinquent enough to warrant filing a lawsuit, even in small claims court. Begin your collections efforts early, and cut the nonpayers loose early. Structure your fee schedule so that even if you have to dismiss a patient, you are at least at a break-even point. A nonpayer understands why he or she is being dismissed and will call you to make arrangements to pay. If you sue that same person to collect your fee, you are needlessly antagonizing him and inviting him to respond with a complaint to the state dental board or to file a retaliatory lawsuit. Even if you win your suit, you are often left with a judgment that is difficult, if not impossible, to collect. There is no reason that we as orthodontists, who have the luxury of presenting clear fee arrangements for an ongoing treatment plan, ever have to resort to a lawsuit to collect our fee.
Can we, as health care professionals, reconcile our duty to provide ethical and compassionate care with aggressive fee collections? I submit that it is the ethical practitioner who takes money out of the doctor/patient equation.
Having an office full of patients who are up to date financially creates an environment that allows you to focus on what we do best: creating beautiful smiles. I am a strong proponent of pro bono work, but I like to pick my cases, not have them pick me. A patient who owes money is preventing me from delivering pro bono care to someone who is truly deserving of my time.
Parents are aware when their child’s account is in arrears. They often don’t come in for their child’s appointment, break appointments, and fail to respond to your efforts to discuss treatment. In the end, the child suffers as treatment drags on. Orthodontists have the tendency to get frustrated with the broken appointments and lack of cooperation, and ultimately just want to “get it over with.”
Some orthodontists tell me they insert a “financial wire” in the hope that by dragging out treatment, they will eventually get paid. Not only is this unethical, but it places the orthodontist in jeopardy with the regulatory bodies in his state. Once financial issues begin to impact on treatment issues, you have begun sliding down the slippery slope of ethical ambiguity. Taking money out of the treatment equation is liberating for both the orthodontist and the patient. We need to stop thinking that the business side of orthodontics has nothing to do with the clinical side. They are intimately related, and the sooner we acknowledge this intimacy, the better we can render top-quality care to our patients.
Unlike our other dental and medical peers, we have multiple opportunities to collect. There is absolutely no reason why all orthodontists shouldn’t be collecting at close to 100%. The simple protocol described above, if consistently implemented, will allow you to do exactly that.
Eric Ploumis, DMD, JD, is an orthodontist and an associate professor of orthodontics at New York University College of Dentistry. He also has a legal practice specializing in issues that impact the dental profession, including dental practice transitions.
This information is not intended as a substitute for legal advice. You should familiarize yourself with the laws of your local jurisdiction and seek legal advice from a local attorney who specializes in such matters.