Ep. 60: Creating Financial Policy that Works for Your Practice
Finances tend to create the biggest headaches in a dental practice. If you don’t have clearly spelled out financial policy in your office, you’ll end up with upset patients, outstanding payments, and a messy accounts receivable. So this week, Jeff discusses how to create sensible financial policy that enables you to get paid on-time and without any confusion or headaches.
Topics:
1:25 – Why having clearly spelled out policy for all your office operations is essential
11:49 – Creating internal financial policy for practice
15:42 – Payment options that work for the practice and the patients
28:59 – Rolling out new financial policies without creating problems
Links:
Recommended Financial Policies - https://www.mgeonline.com/financial-policies-2
The MGE Communication & Sales Seminars - https://www.mgeonline.com/abc
Learn more about MGE - https://www.mgeonline.com
The Scheduling for Production Seminar - https://www.mgeonline.com/the-scheduling-for-production-seminar/
DDS Success - https://ddssuccess.com
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Questions From This Episode
What's the difference between an external and internal financial policy, and why do most practices only have one of them?
An external financial policy is the general statement patients sign as part of their new patient paperwork, essentially confirming they're responsible for balances, while an internal financial policy spells out for the team exactly what payment arrangements are actually acceptable and which aren't. Most practices only have the external version, leaving staff to invent their own rules on the fly, which is exactly where confusion, lower collections, and staff conflict come from.
What actually happens when there's no real policy in an area of the practice?
People don't crave rules for their own sake, but they do want some kind of operational guideline to work from, so without one they'll create their own, often based on whatever they did at a previous job. This is exactly why three different front desk employees can end up handling the same size treatment plan three completely different ways, one pushing full prepayment, another splitting it in half, another letting the patient set their own $10 a week terms.
Why does an unfollowed financial policy tend to reveal a genuine personnel problem, not just a training gap?
Nobody who ignores a sensible policy will admit it outright, they'll offer excuses instead, that patient couldn't pay, that patient disagreed, this policy doesn't work, since most people don't like being shown to be wrong. Since an owner only actually sees a small fraction of what staff are doing day to day, someone who can't follow a clear, reasonable policy in the one area you do observe is very likely mishandling plenty of other things you simply never see.
Why should a payment plan be tied to a specific number of days rather than a treatment delivery date?
Attaching payments to delivery dates creates real risk if a patient runs into a financial problem partway through, potentially leaving a completed lab case with no way to pay for it, or a patient who still owes a balance well after treatment is already finished. Tying it to a fixed number of days instead, with an actual signed authorization to charge a card or debit an account automatically on that date, keeps the process close to automatic rather than dependent on chasing someone down.
Why does Jeff generally recommend against sending insurance predeterminations before treatment?
A predetermination is not a guarantee of payment, insurance companies can and do deny the actual claim later even after approving the predetermination, so all it really does is add delay without eliminating the practice's own responsibility for estimating what a patient will owe. A practice can typically estimate a patient's portion accurately just from knowing how that plan normally pays, and any signed financial agreement should already state that the patient owes the balance regardless of what insurance ultimately pays.
Episode Transcript
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Does your office have a well-crafted, workable financial policy? If you're like most practices, you have some form of policy that patients sign off on with their initial paperwork, something stating they're responsible for payment on any procedures performed at the time of service, and so on. For the average practice, that's about the extent of it. But that's really only half the equation.
You should actually have two types of financial policy in your practice: one for your patients, what we'd call an external financial policy, and one for your team only, what we'd call an internal financial policy. This internal policy details the actual rules for how patients are supposed to pay for services, what's considered acceptable and what isn't. While it might not seem like a big deal, I can't overstate its importance. A lack of policy in this area can cost your practice dearly, in added confusion, lower collections, staff conflict, and reduced treatment acceptance.
That's what I want to talk about in this week's episode of Dental Business Rx: how to create a successful internal office financial policy. My name is Jeff Blumberg, and I'm your host.
I want to start by looking at the concept of policy in general, something we cover extensively in the MGE program because of how important it genuinely is. What is policy? Essentially, it's the rules for your practice, how things are supposed to be done. There's a lot that goes into crafting it well, more than I'll get into in a single podcast episode, but essentially you want your policy to be workable, meaning you don't want policies in place that are destructive, problematic, or that simply don't function.
That statement itself can be a bit loaded, because you might have a policy that's actually perfectly workable, but the personnel using it aren't applying it properly, and you end up concluding the policy itself is bad. Let me give you an example. Say you implement a scheduling policy where primary appointments, larger production, higher dollar value procedures, are done in the morning, with time blocked out on the schedule specifically for that. Say your schedule coordinator isn't especially skilled at handling patients. Patients will sometimes object to this, naturally, since everyone would prefer to come in after work, and if you simply did whatever patients wanted, your schedule would be packed from five to eight in the evening for the next six months while your mornings sat completely empty. But you have to run your practice the way you actually want to run it.
So say that schedule coordinator, struggling to handle the pushback, tells a patient they need four crowns and that the doctor does these procedures in the morning, and the patient says they can't miss work and only want to come in after 5 p.m. Not knowing what to do with that objection, even though it's actually simple to handle, and we've covered exactly how in a prior episode and in our scheduling seminar, I'll link both on the episode webpage, this happens a few times, and you notice your mornings are sitting empty. You ask your schedule coordinator or office manager why, and you hear, this just isn't workable, patients can't miss work, you can't tell them what to do.
At that point, you could simply scrap the policy and conclude it just doesn't work, resigning yourself to working six days a week, evenings and weekends, to accommodate everyone. But the policy itself wasn't the problem, I could show you hundreds, if not thousands, of practices running their schedules exactly this way successfully. The actual problem was the person implementing it. So you have to walk a careful line between what's genuinely unworkable and what simply wasn't rolled out well. You could certainly have something that's just plainly bad, a policy on hours or finances you wouldn't even follow yourself, and implementing that would genuinely be destructive. But you have to be careful judging whether a policy works based on how it's actually being executed.
So, policy is the rules. Now, who actually sets policy? Ultimately, the person who has to approve all policy is the owner doctor, and that's non-negotiable. Anyone on your team, your schedule coordinator, financial coordinator, dental assistant, hygienist, office manager, can suggest policy, and that's often genuinely helpful since they're the ones on the ground dealing with it daily. But ultimately, you as the doctor owner have to agree to it and approve it. If that structure isn't in place, you run into real problems, because two things can happen: either there's no policy at all in a given area, or people are setting policy you never actually approved.
Let's look at what happens when there's simply no policy. Take something as basic as how to request a day off. If there's no policy on this, and people generally aren't craving rules for their own sake, but they do want some kind of operational guideline, they'll simply create their own. Maybe someone does whatever they did at their last job, noting a personal day directly on the schedule without ever actually asking anyone. If you haven't given clear guidelines, people will invent their own, and you see this constantly, whether it's taking time off, ordering dental supplies, or handling patient balances.
Say you have three people up front and you haven't divided their responsibilities, which you should, but let's say you haven't. So you've got employees A, B, and C, all potentially handling financial arrangements. You've just presented a larger treatment plan and sent the patient up front to work out payment. If they see employee A, who likes getting paid quickly, they'll be told to prepay in full and save 5 percent, essentially an invented prepay policy. If employee B handles it instead, they prefer half now and half later. If employee C handles it, they let the patient decide their own terms, since they don't feel the patient should have to pay that much all at once, resulting in something like $10 a week, which would take ten years to pay off.
In that scenario, everyone's setting their own policy based on what feels right to them personally. The problem is, even though they have a genuine stake in the practice as an employee, they don't own the business, so they don't actually get to set the rules. That creates an instant point of disagreement, not just between employees, but with you too. If you're sending a patient up front hoping employee A happens to be the one who sees them, dreading that employee C might instead, you're genuinely disagreeing with how something is being handled in your own business, which is a strange position to be in, since you're the one who's supposed to decide how things are done there in the first place.
Without clear policy, people set their own, and that's exactly when problems start, sometimes escalating into outright conflict between employees who each think the others are handling things wrong. It creates confusion, a lack of team cohesiveness, and zero predictability. Say you have a policy, even an unwritten one that really should be written, that a dental assistant stays until the doctor is finished with a patient. Sounds like simple common sense, but I've heard plenty of stories where it hits five o'clock, the assistant checks the clock mid-procedure, and simply leaves, coat on, out the door, while the doctor assumes they'd just stepped out to sterilization or the lab. Without an actual policy, nobody, not the office manager, not the other assistant, knows whether that person is going to stay or go. Same issue applies to scheduling, without a clear policy on when certain procedures should be done, you can walk in and find no production booked all morning, depending entirely on whoever happened to be scheduling that day.
Lastly, without real policy, or with people setting their own, you'll have real trouble detecting a genuine personnel problem. One reliable sign that you have a problem employee is that they don't follow policy, or they quietly alter it. But if there's no policy to begin with, how would you ever know? Say you do implement a sensible financial policy, which I'll walk through shortly. Employees A and B follow it without issue, patients pay in the acceptable ways you've laid out. Employee C doesn't follow it, and when they don't, they're not going to announce it outright, they'll offer excuses instead, that patient couldn't pay, that patient disagreed, this policy just doesn't work, since most people don't enjoy being shown to be wrong.
The specific excuse doesn't really matter. If someone can't follow a sensible, reasonable office policy, that's a real signal of a deeper problem, because think about it, you're not watching your employees all day long. Your actual interaction with them is usually limited to moments when something's gone wrong. If you're catching the same kind of mistake a couple of times a week, there's likely plenty more happening that you simply never see. Without workable policy in place, you lose your ability to detect that kind of problem employee early.
Policy can be extremely simple and sweeping, we never let a patient leave the office upset, that alone could be an office policy, or it can be highly specific, exact steps for cleaning the plaster trap, or a weekly equipment maintenance checklist. It doesn't matter, policy is simply the rules, and it always needs the doctor's approval.
Most offices already have some form of external financial policy given to patients, usually folded into new patient onboarding paperwork, and it tends to stay fairly general, this patient is responsible for any resulting balance, we accept Visa, MasterCard, American Express, Discover. It rarely gets more detailed than that. I'm occasionally asked whether you should get into the detailed internal policy directly with patients during onboarding. You certainly can, there's nothing wrong with it, but keep in mind, if a patient signs off on four different payment options in their onboarding paperwork, and then you're presenting a larger treatment plan two weeks or even a year later, they're probably not going to connect what you're explaining now to what they signed back then. You'd still need to walk through the actual payment options again at the time you're presenting treatment.
So you'll generally have some patient-facing policy, but let's talk about crafting the internal version, the one specifically for your staff, the treatment coordinator, financial coordinator, office manager, who all need to know exactly what payment arrangements are acceptable. I have a handout on this, called Financial Policies, one of the downloads from our online training platform, DDS Success, part of the Financial Coordinator training course. I'll put a link to it on the episode webpage, it lays out how to actually build this kind of policy and is genuinely useful.
When building this policy, start with general guidelines on what's acceptable and what isn't. Personally, I don't want 30-day balances hanging out there, I want smaller estimated copayments handled at time of service, whatever fits your own practice. If a patient's getting two occlusal composites totaling $400, with 80 percent coverage, leaving an $80 balance, I'm genuinely fine collecting that at the end of the visit. That's the nice thing about financial policy, it has to be real to you as the owner doctor, not to me. I can offer suggestions, but this is your practice, and you have to be comfortable with whatever you set.
A patient with no insurance getting a $250 cleaning, I'm fine collecting that at the end of the appointment too. Obviously if you're accumulating a lot of uncollected balances like that, it becomes a real problem, but in my experience it's rarely a major one on its own. This policy really matters most for larger cases or major services, procedures involving significant chair time, considerable lab fees, or material costs like implants. That's when a real financial policy becomes genuinely critical. If you're doing a $10,000, $15,000, or $60,000 all-on-X case, you need to know exactly how that patient is going to pay.
So the policy should spell out acceptable forms of payment. One option is prepayment, and there are a few ways to structure it. I'm personally a fan of prepayment, since it's a genuinely easy way to reduce cancellations and no-shows. That doesn't mean someone who's prepaid will never cancel, but there's a considerably better chance I show up if I've already paid $5,000 for a procedure than if I've paid nothing.
You might offer a prepayment discount, maybe 5 percent flat, or on a sliding scale from 2 to 10 percent depending on case size, whatever works for your practice. For simplicity, let's say your prepay discount is 5 percent. You're not going to chase down a patient coming in for a routine occlusal composite to prepay and save 5 percent on $200, this is really meant for larger procedures. What does prepay actually mean? It means the patient pays essentially right after the treatment plan is presented, on a card, by check, whatever method, not the day of or the day before the procedure. There's naturally some flexibility, if I've agreed to prepay on Monday but need two or three days to pull funds from a retirement account, that's still genuinely prepay. But if I'm scheduled two weeks out and only pay two days beforehand purely because that's when I feel like it, that isn't really prepay, prepay means paying now, or as close to now as possible.
A common question is how to handle prepayment made by credit card versus patient financing. This is simply my own opinion, you have to decide what's real for your own practice, but personally, I wouldn't penalize a patient for prepaying with a credit card, assuming your merchant fees are reasonably normal, not excessive. I could go on about how merchant fees always seem to creep back up regardless of which processor you switch to, but that's a separate conversation. To me, it's simply not a big enough deal to withhold the discount over. If someone's prepaying $10,000 in treatment, I'll give them the standard discount whether they pay by check or card. Where I wouldn't extend that same discount is with patient financing specifically. If someone's on a two year, no-interest plan where I'm absorbing close to 15 percent in finance company fees, I'm not layering an additional prepay discount on top of that, financing is a genuinely different arrangement, and I'm already absorbing a much larger cost there.
Beyond prepayment, you might offer payment plans, both internal ones you manage yourself, and external ones through outside finance companies. For internal payment plans, again, this is simply my own recommendation, I generally wouldn't go beyond half down and half later, or thirds. Once you're extending credit further than that, running a full one or two year internal payment plan, that's when it's time to send it to an actual finance company, CareCredit, Lending Club, Sunbit, Proceed, whichever you use, since your practice isn't a bank or a collection agency. Extending credit that far internally means building up real accounts receivable, and even when patients genuinely intend to pay, you end up dedicating staff time to following it up, which becomes a real burden.
I'd even tighten up something like a half down, half later arrangement. If a patient wants to pay half now and half later, I'd tie that second payment to a specific number of days, not a delivery date. I'm not a fan of tying payments to delivery, since if a patient runs into a financial problem, you could end up with a completed lab case with no clear way to actually get paid for it months later. You're better off attaching it to time, half now, half in 30 days, or a third now and thirds at 30 and 60 days. There's still some risk, say you've delivered the case in 45 days and the patient still owes a balance, but you can minimize that risk with the right paperwork. Work with your attorney to build an actual signed agreement where the patient authorizes you to charge a specific card, or debit their checking account through an ACH setup with your bank, on that exact date. It should be as close to automatic as possible, not something dependent on calling the patient or waiting on a mailed check.
This is genuinely worth bringing up during the treatment presentation itself, since skipping it can cost you real money. Say it's a $6,000 case, and you immediately default to recommending patient financing. If they go on a two year, no-interest plan, you're absorbing roughly 15 percent, $900. You might have avoided that entirely just by asking upfront how much they could realistically pay monthly. If they say $2,000 a month, that's a three month payment plan, easily handled internally as thirds, with no finance company fee at all, just the standard cost of running a card or an auto debit. Making that process as automatic as possible protects that revenue.
There's also the related idea of collecting a deposit specifically to secure time on the schedule, and I have genuinely mixed feelings on it, since it depends heavily on the amount. Say it's a $7,000 case and you ask for 10 percent down to hold the appointment, but the remaining 90 percent was never actually discussed or arranged. That's considerably easier to walk away from than if the full amount had already been paid, or a real signed financial agreement was already in place. It's certainly better than having no commitment mechanism at all, since it's genuinely easy for someone to no-show if there's nothing securing that time.
Here's the deeper reason that matters, and it connects directly back to the sales process itself. Say I tell you your treatment plan comes to $7,000, and you say, sounds great, when do I come in? You're scheduled, you say you'll bring a check that day, and then you simply vanish, never answer the phone again, no-show the appointment, maybe your spouse eventually calls asking for records to transfer elsewhere. Why did that happen? Because you were never actually asked to genuinely commit to anything, which is itself a kind of test. If someone says they forgot their checkbook and need to go home and call back, they might simply be looking for a polite way out. I'm not suggesting you interrogate whether someone's being truthful, that's beside the point, the reason you ask for real commitment is to find out whether they genuinely want the treatment. If a patient keeps stalling specifically on the financial piece, that's often a sign the real hesitation is somewhere else entirely, maybe they're not sold on the treatment, maybe they're anxious about the procedure itself. I'd rather have fully settled financial arrangements before a patient ever leaves the office than rely purely on a deposit. Once you're extending beyond thirds or half-and-half, that's genuinely when a finance company makes sense, but again, that conversation should happen during the presentation itself, since you might avoid needing one entirely.
This brings up something Sabri mentioned while we were discussing this episode, predeterminations. I honestly hadn't realized how many practices still rely on them. To be clear, you have to decide what's right for your own practice, and if you're legally required to submit one in your jurisdiction, or contractually required as a participating provider on a specific plan, then you should. But outside of those cases, I genuinely don't see the value.
The argument I hear most often, and one Sabri mentioned too, is how else would you know what the patient's portion is going to be without sending one first. But that's exactly what pulling your own data on that insurance plan is for, letting you estimate the patient's portion directly, something we cover in depth in our Financial Coordinator training course on DDS Success. It genuinely isn't that difficult, especially once you've seen multiple patients on that same plan and already know roughly what it pays, what counts as an alternate benefit, and what documentation it typically requires.
Here's what a lot of people don't realize: a predetermination is not a guarantee of payment. Go pull one up and read it, it says so directly. I've seen predeterminations get approved and the actual claim still denied later. So if you're looking at a $6,000 to $8,000 case and waiting on a predetermination purely to confirm roughly $1,000 in expected coverage, what's actually the point? The patient is going to owe at least $5,000 regardless, and that's usually a fairly straightforward thing to handle without the added delay. A tremendous amount of time and effort gets poured into predeterminations that, in my opinion, simply isn't necessary, though again, if you're contractually obligated to send them, you have to.
The other piece worth building into your financial agreements: whatever payment arrangement you set with a patient should explicitly state that if their insurance doesn't pay what was estimated, they're still responsible for the balance. This has to be addressed directly, otherwise you risk a real conflict later. Even with a predetermination in hand estimating $1,000 in coverage, insurance can still decline to pay it, and the patient owes that money regardless.
Once you've built this policy, how do you actually roll it out? Everyone involved has to genuinely understand it. Your receptionist might not strictly need to know every detail, though it helps, but your financial coordinator, treatment coordinator, office manager, and the doctor absolutely need to know it cold and think with it consistently, since there really shouldn't be other options floating around. If you've presented a $6,000 case and sent the patient to your treatment coordinator, and they want something outside your established options, that requires your specific approval as the owner doctor, it's not the treatment coordinator's call to make independently.
Here's why that matters. Say your standard options are a long-term payment plan, thirds, half down, or paid in full for a 5 percent discount. A patient with a $6,000 case and no dental insurance is excited to move forward, but explains they're mid-refinance on their house and can't use credit right now, though their refinance closes in 14 days and their appointment is in 16. They offer $1,000 down now to hold their spot, with the balance the day the refinance closes. That's a reasonable, genuinely case-specific request, but your treatment coordinator shouldn't approve it independently, they should check with you first. If you're comfortable with it, great, they proceed. If you let staff make exceptions like that without your approval, that exception quietly becomes the new unofficial policy, and next time it might not play out nearly as well, a patient pays $1,000 down and then simply moves onto a payment plan you never actually approved for a case that's already been treated. Any deviation from policy needs your sign-off before it happens, not after.
Once everyone genuinely understands and is drilled on the policy, down to its specific nuances, you implement it, and you can always tweak it as new situations come up, if you start accepting cryptocurrency, for instance, just add it to the policy. And if you have employees who aren't following a genuinely sensible policy, that's worth taking seriously as a real signal.
One last thing worth addressing: existing patients of record who've always operated a bit differently. Say you have a patient who's been with you 20 years, always gets treatment done, gets billed, and pays within 30 days without fail. In a case like that, if you're comfortable with it, you can simply let them continue operating that way, they've established real credit with your practice. You could still offer them the new payment options, and they might even prefer to prepay once they see them, but if it's someone with a long, reliable history and you're genuinely comfortable, there's no need to force a change. That's ultimately the doctor's call to make deliberately, not something decided randomly around the office.
One last suggestion to make this even easier: we've covered the mechanics of the treatment presentation process in prior episodes, and we go into it in real depth at the MGE Communication and Sales Seminars, I'll link those on the episode webpage. When the doctor, or an associate involved in the sales process, reaches the point of discussing fees, at minimum they should state the cost and hand the patient off to the treatment coordinator. But you could take it further by pulling relevant pieces of your internal policy and building a patient-facing version of it, a simple printed sheet showing the treatment plan, the total cost, and each specific payment option with the corresponding amount for that option. Laying it out visually like that makes it considerably easier for the patient to actually pick an option, since every choice on that sheet works fine for the practice, whether that's paying in full for a 5 percent discount, taking $10,000 down to $9,500, or splitting it into $5,000 now and $5,000 in 30 days.
I know I covered a lot of ground here, and it might not seem like a huge deal on the surface, but it genuinely has far-reaching effects on your practice. I hope this helps. If you have any questions about anything covered today, or about MGE generally, you can find us online at mgeonline.com or call us at (800) 640-1140. Don't forget, I've got that financial policies download on the episode webpage if you'd like to check it out. Otherwise, have a great week, and we'll see you at the next episode.