Managing Finances: Guidelines for Practice Success. American Dental Association

      Some insurance contracts require the dentist to avail their enrollees of the lowest service fees provided in the office. Repeated fee reductions may qualify as such an occurrence and the practice may be required to extend the discount to all members in a particular insurance plan.

      Also, remember that different states have different laws regarding discounts. Check with a knowledgeable attorney in your jurisdiction or consult your state dental association for information about laws relating to discounts that might apply to your practice.

Barter

      Some dentists opt to participate in formal or informal barter transactions that involve trading their knowledge, expertise and skill for a service or tangible good offered by someone else.

      The idea of trading a few hours of your professional expertise for someone else’s talents can be very appealing, especially when you know and trust the patient. But even if that patient is your best friend, it’s important to consider whether to agree to the deal since bartering can involve certain tax and insurance implications. Keep in mind that any “income” realized through a barter transaction should be accounted for as taxable income and make sure the expense associated with the income is recognized.

      Participation in bartered transactions is not always a smooth process and it’s possible that the tax implications could wipe out any perceived savings. If you do decide to trade your services for someone else’s, be sure you have a written agreement that details what each party will deliver and any cash costs. Be especially careful about deals in which the patient asks you to discount your fee or charge less than your usual fee for service just so you can match the fee for the service being provided by the patient. That type of equation is rarely a “win-win” scenario.

      Participation in bartered transactions is not always a smooth process and it’s possible that the tax implications could wipe out any perceived savings.

      For instance: one of your patients, who runs a business that provides small- to mid-sized companies with computer tech support, needs dental treatment valued at $6,000. The two of you agree to trade your services; no money is exchanged and you perform the necessary treatment and the patient agrees to maintain your computer network for a certain period of time.

      The transaction should be detailed in your books and records through a notation for “fee income” (sales) of $6,000, less computer expenses of $6,000. It’s possible that there may be no tax implication in the transaction. The accounting records for the patient’s computer company should include a notation for fee income (sales) of $6,000 with no expenses to offset. That means the computer expert has accrued $6,000 in taxable income, which would be addressed by sending the computer company an Internal Revenue Service (IRS) Form 1099 Misc. If the deal is structured through a barter exchange, the barter company is required to file Form 1099-B with the IRS.

      If you receive income from bartering, you may be required to make estimated tax payments. The IRS has more information regarding tax considerations and possible implications for bartered transactions; a link to one of those resources, which includes forms and other details, is available below.

       Resource:

      • Internal Revenue Service Topic 420 – Bartering Income https://www.irs.gov/taxtopics/tc420.html

Collecting Payments

      Collecting payment is literally the bottom line of your practice. Developing and implementing a workable financial system is critical to ensuring that patients pay their bills promptly. While this is important for dentists at all stages of their careers, it’s especially important for new dentists who may be personally managing the financial aspects of the business rather than delegating that function to someone outside of the practice, such as an accountant.

      Developing and implementing a workable financial system is critical to ensuring that patients pay their bills promptly.

      A workable financial system should include a written financial policy, information about the financial payment options available in the practice, details on financial arrangements established in advance of treatment, and a protocol that describes the time and place to have private consultation with patients to discuss private clinical and financial matters.

      Having a formal financial program and policy can be a win-win scenario for your practice and for your patients. This information can make it easier for patients to finance and receive the treatment they want and need, and you’ll be able to perform the clinical work that you enjoy with fewer headaches relating to managing accounts with open balances.

      Remember to discuss your financial policy in full with each patient. It’s also helpful to have patients of record review and sign your current financial policy on a regular basis, since it’s likely that they don’t recall every form they saw or signed when they first came in for treatment. Also, every patient should sign a treatment form, with informed consent or informed refusal where applicable. More information about informed consent/refusal is available in the “Managing Patients” module of the ADA’s Guidelines for Practice Success; please see the “Informed Consent/Refusal” article in the Policies section of that module.

      Make sure your financial policy clearly expresses what payment is due at the time of service, even for cases involving routine care. You’ll also want protocols to validate patients’ eligibility, coverage and remaining benefits for the plan year for those patients who qualify for some level of coverage or reimbursement through a third-party dental benefit plan. If applicable, your policy should clearly state that any remaining deductibles and estimated copayments are payable at the time service is provided.

      Make sure your financial policy clearly expresses what payment is due at the time of service, even for cases involving routine care.

      Financial responsibility for healthcare costs, such as dental treatment provided to children whose parents are divorced is typically outlined in the divorce decree. Since it’s not uncommon for parents to share responsibility for taking children to these types of appointments, it’s a good idea to have the parent who is not financially responsible for any out-of-pocket dental costs to agree, in writing, that he or she will pay for care if the former spouse fails to cover those expenses.

      The patient should know the full cost of treatment, including the amount he/she is responsible for after any estimated payment by their dental benefits plan. He/she should also be aware of the practice’s financial policies. Once you’ve confirmed that the patient understands, remind them when payment is due at the time of service and advise them of the amount that will be due on the first date of treatment.

      The patient should know the full cost of treatment, including the amount he/she is responsible for after any estimated payment by their dental benefits plan.

      Having a system in place and following procedures consistently will reduce the amount of staff time spent on collections. This will help avoid uncomfortable, unpleasant, and sometimes even contentious, back-and-forth conversations with patients who might question whether your fee is “really worth” the work that you’re doing. Surprisingly, this happens more than you might think, even with patients who seem to share your philosophy about maintaining good oral health.

      There are many options for developing a financial policy. Some practices develop their own, others work with a financial