February 2025 is American Heart Month -- a reminder of the importance of physical and financial health. Is your dental practice's cash flow thriving, or does it feel like a slow trickle instead of the steady stream it should be? Just as the human body requires a healthy cardiovascular system to thrive, your practice depends on an efficient revenue cycle to remain successful. Even minor disruptions -- like unnoticed leaks or operational clogs -- can result in financial blockages that limit your practice's lifeblood flow.
Diagnosing your practice's health
Estela Vargas, CRDH.
If your practice's financial health seems shaky, it might be time to diagnose the problem quickly.
The heart of the practice: Your producers
Just as the heart pumps blood, dentists and dental hygienists pump production in the practice. Their experience, relationship with patients, and efficiency directly influence the practice's ability to produce blood. Regular team calibrations and staying updated with the latest dental technologies and trends can enrich productivity, much like a strong, healthy heart improves the function of every organ.
The brain: Your leaders
The brain coordinates and oversees all bodily functions. Who is the brain of the practice? Your leaders! Effective leadership in a dental practice requires awareness of all operations ranging from direct patient care and new patient acquisitions to financial management. Leaders steer the practice toward success.
KPIs: Your vital signs
Implementing practice analytics provides oversight for improved decision-making. Key performance indicators (KPIs) are often used as a buzzword, but KPIs serve a function similar to taking your patients' vital signs. How can you assess the health of your cash flow if you don't have the tools to measure it?
To assess your dental practice's revenue cycle health, start by tracking:
- New patient numbers/recall retention and treatment acceptance
- Accounts receivable days, ensuring they stay under 30 days
- Monitor your collections percentage to aim for at least 90%; for experienced administrators, 98%+ is the minimum goal
- Review your insurance aging report to ensure claims older than 90 days are minimal
Detecting leaks: Embezzling and lack of attention to overhead costs
A leak in the cardiovascular system can affect an individual's total health to the point of death. Similarly, financial leaks, such as embezzlement and economic mismanagement, can harm a dental practice.
According to the Association of Certified Fraud Examiners, organizations lose an estimated 5% of their annual revenues to fraud, highlighting the need for vigilance. In dentistry, the situation is even more alarming. Over 60% of dentists will experience embezzlement during their careers.
A 2019 survey by the ADA found that 49% of respondents reported having been embezzled. The most common areas of these financial "leaks" include billing systems, cash larceny, skimming, and payroll.
Arterial clogs: Operational inefficiencies
Atherosclerosis in the human body is like operational inefficiencies in a dental practice. Atherosclerosis blocks blood flow. In your practice, this buildup -- whether from outdated workflows, untrained staff, or neglected billing systems -- over time narrows the pathways that sustain the business.
The signs might initially be subtle: slower collections, longer patient wait times, frustrated staff, patient complaints, etc. However, dismissing the signs as temporary could cost you more than you want in terms of revenue and reputation.
Restoring balance: Recognizing the need for professional guidance
At some point, you realize something isn't right but don't know where or how to begin. This is where consultations with specialists come into play. Revitalizing a dental practice takes time, effort, and intentionality.
There's no magic pill. However, professionals with expertise in practice management can guide you, providing tools and insights to navigate complex challenges. No two practices and no two bodies are exactly alike.
For example, intensive leadership training can be likened to consulting with a neurologist, equipping the practice leader (the brain) to make better decisions and maintain team engagement. Similarly, outsourcing your insurance and patient billing departments is akin to visiting a cardiologist who helps your heart function healthy again. In extreme cases where issues have gone untreated for too long, outsourcing the entire revenue cycle might resemble dialysis, acting as an external system to keep your practice alive and functioning while deeper systemic issues are addressed.
Take action to strengthen your practice
Just as maintaining physical health requires consistency and proactive care, financially strengthening your dental practice means addressing revenue leaks and mitigating risks before they become major issues.
I've put together a step-by-step guide to help you:
✅ Fix the leak
✅ Mitigate risks
Click here to access the guide and explore more expert resources to optimize your revenue cycle!
To help your practice thrive, identify and address revenue leaks, and work with your producers and leaders to improve practice performance. Know your risks and mitigate them. Make those practice doctor appointments by seeking mentorship from experts and colleagues to help you grow. The health of your practice goes beyond cash flow management; it involves creating an environment where staff and patients feel valued. With dedication, challenges can become opportunities for success, ensuring that your practice survives and flourishes.
Editor's note: References are available upon request.
Estela Vargas, CRDH, is the founder and CEO of Remote Sourcing, a dental insurance billing and revenue recovery service. She is a graduate of Miami Dade College's dental hygiene program. Vargas' extensive background in the clinical arena of dentistry is coupled with her experience as a practice administrator and business executive.
The comments and observations expressed herein do not necessarily reflect the opinions of DrBicuspid.com, nor should they be construed as an endorsement or admonishment of any particular idea, vendor, or organization.
