Advanced Guide for Dental A/R Reporting

Some practices miss the big picture when it comes to reporting on their carried A/R.

Other practices understand the big picture, but miss crucial nuances that can impact their bottom line.

To achieve both, you need a reporting system that’s both comprehensive and flexible.

Our aim with this guide is to provide your practice with all the elements that your reporting workflows need to provide a broad enough view to cover the full scope of your carried A/R.

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Insurance A/R vs. Patient A/R

We should start by mentioning that the reports we focus on in this guide are for patient-portion A/R. While we firmly assert that both patient and insurance A/R should be actively monitored, the ways to measure each require different parameters.

For this reason, the reports run for both types of A/R should be run separately, as each tells a different story about the whole A/R picture.
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On Using Reporting Campaigns

While billing should be a constant activity for your practice (i.e. not a task completed in batches), we often advise our practices to work large amounts of A/R across multiple campaigns with reporting conducted for each.

This approach gives RCM teams an opportunity to test different billing modalities, frequencies, and language styles across a gradient of patient cohorts. This strategy essentially informs your practice with more granular data about what billing strategies work best for certain kinds of patient balances.

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A/R Collection Ratios

Understanding how much your practice is collecting from its total production should be at the core of your reporting process. The golden standard of tools for calculating this is the collection ratio.

Collection Ratio is a direct measure of your total collected production divided by your net production, expressed as a percentage. Net production is gross production minus any adjustments (refunds, etc). 

We recommend calculating your Collection Ratio over a one-year period as there will be changes month-to-month. However, having a feeling for this figure on a quarterly basis is useful for understanding how seasonality can affect your collection rate.

In another practice management report, we explain additional collection reporting formulas and best practices for compiling those metrics.

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Payment Velocity

If you have worked to improve your overall collection rate, the next step is to improve your payment velocity. This is a proxy indicator for your overall cashflow situation, a key element of practice financial health. To achieve this, we suggest looking at the number of days required to collect balances from the start of your billing outreach efforts. This will be done on a rolling basis, and will be focused on patient cohorts that you create based on balance age and balance size (more on those next).

You should be monitoring the average number of days required to collect balances for each balance cohort that you define. The lower the days, the higher your payment velocity, the better your cashflow for those balances.

Alternatively, you can consider a standard Days Sales Outstanding (the other kind of DSO) calculation by dividing the total A/R during a period by the total dollar value of credit sales during the same period. You would then multiply this result by the number of days in the reporting window.

Aging Distribution Reports

Next comes your distribution reports. For this branch of reporting, we endorse two reports that work in tandem with one another: balance aging and balance size distribution reports.

With balance aging distribution reporting, you break out your balances into cohorts separated by age. The typical model for this categorizes balances less than 30 days past due (DPD), 30-60 DPD, 60-90 DPD, and 90+ DPD.

When looking at balances along these lines, you will gain insights on which patient cohorts to prioritize before they go to collections. If you have a cascading billing notification system that sends statements based on balance age, this is where you will be able to measure the effectiveness of your stages of patient financial engagement.

Balance Size Distribution

Your practice should also separate balance sizes into discrete cohorts to more granularly triage collection efforts. With balance size distribution reports, your practice should set thresholds for these groups of balances, which correspond with common amounts of patient portions. For most general dentistry practices, we suggest breaking these out at $0-100, $100-500, $500-1,000, $1,000-2,000, $2,000-5,000 and $5,000+.

Billing Touch Point Efficacy

Finally, once you’re dialed in with collection ratios, payment velocity, and balance distributions, you will want to run an analysis on your touch point efficiency. This set of metrics measures how many billing notifications (touch points) are required to affect a balance change or full payment.

This report can be configured to accommodate the modalities your practice is using to reach out to patients. Sending statements via mail, text, email can all be measured with this report scheme. Even the number of phone calls made to collect on past-due balances can be measured.

You can use this report in combination with your aging report to further refine your determinations of which cohorts require more staff time/attention and practice resources to collect on.

For instance, if you run this report and notice that balances between 60 and 90 days past due require two more phone calls, an extra mailed statement, and four emails to collect, then this cohort should receive extra attention to reduce the excess need.

A Tour of Pearly’s Reporting System

Developing a robust and intricate reporting system is half the battle for your financial health. Because what gets measured gets managed, this system is essential to connect the dots between your billing efforts and their impact on financial health and growth.

Within dental billing software, you should have a full suite of analytical tools available to run these reports in any configuration that you need.

As an example, in Pearly, you have access to all of the aforementioned reporting data, plus a report builder to further refine your insights. 

And instead of manually calculating your patient balance categories, Pearly offers its powerful A/R Assistant to automatically build out cohorts for making a game plan to work your accounts receivable.

This reporting suite accommodates the needs of both single location private practices and large DSOs and dental groups, as reports can be configured for multiple locations.

If you would like to learn more about how Pearly’s reporting system works or how its smart billing algorithms help practices and DSOs collect more patient A/R, you can book a quick demo with one of our RCM experts.