We don’t send outstanding bills to collections.

In 2023, Hofmeister Family Dentistry achieved the most productive year in the history of the business (going all the way back to when Mark bought the practice in 1987). Of course, just because we produce a historically high amount in services doesn’t mean that we get paid for the full amount. Some services are written off (e.g. re-work/warranty), some services are discounted (e.g., seniors over 65 get a 5% price reduction), and about 2/3 of our patients have an insurance plan with whom we’re in-network (and thus receive network discounts to bring the price down).

And then of course there are the people to whom we send bills for the outstanding balances after their insurance paid their portion. The billing process at Hofmeister Family Dentistry has two layers: (1) I generate bills immediately after insurance pays and there is an outstanding balance; and (2) I run a monthly billing process at the start of each month to sweep up people that didn’t pay after the first invoice. Bills go out in the mail and electronically to emails and cell phones. And that cycle repeats over-and-over again. We have an aged receivable process that kicks in after an open balance ages beyond 90 days. This is mostly just me sending you a text message followed by a phone call. The vast vast majority of bills (> 95%) are paid either after the initial bill or the monthly bill. But there are some instances in which the open balance ages beyond 90 days, 120 days, 150 days, and in very rare instances even longer. As of right now, we have ~$3K in unpaid services aged greater than 90 days (and about 1/3 of that unpaid balance is a function of a particularly problematic insurance company that is notoriously late in issuing their payments).

All-in-all, getting paid is a pretty seamless process (from both an insurance and patient perspective).

To-date, we’ve only had two patients bail on their bill. We didn’t send either of those to collections. As a matter of principle, we don’t send aged receivables to collections. Asking another company to handle our issue goes against pretty much every reason Jamie and I bought this business in the first place. Is it annoying to have to send out 7 invoices over the course of 6 months and spend close to $11 in print and postage to collect balances as small as $20? Yes. Is it laborious to have to manage the aged receivable process and track what communication has been sent out to which patient at which time? Yes. But that’s the job. While we do everything in our power to make sure patients understand the financial implications of the work we’re proposing, we intentionally separate receiving services in the office from paying for services. We don’t want those two things to mix (going to the dentist can be stressful enough let alone getting harassed for co-pays or assumed coinsurance percentages for services about to be rendered). So when a patient gets a crown, or a filling, or a nightguard, or whatever…we deliver the service, send the claim to insurance, and send the patient off on their merry way. We figure out the money stuff because we know how to figure out the money stuff and we’re in the best position to figure out the money stuff. It’s one of the reasons why Delta Dental can be so frustrating. They put the patient in the middle by sending the claim payments to them instead of me. It’s the functional equivalent of me sending an outstanding bill to collections (i.e., asking someone else to figure out your problem).

Being completely transparent, the value-based decision we’ve made is not in our best financial interests (in the strictest definition). In the short-run, we could make more money (on the margins) if we changed our approach to collecting payments. But Jamie and I believe that would come at the expense of the trust we build with our patients over the long-term. We’re ok with being consistent with our values, even if we have to pay a small premium to do it.