By Andrew Runge, CPA, CFE, CVA, ABV, MBA

At a holiday party, Dr. Savchuk ran into an ex-patient. He inquired as to how the patient was doing with her new insurance. The patient told him they had not changed insurance.  They asked Dr. Savchuk, if he got his computer system fixed.

This conversation was very strange to Dr. Savchuk, as he did not know there had been any problem with the computer system and he was sure the office manager told him this patient had left, because of changing to an insurance carrier they did not accept. He was perplexed as he drove home.  Was this somehow related to his practice woes?

After buying a practice from a retiring dentist, things went well for Dr. Savchuk for the first few months.  Then what seemed like a string of unrelated events left Dr. Savchuk wondering if he had made a bad purchase.  First, the number of patients not paying their invoices started climbing.  On the office manager/bookkeeper’s advice, he started sending amounts out for collection.  Then, his existing patient base started to decline steadily.  Lastly, it seemed his cash balance at the bank was always near rock bottom.
Instead of making a comfortable living, he was barely scraping by and meeting the payroll for the hygienists and staff was becoming precarious.  The office manger, a long term employee with over 20 years experience in the dental profession, assured him that all new dentists faced these same problems.  She told him that he would work through this and over the next few years the financial rewards would begin flowing. Knowing his need to double his marketing and production efforts, she said, “Don’t worry about any of the cash flow issues, I will keep them all under control.”

After thinking about his meeting with the ex-patient, Dr. Savchuk decided to contact them about the whole matter. When he inquired, the ex-patient advised that although they had paid the required co-pays and other amounts, they continued to receive bills and threatening letters from the office manager.  When they complained and sent in copies of the receipts, the office manager apologized and said that the computer system had been down and created some billing problems.  She would fix everything. A few months later, he had gotten a call from a collection agency over the same amounts.  He had denied those charges, but thought that continuing with Dr. Savchuk would not be the best course of events even after the collection agency finally stopped calling. (For the rest of the article, click here.)