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What is the true production to collection ratio for a private run dental practice?

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Karen K

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This is my first job as a dentist in United States. I have just started working for a private dental practice that offers 40% of collection. However after the first month all the details I received shows on a production of $30000 for the month, the collection was only $10000. And my take home salary being paltry $4000. To me this appears like a collection rate of 30%. The practice owner claims that they have 99% collection rate. All the procedures that required pre approval from insurance were pre approved. When I looked through the numbers it seems the production numbers for each procedure were way more than the collection numbers. The practice accepts PPO, HMO and medicaid. For some of the procedures which were reported as $1000 on the production number, the collection was only $125. This seems really odd to me. So I have the following question:
(a) Is this common that the true collection amount would be only 30% of production amount, even though for every procedure the clinic got some money.
(b) This indicates that to make a $10000 paycheck per month my production per month should be $80000 per month or ($960000 per year production for a $120000 per year paycheck). Is this normal?
 

ilovesummer

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Just to warn you, insurances will be the death of you. You'll soon learn that most insurances will not pay you the fee that the office dictates. Say your office charges 1000 for a crown, but a lot of insurance plans will have a negotiated fee of only 600. So you think you will be getting 40% of 1000 but in reality you're only getting 40% of 600 because that is what the office collected.
 
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JVanHorn

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Completely dependent on the practice. I've never seen 40% collection:production ratio though.
 

Lane138

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Most times insurance does not pay on time, so even though you did the procedure this month, the money might not come in until five to six months from now. Most decent offices will not make you wait for the money and pay you according to what they anticipate the insurance will pay. Medicaid always pays.

There is definitely something wrong with a collections rate of 30%. Make sure they aren't tricking you.

Also, check if you're paying your own lab fees or sharing with the office. For example, if you did a crown for $1200 but you pay your own lab fees per your contract (~$250), then you'll only get 40% of $950, not the full $1200
 
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JakeSill

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How does production, collection, and take home relate to each other? I'm learning.
 

OhioDMD

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Production or as it is properly called Gross Production is the actual services done at the provider/practices usual customary and reasonable fees (UCR)

Adjusted gross production are the UCR fess adjusted for things such as contractual insurance company fee schedules, remakes, family member or office staff discounts, and patient financing fees/discounts (care source). Always less than gross production.

Collections are the actual money collected in any given time unit. Irregardless of production per unit of time.

If your practice is truly fee for service (FFS) then you don't participate in any insurance company preferred provider networks (PPO) or HMO's and your gross production should be close to your adjusted GP.

Generally in a well run office collections should be 97+% of adjusted gross production and insurance reimbursement should be less than 45 days.

This list is not all inclusive.
 

OhioDMD

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How does production, collection, and take home relate to each other? I'm learning.

Depends on how you are paid for instance
1) The higher of 30% of AGP with a daily guarantee (say 500) pay per dayfor 3 months then 30% of AGP thereafter.
2) 35 % of collections ( sucks for the first month and you are at the offices collection ability to get paid.
3) Flat monthly fee (military, VA, AGP, )
4) All the leftovers after everyone and everything else is paid if you are the practice owner.
 
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DocJL

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Sounds like you had the equivalent of a shell game run on you.

Adjusted production is the only number you should look at when judging how much work you are doing (i.e. - what is expected to be paid based on accepted insurance reimbursement fee schedules, etc).

When I was an associate I always worked for a percentage of adjusted production, usually 25%, as I had no way of tracking real collections. Too many opportunities to get ripped by an unscrupulous employer when being paid as a percentage of collections. Have heard many first hand stories of this.
 
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