While you do have an accountant and possibly even a bookkeeper as well, to help run your practice, there is still some very necessary office bookkeeping to be done by your front desk staff. Whether you have a larger office with a business or finance manager or your one staff member at the desk who does it all – production, collections and adjustments must be entered correctly and verified at end of every month.
Entering production is generally pretty simple, but when an adjustment is made to production already entered, it’s important to pay attention to whether that adjustment does or does not affect production….. and to categorize it properly. We see so many practices where production is off by quite a bit….this happens with special frequency in orthodontic offices…because an adjustment was entered quickly to get the contract or treatment plan corrected, but was not categorized correctly. In order to make the correct determination, you just have to think if this is an adjustment of money that is collectable or not. If it’s collectable, we did produce it and it should affect production. An adjustment that would affect production is when we adjust off a charge that was incorrectly entered a second time…..a duplicate charge. One that would not affect production would be a correction of a previous adjustment made too hastily….an amount written off that might actually be collectible. Also when discussing production adjustments, we need to be sure they are actually adjustments from production and not from collections. For something to be a true production adjustment, it should be viewed that the doctor “took money out of his pocket (bank account) and gave it to someone.” This giving of money is the only real case of a production adjustment….this would be the case if a doctor refunded money already paid on a procedure back to the patient. In the case where the money is a discount given because the patient paid their full balance at one time….such as an orthodontic contract….the discount for full payment is a collection adjustment.
When posting collections, we frequently see an insurance payment posted on a claim as an adjustment. This should not happen and is usually done when insurance makes additional payments on a claim (such as in an orthodontic practice) or when insurance has agreed to pay additional dollars on a claim and the claim was not split properly in the computer when it was re-submitted. Either way, a payment….insurance or patient…..is never an adjustment. If staff members are unsure how to categorize a payment, adjustment, credit, or charge, they can use the resources available from their consultant or the support desk from their dental practice software.
All these adjustments should be reviewed, preferably daily, but at least at the end of month by the doctor to be sure they match actual production and bank deposited collections. Adjustments that seem way too large can sometimes be a red flag for staff embezzlement….but more often, they’re just a case of bad in house bookkeeping that needs correction. Watching this bookkeeping is as important for the practice as any work done by the accountant, as this can affect the day to day numbers in a very real way.
