INDUSTRIES / MEDICAL & DENTAL
Medical & dental practicesProduction is not collection,
and the gap matters
Practices measure themselves on production. The money that actually reaches the bank is collection, and the difference between the two — write-offs, adjustments, denied claims, aged receivables — is where practice profitability quietly lives or dies.
The insurance
gap
A practice produces $180,000 in a month and collects $121,000. That gap isn't fraud or failure — it's contractual adjustments, denied claims, patient balances and the ordinary friction of insurance billing. But if your books only track deposits, the gap is invisible and nobody manages it.
Insurance receivables need to be tracked and aged like any other debtor book. Claims sitting unpaid past ninety days are frequently claims that were denied and never reworked, and every one of those is money the practice earned and won't receive. In most practices we review, the aged claims balance is larger than the owner expected.
Provider compensation is the second complexity. Associate dentists on production percentage, physicians on collections, hygienists on a mix of base and bonus — each arrangement needs to be calculated consistently and, importantly, needs to reconcile to what the practice actually collected rather than what it produced.
Then equipment. Practices are capital-heavy — chairs, imaging, lasers, practice management systems — and purchase timing has a substantial tax effect. Deciding to buy a CBCT in November versus January is a real financial decision, and most practices make it without modelling either side.
Underneath all of it, most owners lack the one number they need: profit per provider, per operatory, or per location, so growth decisions get made on production figures that don't reflect what reaches the bank.
What usually goes wrong
- Only deposits recorded, so the production-to-collection gap is invisible
- Insurance receivables not aged, so denied claims go unreworked
- Contractual adjustments not tracked by payer
- Provider compensation calculated inconsistently month to month
- Equipment expensed rather than planned as a depreciation decision
- No profitability view per provider, chair or location
- Payroll and provider pay handled as one undifferentiated cost
Bookkeeping from $299/month · Cleanup from $200 per month behind
Built for how a
practice actually earns
The insurance cycle, provider economics and capital decisions handled properly.
Insurance receivables
Claims tracked and aged by payer, so denials surface while they can still be reworked rather than after the window closes.
Adjustment tracking
Contractual write-offs recorded by payer, so you can see which contracts genuinely pay and which barely cover cost.
Provider compensation
Production or collection based pay calculated consistently and reconciled to what the practice actually received.
Profit per provider
Revenue against fully loaded cost per provider, operatory or location, so expansion decisions rest on real margin.
Equipment planning
Depreciation schedules maintained and purchase timing modelled for tax effect before the decision, not after.
Practice payroll
Clinical and administrative staff, associate providers and contractors handled correctly across every classification.
You'll recognise this if...
None of these mean anything is broken. They mean the books were set up to satisfy a tax return rather than to run a business, which is the normal starting point.
Busy, not richer
Production keeps rising and the amount you take home doesn't move with it.
Claims age quietly
Nobody could tell you today how much is sitting in claims over ninety days old.
Payer mix unknown
You couldn't rank your insurance contracts by what they actually pay after adjustments.
Provider pay is manual
Associate compensation is worked out in a spreadsheet each month and occasionally disputed.
What better numbers
change in a practice
The first thing that changes is the receivables position. Aged claims get worked, denials get reworked inside the appeal window, and practices routinely recover meaningful sums that were simply being left behind.
The second is payer clarity. Once adjustments are tracked by contract, you can see which payers are genuinely worth having. That's the foundation for the harder decisions about which contracts to renegotiate or drop.
The third is provider economics. Profit per provider, calculated on collections and fully loaded cost, is the number that tells you whether adding an associate would actually help — and whether the one you have is contributing what you assumed.
And capital decisions become deliberate. Buying equipment with the depreciation and tax effect modelled first is worth real money in a business that buys equipment regularly.
BOOK A FREE CALLEvery client gets
- Replies within 48 hours, guaranteed
- Books closed by the 15th, every month
- Flat monthly pricing, no hourly billing
- A plain-English summary with every report
- The same team every single month
- Cancel any time, files handed over cleanly
Medical & dental accounting questions
Yes, alongside the practice management system rather than replacing it. Those systems handle production and scheduling; we reconcile them against the accounting records so production, collection and deposits all tie together.
We work with financial data rather than clinical records, and we don't need access to patient health information to do the accounting. Where any patient identifiers appear in financial records, they're handled with appropriate care.
Yes, on whatever basis your agreements specify — production percentage, collection percentage, or a base plus bonus. The important part is consistency and a calculation the associate can see and verify.
Handled with per-location reporting plus a consolidated view. Location-level profitability is usually the most valuable report a growing group practice isn't currently producing.
Sometimes, and it depends on your profit position, your entity structure and the current expensing rules. It's a decision worth modelling rather than defaulting to. That's exactly the kind of question tax planning during the year is for.
Considerably. Buyers and their advisors examine three years of financials, and clean, consistent books with clear provider economics support a better valuation and a much smoother diligence process.
Find out what your
practice actually collects
Thirty minutes, no pitch. We'll look at your production-to-collection gap, your aged claims, and quote you a flat monthly price.
BOOK YOUR FREE CALL