Monday, December 14, 2009

Dental Production vs. Collection Problem

Can you tell me where I can find legal definitions of "production" and "collections" as they relate to dentistry?

 
I've just started working for a group practice. I have a contract (as an independent contractor) that states that I will be paid "30 percent of the production resulting from dental services provided by" me according to their standard fee schedule. I was happy with that until I discovered that they are trying to call their collections "production" and compensate me accordingly. (The word collections is not mentioned anywhere in my contract.)

 
Some of the things they are claiming according to this nomenclature are that when they run a promotion for a free exam (etc), since they are charging nothing, it doesn't count as "production" and I get paid nothing. If they discount a fee, it discounts what I get paid. They also said that if a patient defaults on their payment, that it retroactively counts against my "production" and is backed out of my pay. (Of course, since I'm not an owner, I have no say what promotions get run, or when.)

 
Naturally, I'm contesting all this, since it would basically give them carte blanche to not pay me for whatever they decide not to charge for. In school, production was always defined as "the procedures you perform" and collections as "what the patient/insurance actually pays." Is this incorrect? Can anyone help me find official definitions of these terms? I'm really hoping I don't have to involve an attorney.

 
Thanks!


First, different people use the term “production” very loosely. While one might expect it to mean the number based upon the practices fee schedule, many people simply use it to fit their needs. You’ve learned a very valuable lesson, which is (and this is for every associate and owner dentist):


Make sure you define these terms in your agreement. As an associate, if you get a contract that says you'll get 30% of production, insist that a definition be inserted that your dental attorney is comfortable with. The same goes for many other terms thrown around in agreements, compensation, professional expenses, full time and part time, just to name a few. Use examples if you must so it's very clear.


Check with the ADA as to their definitions. They put statistical information out there and they must have "standard" definitions for these terms.


Good luck. You’re right to contest this.

This first appeared on Dentaltown.

Send your questions to Tim Lott, CPA, CVA at tlott@dentalcpas.com

For more information or to sign up for our newsletter, please contact arose@dentalcpas.com
Follow us on TwitterFacebook and Pinterest

2 comments:

test said...

I am looking to make an offer on a practice where the seller is insisting that he gets 35% of collections and that I assume 100% of lab bills. Is this fair?

Tim Lott, CPA, CVA said...

Yes, that's fair if not favorable, the norm I see is 40 percent - no lab.

You can email me with any other questions: tlott@dentalcpas.com

Good luck!