High A/R for DSOs? Why dental service organizations struggle with collections

All dental businesses face challenges, but dental service organizations (DSOs) seem to struggle constantly with high accounts receivable (A/R). Our experts have seen this problem across the board, so we can’t help but wonder: Why do DSOs have high A/R — and how can they fix it?

Running a DSO is no easy feat. There are typically more than 20 dental office locations that you’re trying to keep streamlined, but standardizing processes throughout all of the locations is labor-intensive.

Our VP of Sales and Business Development at DCS, Jon Kromenhoek, spoke to us about dental service organizations and their unique challenges. 

We’re sharing his insights with our own deep dive on why so many DSOs wrestle with collections and high A/R. We’ll also propose a cost-effective and efficient solution for overwhelmed DSOs to reduce their A/R backlogs and optimize cash flow — now and in the future. 

Key takeaways on high A/R and collections problems at DSOs: 

• Every DSO wants solutions that will collect more while costing less
• DSOs struggle with staffing as single private dental offices do, but at a larger scale
• Hiring more staff isn’t the only solution or the best one

What’s the goal? Dental service organizations (DSOs) want to collect more with less

According to the Association of Dental Support Organizations, the purpose of a DSO is:

“To allow dentists to maximize their practice with the support of professional office management. The DSO model enables dentists to focus on the patient while delivering excellent dental care.”

But that’s just one part of why DSOs exist. We asked Jon Kromenhoek what he thinks DSOs are aiming for. Here’s what he said: 

“Lower A/R seems to be the primary objective with most DSOs. They want to figure out how to capture more revenue, with fewer people, cost-effectively.”

It makes sense. Doesn’t every business want to save on overhead expenses while also collecting every dollar they’re owed? Of course!

So… why is high A/R such a difficult problem at DSOs?

What’s the problem? Everyday dental business challenges are multiplied for DSOs 

DSOs deal with the same challenges that single-office private practices face: 

• • Claim denials
  • Patients with outstanding bills
  • And more recently, high staff turnover

The big difference is the scale in which DSOs are operating — they’re dealing with these issues across dozens, or even hundreds, of locations. Jon explains what he believes their biggest problem is:

“Finding good people wanting to work is by far the greatest challenge for DSOs. The recent security breaches also created a significant issue, creating backlogs of work. I know one DSO that had 40,000 unpaid claims last year alone. A/R begins to pile up, and their staff are unable to keep up.”

He continues: 

“The large DSOs that grew too fast, coupled with the pandemic and the security breaches, presented the perfect storm. I know one company that has a foothold in DSOs, but we’re hearing how they’ve overpromised and underdelivered. We’re told that they can’t retain their own employees, leading to their overall service levels and communications deteriorating significantly.”

Those are extreme cases, but they’re an indication of what all DSOs are facing.

Read more: 95% of dentists battle the healthcare workforce shortage: What’s their game plan?

Because of these staffing issues and a lack of quality control, DSOs are unable to ensure fast, accurate collections for their dental practices. This negatively affects their bottom line, and even their practices’ reputations.

Unfortunately, a practice can inherit these issues on Day 1 with their DSO, which might have processes in place to make the transition from private practice to DSO-owned easier, but they’re not always effective.

MGE Management Experts explains:

“DSOs often ask the original owner to stay on board for a few years, ensuring a smooth transition. But what happens when the owner’s time is up? Finding someone with the same level of dedication and commitment isn’t always a walk in the park.”

As you know, staffing a dental business is not about filling positions with warm bodies. It’s about finding the right people to perform fundamental dental billing tasks, such as reducing the A/R backlog — a business-critical operation which requires niche expertise that is hard to find.

So, how does a DSO leader find qualified and experienced dental billing professionals to clear the deck and provide continual support?

What’s the solution? DSO leaders find it wise to outsource to specialists who combat huge A/R backlogs

As we now know: Every DSOs’ goal is to reduce their A/R backlog. They want to spend the least amount possible to collect as much as possible.

But the chronic healthcare staffing shortage provides a huge roadblock, and there’s no end in sight. Jon told us how DSOs are approaching this:

“Leadership is the driver at the large DSOs, and constant pain and frustration with the emerging DSOs leads them to our site (DCS), looking for alternatives. Many DSOs are getting their info for alternatives by word of mouth.”

The suite of services and solutions at DCS can be defined as end-to-end revenue cycle management — from insurance verification through scheduling to billing and collections. Our pool of experts paired with our automated technology help DSOs capture more revenue with fewer people at a lower cost.

Working with DCS even eliminates the need to hire additional billing staff. Instead, you gain a comprehensive solution to collecting from both patients and insurance companies. 

You can explore all of our service and solutions here. 

"Before working with DCS, we had too many old claims, and were not able to get caught up. Once we partnered with DCS, we noticed an immediate reduction in AR due to catching up on posting, then starting to work aging. They were very responsive, and Ana was amazing: Very knowledgeable and friendly! We continue to be impressed with the great communication and ease of onboarding with DCS. I absolutely recommend DCS." - Yellowstone Family Dental 

When your DSO combines our patient and insurance billing services, you’ll see your A/R backlog reduced significantly, all while removing tedious, time-consuming tasks from your in-house team’s plate.

Our insurance billing experts will handle your insurance claims and appeals, while our automated technology will make it easy for your patients to pay online — it will even text or email payment reminders directly to their digital device.

With our team and tech on task, your DSO won’t accumulate a major backlog again. Your revenue won’t be stuck in limbo, and you’ll have consistent cash flow without staffing struggles.

Will you set your DSO apart by overcoming high A/R?

Reduce the A/R at your dental service organization with our expert help

To recap: 

• DSOs want to reduce their A/R backlog, but they can’t find (or keep) enough experienced, qualified, and committed staff to get it done.
• Even if building the perfect team were possible, the staffing shortage has made it unattainable
• Turning to DCS will reduce your A/R and increase your collections at a remarkable ROI

When you work with DCS, you avoid the frustrations of the staffing shortage yet still have the revenue you’ve earned from insurance and patients.

Just imagine: Your DSO will finally have standardized billing operations across all its locations, and your A/R will be brought down to a reasonable threshold — and it will stay that way.

Transform your DSO and get the cash flow you deserve: Book a free 30-minute consultation with DCS today.