I get asked this question frequently.
“What is the difference between production, adjusted production, and collections?”
Associates are typically paid on either adjusted production or collections.
Adjusted production is production minus any insurance write-offs or discounts. To understand adjusted production, you need to know what “production” means. Production is how much dentistry a dentist completes measured in dollar amounts using a Usual and Customary Fee schedule (UCF). The UCF fee schedule is usually established by the office and adjusted each calendar year. Adjusted production is how much dentistry a dentist completes using the UCF fee schedule minus any insurance adjustments or discounts.
Collections refer to how much money the office actually receives for the completed treatment. Therefore, collections is equal to adjusted production minus any additional discounts, denied claims, and unpaid bills by patients (failed collections). It’s debated if financing fees should also be deducted from the adjusted production when calculating collections.
Collections do not involve a lab bill. If a lab bill is subtracted from an associate’s compensation, a formula would be used to determine the associate’s compensation. For example, an associate may be paid:
Adjusted production – lab fees
Collections – lab fees
The lab component of the formula should be itemized and broke out as a separate line item so the associate can review the charges during each pay period.
The Rule of 72 is a simple way to estimate how long a particular investment or debt will take to double given a fixed annual rate of return. Some students try to apply this rule to their student loans, but it is not applicable because direct loan interest does not compound. For example, if an […]
When you start looking towards the U.S. stock market as a potential place to invest a portion of your portfolio, you will find that a stock is classified as either a small, mid, or large cap stock based on how much the company is worth. Small cap stocks consist of companies worth 2 billion or […]
Amortization of loans refers to the spreading of payments over a defined period of time often referred to as the amortization schedule. Upon graduation, dental students enter a standard repayment plan where their graduate student loans are amortized over a 10 year term. Since most graduates have no income on the day they graduate, it is […]
I was interacting with a senior dental student on Facebook a few days ago and it became apparent that some students may not understand the difference between the capitalization of outstanding interest and compounding interest upon graduation. This particular student is going to graduate with approximately $400,000 in federal graduate student loans (all of which are […]