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.