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Identify and Live by a Happy Medium for Highest Profitability
Dashboard graphic that the “Green Zone,” or ideal Gems Ratio, is from 0.8:1 up to 1.1:1. If your Gems Ratio is > 1.1:1, there is too much money owed to your practice. It’s not only coming in too slowly, but you are also at higher risk of never seeing some portion of it. If your Gems Ratio is < 0.8:1, on the surface that may appear to be a good place to be. But it’s NOT! Heck, if you take it to the extreme and require full payment (even the insurance portion) for all treatment in advance, then you’ll have ZERO AR … a “Cash Practice.” Sounds good, right? You may think you’ll sleep better at night knowing that nobody is going to get your care without paying for it. But it’s a false sense of financial security. You’ve choked out a huge portion of the production you could have done by having a more lenient financial policy.
“You may think you’ll sleep better at night knowing that nobody is going to get your care without paying for it. But it’s a false sense of financial security.”
The zone we’ve identified as “green” on your dashboard is 0.8:1.1. Keep your Gems Ratio in the green zone for maximum productivity and profitability. Too high and you’re giving away the store. Too low and security is so tight that nobody can get in! For full details on financial options, financing sheets, long-term internal financing, and more, visit GoldMine Team Training Toolkit 006, “Financial Options and Exactly How to Sell Them.” Gems Ratio is but a fraction of what’s available on your Gems Members’ Dashboard. Be sure to connect with your Personal Gems Concierge today to get your Gems Dashboard up and running!
stays fairly constant (flat line) and your Gems Ratio (AR divided by three-month floating average monthly net collections) hovering around 1:1 for a number of months. Then you note a sudden sharp decline in AR. The significant drop could mean that your staff has worked overtime calling patients and collecting outstanding balances. Or it could just as easily indicate that your team had not performed routine write-offs for ages. Then last month, you lit a fire and appropriately identified and wrote off $20,000 in bad debt! There is yet another possible reason your AR heads downward. You may have taken a week or two off. How would that affect AR? Simple. Collections continue to come in from patients and insurance companies, yet production grinds to a halt in your absence. As outstanding balances continue to reduce without new ongoing production, the total AR (money owed to the practice) will decline. This isn’t necessarily good or bad. It is, however, important that you understand why it’s occurring. Without such insight, you may assume that the collections efforts of your team have finally helped you to turn the corner on a chronic AR problem. It’s one of many reasons that we’ve programmed your dashboard to use three-month floating average monthly net collections. It accounts for periodic fluctuations in collections.
Gems Ratio = AR/Average Monthly Net Collections
If John has an outstanding AR of $60,000, and he is collecting $60,000 per month, then his AR to monthly collections ratio, his Gems Ratio, is 1:1. Notice on the Gems
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