Hi, this is Dave Kats with Therapist Consultants, and I have a tip for you.

Most of you know that I work as a consultant only to mental health therapists, but that my background was in chiropractic. I originally had a chiropractic consulting firm which was, by the way, the largest one in the United States. Well, I still own a couple of chiropractic offices. I bought a new chiropractic office not too long ago. I said, "How is your accounts receivable?" In other words, the amount people owe you. They said, "Oh, we do a really good job of that. Not too many people owe us anything." Well, at our insistence, I said, "I want you to run an aging of accounts and see what people actually owe us."
They called us back, they were absolutely shocked. They had $260,000 that people owed them from the past that they hadn't collected. Now, I'm not saying you're going to have $260,000. If you're on a cash basis, you may have very little, but if you are on an insurance basis, you accept insurance, you...

Hi, this is David Kats with Therapist Consultants, and I have a tip for you.

If there's one thing I see that therapists do that's unusual, is they almost always underestimate their overhead. I asked them how much their overhead is, and they say, "About 1,500 a month." I say, "How much do you make and how much you collect each month?" They say, "$10,000." I say, "Okay, that means that you have $8,500 that you take home every month. That's $100,000 a year." They say, "No, no, I only take home $60,000 a year." The problem is they have underestimated their overhead.
What you have to do is you have to look on your taxes and say, "Here's what I did for total collections. Here's what I took home. Divide those out, and you'll find what your true overhead is." Now, one of the ways you can find your overhead that I try to bring therapists around to understanding their overhead a little better is by using forms, and there are lots of templates online. One of my like is called...

Hi, I’m Dave Kats with Therapist Consultants and I have a tip for you.

If you take insurance and even if you are a cash practitioner, you should run an aging of accounts every month. What I mean by an aging of accounts is just a report that tells you who owes you money and how long they've owed you that money. And you have to decide based on that report what you need to do for collections. I have here a hypothetical aging of accounts that I'd like to go over with you and show you what we would do if we found these on our aging of accounts. Let's look at the aging of accounts. You can see the first person there is Bill Jones. Now he doesn't owe anything for 30 days, 60 days, 90 days, but from 90 days to 120 days he owes $100 and for over 120 days he owes $400. So he owes a total of $500. Now it appears to me that he has stopped coming in some time ago, about three months ago, and we have not collected from the times previous. Something went wrong, we sent it to the wrong...

Hi, I’m Dave Kats, at Therapist Consultants and I have a tip for you.

You know at some point in time almost everybody that takes insurance thinks about going to cash or being a cash practitioner where patients pay their own bill. Well, there are certain times when it’s good to be a cash practitioner and certain times or certain conditions when it’s not good to be a cash practitioner. Let me give you an example. If you are in practice that’s overfull right now, if you’re turning away new patients away, then chances are you should move to a cash practice because even if a few don’t stay with you, you have all those new patients coming in. So that’s one reason why you might want to be a cash practitioner. Another reason you may want to be a cash practitioner, is if your insurance is paying very little. If you have insurance companies that only pay you $60 or even $50 for a visit then I think it’s time maybe to go to become a cash...

This is Dave Kats for Therapist Consultants. I have a tip for you.

Last week we talked about what kind of billing software you should use. We talked about Therapy Appointment being good and Therapy Notes being good and Practice Mate by Office Ally if you wanted something that was free. Today I want to talk about your bookkeeping software and I think hands down, you should have QuickBooks. QuickBooks has one program that resides on your computer that you can use and there is a Cloud-based software. They are both fairly inexpensive. Here's what you need to do, if you keep your books on QuickBooks, it makes it light years easier for your accountant at the end of the year. You should provide your accountant something that interfaces with the software he or she uses and your accounting fee should go down. Virtually every accountant in the world interfaces with QuickBooks, so I would suggest you get QuickBooks. If you know nothing about accounting, I would suggest you go to Craigslist or...

Hi, this is Dave Kats with Therapist Consultants and I have a tip for you.

Do you remember when the new codes came out? We talked about so many different things with these codes. Something new that had been added was add-on codes. Well, I find that most therapists aren't using the add-on codes. There are certain add-on codes and I'm not going to list them for you but you can look them up. Just go to add-on codes for mental health practice, CPT add-on codes for mental health practice, and it will bring those add-on codes up. Some of the ways you use an add-on code is when a patient is in crisis, you bill your add-on codes. You bill those add-on codes or you bill a new code for a patient in crisis. You have to look at those things. Also, with things like play therapy or if you have language as a barrier, you can do an extra charge using these add-on codes. Like I said, I'm not going to list all the add-on codes for you or the other codes for you but make sure that you just look them...

Hi, this is Dave Kats with Therapist Consultants, and I have a tip for you.

Maybe it's time to kick some of the low-paying insurance companies to the curb. You know, if you still accept insurance, one of the things that happen is some insurance companies pay very little, and we have kind of a rule of thumb for our clients who accept insurance, and that is if the insurance company is going to pay you a total of less than $68 for the session, you might as well kick that insurance company to the curb, get rid of them, and have those patients pay cash for their services when they come in, for their therapy. And you have to think about which ones that pay enough to stay with, and which ones that don't. Get rid of the ones that don't pay well and put those people on cash. You will see that your practice will increase and that your revenue will increase as a result. What I'd like you to do is take a mental note or go through your files and see which insurance companies pay less than...

Hi, this is Dave Kats and I have a tip for you. 

People a lot of times ask us, ‘what are the most prevalent and best software out for billing insurance?’. The first thing I would say is this, every therapist should be using their own software. Sometimes I see a therapist that accepts insurance and they will go to Blue Cross to file, Aetna to file, UHC to file. It is better having your own software. If you would like to have something free, I suggest that you use Practice Mate which is by Office Ally. Just look up Office Ally and Practice Mate. It has a great billing system and is absolutely free. If you are a cash practitioner, I would use this type of software to keep your practice organized and your notes organized. If you can afford to pay for software, there are two that have become the king of the hill in the last few years. These are Therapy Appointment and Therapy Notes. We use Therapy Appointment in our office, and we are fans of Therapy Appointment. It cost...

Hi, this is Dave Kats, at Therapist Consultants and I have a tip for you.

There’s a right way and a wrong way to schedule patients as far as scripting is concerned. I'd like to go over the right type of script to use when scheduling a patient. Let's assume you're in a counseling session and your phone rings, and somebody leaves a voicemail that says we may need to come in as new patients. As soon as you have the opportunity, you call them back and you'll say, "Hi, this is Judy Lewis, the therapist that you called about getting in for some care. I have just a few minutes before my next patient. Can you tell me briefly what your situation is?" "Well, yes. My wife and I have been married for 26 years, but four years ago we lost our adult son. It’s made our marriage fall apart. We decided that we either have to call it quits or that we have to get some marriage counseling. So we were thinking about possibly getting marriage counseling.

Now, when they pause or if you break...

Hi, this is Dave Kats from Therapist Consultants and I have a tip for you.

Some people, some therapists have trouble collecting money. They have, what I call, a poverty complex, and I found the best thing to help you with a poverty complex is to have a set of scripts that you use when collecting money from the patient.

For instance, here's one script that we always use in our clinic. When the patient comes to the front-- if you haven't charged them before they go back, and they come up to the front. You say, "That will be $125 for today. Do you prefer to pay by cash, check, or credit card?" And then you just look down and let them decide. But always use that, "Do you want to pay by cash, check, or credit card?" Because then that gives them a choice of yes's. Yes, I'll pay cash, yes, I'll pay by credit card, or yes, I'll pay by check. Always use that one when they come to the front, "Your fee today was $125, do you want to pay that by cash, check, or credit card?"

Of course, once...