FINANCIAL - How to Prorate Fees for Orthodontic Transfer Patients

“Don’t make a hundred decisions when one will do”.

– Jim Collins

Orthodontic transfers!  Don’t you love them!

When they’re our patient and they’re moving elsewhere, how do we decide what’s a fair fee for our portion of the treatment?

And if we accept into our practice transfer patients with appliances, how do we determine what’s a reasonable fee to complete their treatment?

Tough questions!

Like Jim Collins, our practice wanted to make “one decision” rather than a hundred.  So, after struggling with these uncomfortable decisions for several years, we eventually arrived at a solution that seemed fair to everyone.

We put together two excel spreadsheets (below) that would calculate a prorated fee for both situations.  We based the transfer fee on the following percentages for each stage of treatment:

• 5% - Records
• 20% - Diagnosis, treatment planning & placement of appliances
• 60% - Time in treatment
• 15% - Removal and retention

To simplify matters, we used our practice average of 20 months for active treatment so that each month was 3% of the total fee.  By using 3% per month instead of 2% as some do, we could cover the cost of transfer in records.  Re-bonding the patient with our appliances is an additional fee if necessary.

If you believe that your effort in each stage is different, you may wish to adjust these percentages on the spreadsheet. Others have used other percentages usually ranging from:

• 25-30% for Records, treatment planning and appliance placement
• 45-55% for active treatment
• 15-25% for removal and retention.

The TRANSFER OUT Procedure

When a patient informs us that they will be moving,

1. the Office Manager/Financial Coordinator opens a blank Transfer-Out spreadsheet and enters three numbers – the total fee, the months in treatment and what the patient has paid to date. The spreadsheet then calculates the refund or remaining balance due.

2. Before presenting the fee to the patient, I quickly review the calculations and make any slight adjustments to the months in treatment especially if I’m aware of any special considerations.

3. Next, the Office Manager/Financial Coordinator presents the spreadsheet to the parent/patient. (We want to give the clear impression that this partial fee decision was not arbitrary.)

4. If at all possible, photographs and a panoramic film are taken at the last visit to document the state of the patient as they left our office

5. Before leaving the office, I encourage the patient to seek two opinions in the new city because, “Orthodontic offices vary widely on how they assess fees for patients transferring to them and there could be a big fee difference between those two offices.” With this recommendation, I’m hoping to avoid a call from a former patient who sought only one opinion saying, “The new orthodontist said you overcharged me!” 

6. Finally, the patient’s account is adjusted by the amount to create a zero balance. Remember, this is an adjustment to Production not Collections. We label it as "Undelivered Services” since it represents an adjustment to the patient’s anticipated Full Treatment fee as opposed to an noncollectable “write off" that we might do from Collections.

BTW - A $100 Transfer Fee is factored into the spreadsheet.  All of our Truth-in-lending forms list this fee in the event that the patient leaves during treatment. 

The TRANSFER IN Process

We prorate the fee based on treatment remaining using the Transfer In spreadsheet.  As you know, we are under no obligation to "take what's left on the fee from the other orthodontist". Nowhere else in all of medicine or dentistry is that question even a consideration so it shouldn’t be here. 

For the Transfer-In patient,

1. The Treatment Coordinator opens a blank Transfer-In spreadsheet and enters two numbers - my Full Treatment fee for this type of patient and the months remaining which then calculates the prorated fee to complete treatment. Again, the "calculations” can be shown to the Transfer Patient so that the fee doesn't seem arbitrary. 

2. If questions about fees or time remaining do come up, I explain to patients that "in my practice, we can usually hit certain milestones during treatment. Generally, the initial straightening of the teeth occurs in 6-9 months, any extraction spaces are generally closed by the one-year anniversary and then it takes approximately 6-9 months to do the detail work to get a great bite and smile.”  I’ll then say (for example), “You can see from her teeth that she still has 3 months to close the spaces and an additional 6-9 months to get the best result. So, it will take an additional 9-12 months to complete her care." 

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Having a consistent way to set these fees has simplified the process tremendously.

Since initiating this system, we’ve never had a complaint from a patient transferring out and I’ve not resented treating any Transfer-In patients when I’ve succumbed to quoting a low fee to please the patient.  It is true that we may lose some of the Transfer-In patients who want us to accept the previous balance, but do we actually want a patient who doesn’t value our services?

I think not.

(download spreadsheet)