What software reports should I look at?

A friend who is a dental CPA and practice management speaker asked us the other day what reports from practice management software should be reviewed by a practice owner.  Here is our answer:

Using PMS Reports to Monitor Your Practice

Obviously, there is no report called “Is embezzlement happening?” in any PMS, so this is really about picking up signs that something is amiss from reports designed for other purposes. Also, embezzlement protection often requires comparing PMS and other things like bank accounts. Since there are differences between how various software labels their reports, we are using fairly generic labels here.

The following is what we consider to be an effective monitoring routine:

1. Print your own reports.  Don’t let someone print and hand you a report.
2. Look at day-end summaries every day before you leave.  Don’t try to follow the money into the bank – this is better done at month end.  Scrutinize adjustments, and make sure that treatment entered lines up with your memory.  This is your primary control for ensuring that transactions were accurately entered into PMS.
3. At the end of each month, perform an “articulation” calculation.  Take the month's day-end reports (i.e., the ones you reviewed) and total fees, adjustments, and payments from them.  Compare these totals to the totals from a month-end summary report.  They should match exactly.  If they don’t someone performed some transactions after-hours that you have not seen.
4. Compare the collections from the month-end report (which in the previous step we confirmed equaled the daily totals) against bank deposits.  They probably won’t line up exactly due to timing differences between the date when PMS recognizes certain transactions and when they make it to your bank.  You have two options for these variances:
1. Try to track down the individual items causing the variance
2. Plot the variance on a graph, or perform a 6-month running total for the variances.  The cumulative trend should approach zero if discrepancies are in fact caused by timing.
5. In addition, we recommend looking at a few more things monthly:
1. The alarm log for the practice’s alarm system, to see if anyone is accessing the practice at unexpected times
2. Receivables, which we want aged and segregated between patient balances and insurance balances.  Also, print a separate report of credit balances.
3. Deleted and modified transactions report, although if you have scrutinized day-end reports properly you have already seen these.
4. Most software can print out a zero-fee report for patients who have had appointments but no fee.  Some of this is organic, for example, multi-appointment treatments like crowns or implants, but worth scrutinizing.

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