Production and Income
Below is a definition of terms used when discussing production and income, as well as a discussion about compensating providers by production vs income.
Production: The amount of money the practice expects to collect. Production is often described in terms of production for all (or a group of) patients in a date range (or on a certain date). Gross production is the sum of the fees charged to the patient(s). It is a good number to compare how busy the practice is in different periods. Net production is gross production, plus adjustments, minus insurance write-offs.
Write-offs: The difference between the insurance fee the provider is contractually obliged to charge and the provider's UCR fees.
Adjustments: Reductions in charges to patients. Open Dental splits adjustments into positive adjustments and negative adjustments for data entry purposes, but they are reported together or by type. For example, a positive adjustment type might be 'missed appointment' or 'late charge'. A negative adjustment might be 'senior discount'.
Income: The amount of money brought in or paid on accounts (e.g., collections), usually described in terms of a date range.
Production or Income? Sometimes there is confusion about whether a particular entry is production or income. Examples:
There are several Production and Income Reports (daily, monthly, annual, provider). Each summarizes the data differently but is comprised of the same information.
If there are insurance plans that use the PPO percentage plan type, and the office tracks write-offs, there are three options that affect when write-offs in reports are applied to production. See Show Insurance Writeoffs for guidance and examples.
Some offices compensate providers by paying them a percentage of production. To determine provider production, run the Production and Income Report for a date range, using the Provider report type or by selecting only a single provider.
If the office does not use PPO insurance plans: The Tot Prod amount indicates the net production and accounts for adjustments. Set a Global Lock Date so that financial report data doesn't change over time. See Security Lock Dates. The practice should not be utilizing write-offs, so the write-off preference should not affect reports.
If the office has PPO insurance plans: Determine how the practice would like to calculate write-offs. There are three options. See Show Insurance Writeoffs for information on each option and how it functions. .
Provider income or collections can be viewed on the same Production and Income Report used to view production. There are two types of income: insurance income (Ins Income) and patient income (Pt Income). Together they equal the total income (Tot Income).
There are two issues to be aware of when tracking income:
Insurance Income: Insurance income is allocated when a user receives the claim payment.
Patient Income: Patient income can be allocated when entering the payment or at a later date using income transfers. Depending on Allocation Setup, Open Dental may suggest paysplits based on the family's outstanding charges, payment amount, and FIFO logic (first in, first out, by date). It is very important to know which provider should and is getting credit for a payment. The practice should also develop a policy for allocating payment to multiple providers. The daily or weekly Daily Payments Report (run by provider) can be a useful report to give to providers so they can verify the income information.
Adjustments to income: Adjustments themselves only affect production amounts, not income. If income needs to be adjusted, enter a payment or an income transfer. Below are some example scenarios.
What are the issues with reporting income by provider?
To mitigate this issue: