What financial reports should a medical practice owner review monthly?
The single most important report is your profit and loss statement broken down by provider. A practice-level P&L tells you overall performance, but a provider-level view shows you which dentists, hygienists, or practitioners are generating revenue and which are underperforming. If one provider’s production is dropping month over month, you want to catch that at thirty days, not six months in when it’s already hurt your bottom line.
Accounts receivable aging by payer is the next report to review. You need to see insurance A/R and patient A/R separated, and within insurance you want to see it broken by payer. If one insurance company is consistently sitting in the 60-plus-day bucket, you have a billing or follow-up problem with that specific payer. A healthy practice keeps days in A/R under 35. Once you’re pushing past that, money is sitting out there that should be in your bank account.
Your collections versus charges ratio tells you how much of what you bill actually gets collected. Most medical and dental practices should target a collections ratio above 95% of adjusted charges. If you’re collecting 85 cents on every dollar billed after adjustments, something is broken in your billing process, your fee schedule, or your follow-up workflow. Watching this number monthly lets you act quickly instead of discovering a problem at year end.
Overhead percentage is the report that tells you whether your practice is financially healthy overall. The benchmark for most medical and dental practices is keeping overhead under 60% of collections. That means for every dollar collected, no more than 60 cents goes to rent, staff, supplies, insurance, and everything else that isn’t provider compensation or profit. If overhead is creeping above that threshold, you need to figure out which category is driving it up. Staff costs, facility costs, and supply costs are usually the three biggest areas to examine.
Denial rate by payer is easy to overlook but it directly impacts cash flow. A high denial rate with a specific insurance company might mean your front desk is collecting wrong information, your coding is off, or the payer has changed their requirements. Tracking this monthly by payer turns a vague “we’re not collecting enough” feeling into a specific action item you can fix.
Beyond these core reports, a quick review of your bank balances and upcoming obligations keeps you from being surprised by payroll, quarterly tax payments, or large vendor bills. This doesn’t need to be complicated. It just needs to be consistent.
The practice owners who review these reports monthly make better decisions about hiring, equipment purchases, and payer contracts. The ones who don’t tend to rely on their bank balance as a gauge of how things are going, which only tells you where you’ve been and nothing about where you’re headed. Just like construction job costing in Phoenix gives contractors visibility into project profitability, these reports give practice owners visibility into what’s actually driving their revenue and where the leaks are. Fifteen to twenty minutes a month reviewing the right numbers prevents problems that cost thousands to fix later.
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