Missed charges—services or products you provide but don't bill your clients for—may not seem that critical. After all, everyone knows that a few charges will slip through the cracks. And it's not as big a deal as calling Mrs. Fountain's beautiful male Irish setter a girl, right?

Before you shrug off the problem, consider this: Practices often drastically underestimate the cost of missed charges. Your practice could be hemorrhaging tens or hundreds of thousands of dollars each year.

Why should you care?

Practice owners often tell me they don't pay their team members more because they simply can't afford it. If you're helping your practice earn more by catching missed charges, there's a good chance you'll see both your pay and benefits increase. Additional profits also give your practice the opportunity to offer higher quality medicine because the owner can afford better equipment and more help. So capturing these charges is a win-win situation. It's good for the pets that need care, the clients who love them, the practice owners, and, importantly, you.

If you're worried that your boss won't reinvest the extra money you generate from capturing missed charges into raises, continuing education, or other benefits, consider this: You still benefit. At the very least, your boss will notice and appreciate your efforts. And you can take pride in doing a great job and building skills that make you a more marketable employee.

How bad is the bleed?

Most teams assume their missed charges are a slow dribble that doesn't amount to much. They're astounded when a medical record audit reveals the deluge that's occurring. One solo doctor practice I worked with in Texas wasn't billing clients for about 8 percent of its gross revenue. The hospital grossed about $500,000 annually, so they were losing $40,000 in income a year—money that could've been spent on an additional technician, a new ultrasound, continuing education, or raises.

A large practice I worked with in an affluent area found that its missed charges ranged from 5 percent to 20 percent of gross revenues, depending on which doctor's invoices they reviewed. Missed charges were draining the practice of about $500,000 in sales a year. Think what $500,000 could buy!

How much money is your practice losing? The best way to measure the leak is a medical record audit. Ask your manager for permission to review the records; this is a great task to tackle during slow times. You'll pick 20 medical records for each doctor—half outpatient and half hospitalized cases—from the most recent month.

Do not miss these leaks, either

For each week of the month, pick five records from different days of the week. Compare the services noted on the medical record to those listed on the client's invoice. Record your findings on a summary list—include the doctor's name, the client's name, the date of the visit, the day of the week, the total amount the client paid, all of the services or products the client received that weren't invoiced or were discounted, and the standard price of the product or service. When you're done collecting this information for each doctor, total the items the client wasn't charged for and calculate it as a percent of the amounts invoiced. (Go to firstlinemag.com for a sample audit summary form.)

These summary sheets may reveal some interesting trends. For example, does one doctor miss more charges than the others? Does your team miss charges more frequently on a certain day of the week or with outpatient or hospitalized cases? Are most of the missed charges for one kind of service?

Plug the leak

Once you know the scope of the problem, your team can look at why it's happening and find a solution. Missed charges occur for a number of reasons. Sometimes it's deliberate—a doctor or team member decides to offer a 100 percent discount. If this is the case in your practice, the practice owner needs to discuss these intentional discounts with the people who offer them. But in most cases, missed charges are unintentional—they just slip through because you're busy or your systems aren't working.

To catch missed charges, you need to develop a protocol that lists the specific steps you'll take to record charges. For example, one option is to enter the charges in the exam room as you and the doctor offer the services. You're also much less likely to miss charges if you use a travel sheet that lists your most common services. This is a great option if you don't have a computer in every exam room.

Understanding the patterns behind missed charges can also help you find the best way to stop them. For example, are most missed charges occurring on Tuesday, when you're short an assistant?

If you're running lean that day, the rest of the team may be too busy to pay attention to missed charges. You may need to adjust the schedule or designate a receptionist to check charts once more before you close out invoices.

Are most missed charges occurring with hospitalized cases rather than outpatient visits? Hospitalized patients stay in the practice longer and require more services, so the risk of missing charges increases. One solution: Use detailed order sheets attached to each cage and designate a person each day to enter the charges.

Once you know the reason behind missed charges in your practice, try these steps to stem the tide:

• Question missed charges. If you see a doctor forget to charge a client, ask (politely—and out of the client's earshot) whether it was intentional. Doctors' memories are as fallible as anyone else's.
• Look for trends. Do you often miss charges in the early morning when you're trying to treat several pets at once? Is there a way to make tracking charges easier? For example, if you note charges on a board in a remote location, individual cage cards might be part of the solution.
• Redesign your travel sheet, cage card, and any other forms you use to note charges. They should be easy to read and should list your most common services so you just check off the services you provided whenever possible.
• Track food consumption. Hang a clipboard and pen next to the pet food to remind team members to write down food pulled for hospitalized or boarded animals. This also works for products you store in the refrigerator.
• Put one person in charge. Designate one person to enter charges for hospitalized and boarded patients each morning and again each afternoon.
• And finally, pay attention. Once you see how much missed charges affect you and your practice, you're more likely to notice these leaks, and so you'll be prepared to plug them.

The cost of a missed charge

Missed charges don't just affect gross revenue. They reduce practice profits on a dollar-for-dollar basis. So if you don't charge for $40,000 worth of services, you're losing $40,000 in profit.

When charging isn't worth it

Did you miss an $18 charge for Fluffy's nail trim? If you discover the error right away, call the client and explain the problem, says Dr. Jeff Rothstein, MBA, president of The Progressive Pet Animals Hospitals and Management Group in Michigan. If it's been more than three days, you might be better off eating the cost. It's better to lose the $18 than lose clients when you confront them much later about a missed charge.

Karen E. Felsted

Karen Felsted, CPA, MS, DVM, CVPM, is a consultant with Brakke Consulting Inc. in Dallas. Please send your questions or comments to: firstline@advanstar.com