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An insurance or employer contract looks like guaranteed volume. Sometimes it is. Often it is discounted work that arrives with administrative overhead and pays sixty days late, and the clinic only discovers which after signing.
Here is how to tell the difference beforehand.
Do the arithmetic first
Work out your cost per chair-hour, then check the contract's rate against it.
Take the contract's price for the procedures it actually covers — not the headline list — and calculate what they pay per hour of chair time, including the administration each case requires. Filing a claim that takes fifteen minutes of a receptionist's time on a procedure that takes thirty minutes of chair time is a real cost, and it is the one left out of most decisions.
If the effective rate is below your cost per chair-hour, the contract only makes sense if it fills time that would otherwise be empty. That can be a legitimate reason — but it is a very different decision from "this is profitable work," and it stops being true the moment your schedule fills.
What to check in the terms
Before signing:
- The fee schedule, per procedure, in writing, and how often it can change
- Payment terms. 30, 60 or 90 days changes what the contract is worth
- What happens when a claim is rejected. Do you bill the patient, absorb it, or appeal? Get this in writing.
- Pre-approval requirements — which procedures, how long approval takes, and whether it can be obtained while the patient is in the chair
- Exclusivity or volume commitments. Be careful agreeing to a minimum you cannot control.
- Notice period on both sides
- Who the patient belongs to if the contract ends
That last point matters. If an employer contract ends, can you continue treating those patients directly? Ask before signing, not after.
Pre-approval is where the friction is
The common failure: a patient arrives, the treatment needs approval, approval takes three days, and the appointment is wasted.
Two habits prevent it:
Check coverage before the appointment, not at it. When booking a patient with insurance, confirm what is covered and whether approval is needed. Reception can do this the day before.
Have a plan for the answer "no." The patient still needs the treatment. Know in advance what you offer: pay directly, a staged alternative, or a referral. Deciding this while the patient sits in the chair produces inconsistent answers and uncomfortable conversations.
Record it against the treatment
For every insured case, record: the insurer, the policy reference, what was pre-approved, the date of approval, what was claimed, what was paid, and what remains.
Insurance claims are rejected months later for missing documentation. A record of what was approved and when is the difference between an appeal that succeeds and one that does not.
The cash-flow trap
This is what catches clinics.
Materials and lab fees go out immediately. Salaries go out monthly. Insurance pays in sixty days, sometimes ninety, and sometimes rejects and pays in a hundred and twenty.
A clinic where half of revenue is insured needs materially more working capital than one that is paid at the chair. Growing insured volume without growing the cash buffer is how a profitable clinic runs out of money — the profit is real, it just has not arrived yet.
Before increasing insured work, calculate the cash gap it creates and confirm you can carry it.
Employer contracts
Contracts with local employers for staff check-ups behave differently from insurance and are often better for a small clinic:
- Payment is usually simpler and faster
- Volume is predictable and can be scheduled into quiet periods
- The patients become individual patients, which is the real value
Price them from your cost per chair-hour with a modest volume discount — not from a percentage off your list, which is how clinics agree to rates they later regret.
Schedule them deliberately into your quietest hours. That is where the discount is earned back.
Review annually
Once a year, calculate per contract: total revenue, effective hourly rate after administration, average days to payment, and rejection rate.
Contracts drift. A rate agreed three years ago against costs that have since risen 20% is now a different contract, and nobody will tell you.
In DOQ, payments attach to the treatment they cover and outstanding balances are reported by age, so a slow-paying contract is visible as a number rather than as a feeling.