Production, Adjusted Production, and Collections

Learn the difference between production, adjusted production, and collections.
Production, Adjusted Production, and Collections
Photo by Tyler Easton / Unsplash

A fundamental part of understanding your compensation as a dentist is to know the difference between production, adjusted production, and collections.

Production is your office's full normal fee (or "cash price") for procedures. This is basically your office's UCR fee (Usual, Customary, and Reasonable). If a patient walked in with no insurance and wanted to pay cash for a procedure, that total fee is your production.

Adjusted Production is your office's full normal fee minus any "adjustments". The most common adjustment is due to participating with insurance plans that will "adjust" the full fee to a lower fee to match the insurance's UCR fee. For example, if your full fee for a crown is $1000, but you participate with insurance X, there may be a -$200 adjustment on your production because insurance X says their crown fees are priced at $800. So your adjusted production for that crown with insurance X is $800, not $1000 (which would be your normal full fee). There are other adjustments, such as discounts, professional courtesy adjustments, insurance downgrades, etc.

Collections is the amount your office actually collects for the treatment. In an ideal world, adjusted production and collections would be equal because we would like to collect everything we are owed, but sometimes things slip through the cracks: insurance denies the claim and doesn't pay, patient owes a balance and refuses to pay, etc. In the end, the amount that was actually collected may be less than what should have been collected. It could also take a few weeks or months to actually collect the full amount owed, especially when dealing with insurances. Typically you want to see the office collect in the high 90 percent (97-98%).

People use the word "production" very loosely, but most of the time when people say they are paid by production, they usually mean adjusted production. Adjusted production and collections are very similar, but being paid on collections typically means things are delayed, whereas adjusted production you are paid at the next pay cycle after doing the procedure. Basically if you're on adjusted production, you get paid upfront compared to collections where there is at time lag. Be aware though that if a claim ends up not getting fully covered and the office cannot collect the rest from the patient, the office may write-off the loss and you may see another "adjustment" in the future on your "adjusted production".

Ideally, we would like to be paid on adjusted production because you can feel more secure knowing you will get paid for when the procedure it's done, rather than waiting for you office to collect the full amount.

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