Unfortunately, there are going to be situations where you may need to send your patients to collections, and it's important to understand when it is time to utilize a third party to collect past due payments. Although it's not something you want to have to worry about as a healthcare practice, it is sometimes necessary to send patients to a collection agency.
Knowing When to Send Patients to Collections
There is no industry wide rule on when to send patients to collections, and therefore every medical practice may have different collections policies. Regardless of your practice policies, it is important to stay consistent, so that patients know what to expect.
If you find that your practice is spending a significant amount of time following up on past due payments, and that it is affecting operations, it may be time to send uncollected payments to a third party collections agency.
Unfortunately, "The cost of employing a collection agency is significant, generally ranging from 20% to as high as 50% of the amount collected."
Therefore, it is important to determine when it is necessary to use an outside collection agency vs. keeping your collections process in house.
How to Avoid Sending Patients to Collections
Of course the best way to avoid sending patients to collections is to collect those payments from patients upfront however, in the past, hospitals and practices didn't really have to develop interactions with patients about bills which presents a problem today.
Because practices collected the vast majority of their reimbursements from insurers in previous years, they focused their efforts on insurers and many didn't develop good ways of interacting with patients to encourage payment of their bills.
Plans with $2,000 deductibles are not uncommon today, and with the majority of Americans having less than $1,000 in savings, this clearly presents a potential problem.
Here are a few ways your practice can avoid having to send patients to collections in the first place.
1. Communicate Policies Clearly
Communicate your collections policies ahead of time, and as clearly as possible, so that patients can be prepared for what may occur if they are significantly late with payments. By addressing the issue early, you should be able to decrease the amount of delinquent payments that occur.
Include your payment policies on your website, in patient brochures, as well as throughout your medical office, including in the waiting room. It should also be a topic you discuss when first meeting with new patients, so as to establish the importance of your payment/financial policies from the beginning.
2. Review Delinquent Balances Regularly
By keeping a close eye on delinquent accounts and putting a process in place to follow up regularly, you may be able to prevent accounts from going to collections altogether. However, you will also discover that certain patients are at a point where their past due account status must be addressed more seriously, and possibly in person.
3. Invest in Staff Collections Training
Spend some time training administrative staff and doctors on discussing financial policies with your patients in order to minimize accounts that need to be sent to collections. Sometimes a simple in-person, private discussion about past-due payments is all it takes to get a patient to commit to a payment plan, or to make outstanding payments.
4. Collect Co-Payments Upfront
Train your front desk staff to collect co-payments or other upfront dues before your patients are provided with services. This will help to prevent situations where patients leave the office without submitting a due payment, which will in turn help to lower the amount of outstanding collections overall.
5. Request Payments Promptly After Service
Another way to decrease instances of payments going to collections is to send patients a statement of what is due as soon as the amount has been verified. The sooner your patients know what they are responsible for paying, the sooner they can make arrangements to submit the amount due.
6. Offer Alternative Payment Options
Each patient has different preferences for making payments, and therefore it may be convenient to offer multiple payment options. By accepting many different forms of payment types, such as credit/debit card, check/cash and/or online payments, you can make it easier for your patients to pay their bills in a timely manner.
If you've attempted all of the best practices listed here, and then some, and you still have several delinquent accounts you are having trouble collecting on, then it may be necessary to use a third party collections agency. Often times patients will respond more quickly to a letter from a collections agency vs. from their medical provider.
Choosing a Collection Agency that Doesn't Upset Patients
Once you've determined that working with a third party collection agency is necessary, you'll want to be sure that they are handling payment collections in the most professional, respectful, and effective manner possible, and without upsetting your patients. After all, these are the patients that you have spent a significant amount of time establishing a relationship with, and proving the best possible level of care.
Here are some guidelines to choosing the right collections agency for your practice:
- Choose a Local Agency
Although national agencies sometimes are able to offer lower pricing than a small town agency, it's important to consider the advantages of a local collection agency. They are more likely to understand your specific market, and may automatically instill a higher level of trust with your patients, since they are located in an area your patients are familiar with.
- Ask for References
Every agency you research is going to promise that they are the most professional, courteous, delicate and efficient collections agency. However, if they truly are the best, then they should be able to back that up with a reference or two, and they should be happy to provide you with that information.
- Do Background Research
After you've narrowed in on a few final candidates, you should do some additional background research on each agency. Take a look at their online profiles, review sites, etc., and see what others are saying about the services they provide, as well as their overall satisfaction levels. Keep an eye out for serious complaints and/or negative reviews that may raise red flags.
Your final choice of a collection agency should ultimately be based upon more than the cost of the provider. While you obviously don't want to overpay for collection services, you should focus more on the range of services they provide, their industry reputation, and the overall quality of service they have to offer.
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