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Use collection agencies wisely - Patient collections
Problem: Practices don't have a full understanding of their return on investment when contracting with a collection agency.
Solution: It may be more cost-effective to pay your own employees to stay late on a given number of evenings and "get on the phones and be aggressive," considering that outside collection companies take a significant percentage of what they might bring in on your behalf, says Mike Fleischman, an Atlanta-based consultant.
Your own staff may have better luck appealing to patients about their financial responsibilities than strangers who are paid solely to collect.
If you do enlist a third party, do your homework and find a company you plan to stick with, rather than switching collections agencies once to twice per year, as Fleischman often sees. You should still monitor the agencies' performance, of course. Check in quarterly to ensure that the collection agency returns five to 10 percent of your outstanding accounts, suggests John W. McDaniel, a New Orleans-based consultant who also has served as president and CEO of several healthcare systems.
Your financial policy should describe when you'll turn an overdue account over to a collections agency (e.g., after 60 days). Provide this policy to all patients, have them sign it, and keep a copy in their file. For patients who understand your policies, the mere threat of turning their accounts over to collections may serve as a deterrent to not paying.
Caveat: Passing the cost of collection onto patients is illegal, not to mention unethical, unless patients have agreed upfront, in writing, that you will charge them these fees, says Mary Pat Whaley, practice administrator at Halifax Regional Medical Center in Roanoke Rapids, N.C.
Consider, for instance, a letter Fleischman recommends practices send patients when their accounts are 60 days past due. It spells out exactly how much the patient owes for what service, and then asks the patient to check one of three boxes:
- a) A check is enclosed
- b) Charge my credit card $XX amount
- c) Please turn my balance over to a collection agency
The physician must review a patient's chart before such a letter is sent, Fleischman says. If no response is provided by the due date set in the letter, the practice proceeds with option C. He recalls one obstetrics practice that recently mailed out 600 of these letters. Within a week, 500 of them were returned with money enclosed, he says.
Of course, your approach depends largely on the type of community you serve, McDaniel adds. For instance, practices in rural areas might find success using credit bureaus, he says. And for substantial outstanding balances (under $5,000 in most U.S. states), small claims court is a viable option for many practices.
Fleischman tells of one physician in a small town who sued a patient successfully for $475. Once the judgment hit the local newspaper, the rest of the physician's patients in the community suddenly got much more serious about paying their bills, he says.
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