Working in healthcare can be one of the most rewarding jobs, but what happens when you provide a service to a patient and they’re unable to pay you back?
For anyone who works in this industry, this can be one of the most challenging aspects of owning and maintaining a healthcare practice. Even with a large client base, if the majority of your patients don’t have insurance or can’t pay the remaining balance then you’re rarely recovering the total revenue that you have earned.
So how do you solve this problem? Some medical practices rely on hired employees to recover lost money, but for companies that don’t want to take on the tedious job, medical collection agencies are often the best option for healthcare providers.
A collection agency is a contracted company that is tasked with contacting patients and insurance companies to recover unpaid debts that are owed to a healthcare provider. Medical collection agencies are hired by the medical service provider and payment for their services are typically a commission or percentage of the money that they’re able to recover.
However, take note that medical collection agencies are NOT debt buyers. Debt buyers are third party companies that seek to purchase the sum of the debts owed to you in exchange for a lump sum price that is valued lower than the total amount of money that is actually due.
Debt buyers work under the assumption that you won’t be able to recover the majority of your funds. For medical service providers that can’t afford to wait for late payments, debt buyers might be a good option but debt buyers often offer prices well below what is actually owed to you. For medical practices that have the resources to actively seek out non-paying clients this option can be a scam and a way of selling yourself short.
Let’s face it. You’re a service provider and you have thousands of dollars, if not more, still owed to you. What can a collection agency do for you? That answer is easy – they can help you collect the money that you can’t. In a study done by Ernst & Young, it was found that debt collectors recovered $44.6 billion dollars in debt for their clients in 2010 alone.
Medical collection agencies are a huge asset to healthcare providers because they have more experience than collection officers who work in-house. The best agencies have been in the industry for years and stay up to date on the best methods and procedures to recover debts. When selecting a collections agency make sure you find one that is specialized in healthcare or medical bill collecting. The most experienced agencies tend to be experts in their niche, and thus they have higher recovery rates.
What’s even better? Medical collection agencies reduce the amount of time and resources your business needs to expend on collecting unpaid bills. Bill collections can be tedious. The process includes compiling all the numeric information of unpaid debtors, contacting and negotiating with insurance companies, and following up extensively via phone, email and mail to ensure payment.
If you’re a small size healthcare provider you might not have the bandwidth to successfully organize, target and follow-up with debtors. To effectively recover debts an ideal company would need to have many employees contacting patients throughout the day. This is an internal human resource expense that many can’t afford.
Even if your practice has a solid team, many medical collection agencies have advanced tools and resources that streamline the collection process and increase the percentage of debts recovered. Agencies may have computer tools that assess which patients are priority targets based on the amount owed and their likelihood of paying. Medical collection agencies are strategic which allows them to work more efficiently and effectively.
Furthermore, collection agencies often hire bilingual collectors and have access to patient databases that provide exclusive information on how to find and make contact with debtors that might be avoiding payment. Once a good collection agency connects with a patient they often provide online services that allow debtors to log in and track their bills and payments which makes debtors feel like they have more control and transparency in their payment process.
Medical collection agencies also have heightened IT capabilities which ensure that patient information is kept safe from cyber security threats. Continue reading to learn more about the legal aspects of debt collection.
Many of you reading can attest that the medical industry is subject to intense laws that can have huge implications for your practice if not abided by. Medical collection agencies are no different. When you select a collection agency it’s paramount that the one you choose complies with all state and federal laws. Agencies have federal regulations that they MUST abide by such as HIPAA (the Health Insurance Portability and Accountability Act), statutes of limitations for each state, and The Fair Debt Collection Practices Act.
Just as much as these laws are in place to protect patients, choosing a credible and compliant agency is another way of protecting your practice. Even if you aren’t directly dealing with patient debt, your practice can be held liable and be subject to fees and lawsuits if you do not select a professional medical collection agency that follows the law. Your practice is the original creditor so it’s paramount that you find a trustworthy agency that operates within the same standards that you do.
Patient care does not end after you’ve provided a service to someone. The best collection agencies understand this and commit to maintaining positive client relationships.
Let’s be real. The last person someone wants to talk to is a debt collector when they are behind on debts or in a financial bind. It’s paramount that debt collectors show the utmost respect and integrity to the clients because an unprofessional medical collection agency can ruin future business.
Just because a debtor is currently in a financial struggle doesn’t mean that they won’t be financially secure or need additional services in the future. Collection agencies are extensions of your medical practice so rude, unprofessional and overly aggressive collectors can fracture client relationships and prevent old patients from returning.
Remember this. Patients perceive the medical collection agency as YOU. An exceptional medical collection agency should operate with the same level of care.
Most importantly, premiere medical collection agencies are the ones that give you the best return on your investment!
As a healthcare service provider, you have to make a risky decision. Is It worth expending your personal resources to attempt to collect delinquent payments on your own without the guarantee that you’ll be able to recover them effectively? Or do you pay medical collection agencies a percentage of what is owed to you with the knowledge that they will be able to recover more money?
Statistics say that 80% of debt that is recovered within the first 30 days are recovered by healthcare providers. However, once debt becomes late, collection agencies have a higher recovery rate than service providers with an average of 20 percent recovery on delinquent debt.
The best collection agencies should effectively recover enough debt for you that even after the agency is paid, the net amount of money that you receive should be more than if you were to have collected the debt on your own.
In selecting the right collection agency efficiency is essential. Your practice can hire a cheap collection agency that will only charge a small percentage of each debt collected, but if they’re not an effective agency then their small fee is not beneficial. An inefficient medical collection agency will recover little to no delinquent debt and though it won’t cost you much, you’re not gaining anything either. In fact, your practice might have been able to recover the same, if not more money than the agency without having to pay them a percentage off the top.
Our best recommendation would be to hire an experienced, effective and trustworthy medical collection agency. Although these agencies might charge a higher percentage per debt collected, the amount of money that a good agency can recover for you is worth the price. A professional company can end up saving you money in the long run because they are less likely to get you in legal trouble, they maintain a higher level of professionalism and thus maintain better client relationships, and they’ll recover more money for your company than any other option can.
Now it’s time to research the best medical collection agency for you! For more information on how to select a great agency check out rabtx.com