When is it Time to Go to Collections?

When outstanding patient balances grow out of control, your practice may feel there’s no option but to place them in the hands of a collection agency. However, turning an account over to collections should only be used as a last resort.

The debt collection industry averages a recovery rate of about 20% of delinquent funds. Typically, medical collection agencies take 30-40% of a collected total as commission – earning you ultimately as little as 12% of the balances you place under their service. It’s hardly worth the effort!

After a patient fails to pay a balance within a reasonable amount of time (60-90 days), the best course of action is to follow up the mailing of a statement with a call from your office. Make sure to be firm, but generous by offering to set the patient up on a payment plan. (Of course, if you’re a Clinic Service client, we take care of this communication for you.)

Keep in mind, because of Obamacare, there are many newly insured patients and they may not understand that their insurance company’s reimbursement does not cover the full cost of care. Your staff must make it clear to patients who refuse to make their co-payments that they are actually in violation of their contract with their insurance company. Pointing this out may help patients better understand your role in the process.

If the initial phone call is not successful, then you should follow up with a warning letter, which explains that the patient will be completely dismissed from your practice’s care if he or she does not begin paying on the balance by a designated date. When that date arrives, send off letter of dismissal that notifies the patient if the account is going to the collections agency.

If you still have not received payment at that point, it’s time to move into debt recovery with an outside company. Make sure to use a trusted, vetted agency. It’s helpful to ask colleagues for referrals before contracting with a debt recovery business.

Collections is one of the most difficult aspects of practice management. It’s critical to remain mindful of the collection laws and always give your patients the dignity and respect they deserve. By following simple, straightforward steps, you will be available to focus on patient care.