A billing employee recently asked if I could recommend any tactics to collect on a three-year-old account. She had already sent 36 statements, as well as a barrage of letters and phone calls. Her physician had asked her to "try one more time."
Sound familiar? If so, you could use a brush-up on working with a collection agency.
Physicians often contract with an agency, or say that they use one, but that might mean all they are doing is sending over an account or two every few months. These accounts are normally months, if not years, old, and have little hope of being collected.
"Eighty percent of patients who haven't paid you at 90 days after the balance comes due are not going to pay you at 120 or more," says Dave Glass, founder and CEO of Extension Express, a collection agency with clients in more than 40 states and an experienced collector himself. "So it's in your best interest to address these balances sooner rather than later."
A lax approach to collections often symbolizes an underlying problem with your practice's operations. Think about the practice I just described. While I certainly appreciate the physician's patience, he would have been much better off to write the account off two years ago. Let's do the math, and you'll see why.
The account in question was for a $200 hospital visit. The statements and letters cost 55 cents each, and the phone calls, at an average of 15 minutes of staff time, cost $5 each (including benefits costs). That's more than $75 in paper and labor costs. Then consider the time that goes into research and discussion of the account, estimated to be another $30 of staff time. Add on the physician's time to review the account, and there's another $50 on the table.
We've almost reached the $200 mark, breaking even on billing costs alone. What's left to contribute to your overhead and your income? Not much. And we haven't even addressed the negative impact on staff morale.
If you have an agency, but aren't using it much or at all, be sure to scrutinize your internal processes. In the interest of being kindhearted by pursuing unpaid bills rather than turning them over to collectors, you may be wasting a lot of time, energy, and money chasing money you'll never collect. Here are three proven tips to improve your relationship with a collection agency — and the agency's results.
Start with complete information
Accounts are usually turned over with only a balance, a patient's name, and an undeliverable address. The agency may have more expertise in chasing down that patient, but it can't work miracles. If you don't give your agency any information to work with, you're not going to see results.
Collect good information on the front end, including:
- correct insurance information, verified for eligibility at the time of service
- a copy of the patient's insurance card, front and back
- a copy of a picture ID from the patient
- the patient's home, work, and cell phone numbers.
Finally, review the patient's demographic information at all visits. Be specific: "Are you still at 123 Main Street?" is more effective than asking, "Is everything the same?" According to Glass, the lack of accurate information captured at the front office is the primary reason practices send accounts to his agency.
Develop a working relationship
Your collection agency is an extension of your practice. Just as you work to bridge gaps between two internal areas, like registration and billing, so should your efforts be with your agency.
Set up a semi-annual meeting, at minimum. Ask to review at least three accounts that were successfully collected, and discuss the agency's tactics. You might learn from them. For example, I recently spoke with a collection agency that successfully collected a $1,200 surgery from Medicaid. It took the agency just one phone call, yet it took a 35 percent fee right off the top. The account had been transferred from the physician's office as an uninsured patient.
The agency contacted Medicaid with the patient's information, and sure enough, he was covered for the date of service. The claim was paid immediately. The physician's office could have avoided this costly transaction by double-checking the patient's insurance information on its own.
