Debt Collections in the Healthcare Industry
According to research by Kaulkin Media, if you are in the healthcare industry 7% of your sales should be set aside for bad debt. That is a staggering number. To help companies in the industry control bad debt losses, it prepared a white paper listing 11 tips for a healthy collection program. This is part 1 in the series about Debt Collections in the Healthcare Industry.
1. Acknowledge the impact of self-pay patients
This really isn’t so much a tip on collection as it is a reminder to keep in mind that 16% of the US population is uninsured and can account for a significant portion of the problem debt.
2. Start early for best recovery and Debt Collections in the Healthcare Industry
The researchers suggest that early efforts to control receivables incurred by emergency room visits can have a significant impact on the bottom line. They note that successful healthcare providers utilize best in class “front-end procedures such as patient admittance, charity care classification, and insurance approval” to help reduce receivables risk. this would include partnering with A collection agency that does more than mere collections, but provides intelligent input into the “revenue cycle.”
3. Use different services for different purposes
The paper suggests dividing up the collection effort among three different groups. The first group is, in effect, an outsourced accounts receivable department that collects in the name of the healthcare provider. The second group is a contingent fee-based collection agency, that is, the most typical organization that is thought of one one refers to a collection agency. The third group is what the paper terms “debt buyers” which can be investment pools that buy up healthcare receivables and and turn them into investments for their stakeholders.
This is an interesting suggestion that could become a part of a well-planned collection program.
4. Negotiate based on price, but only to a point
This tip explains that there has been a bit of a “land rush” by collection agencies into the healthcare receivables segment of the market as the segment continues to experience strong growth in demand for debt collection services. This rush of collection agencies into the market has pushed collection fees down to an average of about 21%.
The researchers invite you to take into consideration the fee being proposed by the collection agency, but not to forget the organization standing behind the fee. What are you buying for that price? Look at experience, whether it has well-trained personnel, whether it uses creative methodologies, et cetera.
Part two of this series of 11 Tips for Better Debt Collections in the Healthcare Industry will be published soon.