Summary: How to hire a collection agency for your medical practice or hospital and maximize results cost-effectively: Begin the collection process with fixed-fee written demand letters, regardless of what the collection agency representative recommends.
Collecting medical debts is a highly sensitive task, governed by strict government regulations, privacy laws like HIPAA, and stringent credit reporting restrictions. While experienced collection agencies understand the necessity of treating patients respectfully and adhering to all compliance & legal requirements, there’s an even more critical aspect that demands your attention.
For a medical collection agency to work effectively on your behalf, it’s crucial to manage the process systematically. Simply handing over debts and allowing the agency to operate as they see fit may lead them to use methods that benefit their interests over yours. This could negatively impact your profits and reputation. In this article, we will tell you how to hire and use a medical collection agency effectively, any why you should always start collections with fixed-fee services instead of contingency-fee services.
Timing Is Crucial
The most critical factor in determining how much money you will recover is how quickly you submit accounts to a collection agency. We strongly recommend submitting accounts for collection between 60 to 90 days after the first default. After three months of reminders, your staff may lose motivation to continue pursuing non-paying patients, who might believe they can evade payment altogether. Waiting any longer is like throwing money away.
Begin with Fixed-Fee Collection Demand Services
For medical debts, it’s essential to start with a Fixed-Fee Collection Demand Service rather than immediately resorting to collection calls.
Frankly, collection agencies barely profit from fixed-fee services, but it’s an excellent cost-effective option for you.
Fixed-fee collection demands are a patient-friendly way to recover debts, providing ample time for patients to pay. They receive five written notices every ten days, which helps them avoid the discomfort of speaking directly to a collector. Sending these five demands costs about $15, and since they’re sent on a medical collection agency’s letterhead, they carry significantly more weight than notices sent from your office. Patients pay you directly. If you attempted to send these demands yourself, the cost could be $50 to $100 or more when all expenses are considered. This approach is not only cost-effective but can also become 100% free as you can write it off as a business expense.
Transition to Collection Calls with Care
If written demands have been unsuccessful and the debt remains outstanding, it makes sense to proceed to Collection Calls, which are more direct. By this point, you’ve given your patients sufficient opportunity to settle their debts amicably, now a diplomatic yet a slightly-firm approach is required.
Accounting Tip: When transferring accounts to the Collection Calls Service, we recommend writing off the debt at that time for accounting purposes.
Key Qualities to Look for in a Medical Collection Agency
When selecting a medical collection agency, consider the following important factors:
- Nationwide Licensing & HIPAA Compliance: Ensure the agency is licensed to operate nationwide and fully compliant with HIPAA regulations.
- Fixed-Fee Written Demand Services: The agency should offer fixed-fee written demand services as a starting point for collections, averaging $15 per account. There should not be any fee on top of that and patients must be instructed to pay you directly.
- Secure Online Client Portal: A secure portal allows you to monitor and submit accounts conveniently. They should also be easy to use, and backed by a single point of contact who acts as your customer service representative.
- Litigious Patient Scrub: The agency should perform a litigious patient scrub to avoid pursuing patients who have a history of suing businesses like yours, unless the balance owed is significant.
- No On-Boarding Fees and Complimentary Services: Look for agencies that do not charge on-boarding fees and offer free bankruptcy screening and credit reporting.
- Bilingual Services and Extensive Experience: The agency should be bilingual and currently serving over 500 medical and dental offices.
- High Online Ratings: An average online or Google rating of over 4.5 stars with more than 1,000 reviews indicates reliability and customer satisfaction.
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Exercise Caution with Sales Representatives’ Promises
Sales representatives from collection agencies may make impressive promises, verbally assuring you that their security measures are unparalleled. Do not accept these claims without written documentation to substantiate them.
Contrary to popular belief, asking for references from existing clients might not be particularly helpful. Sales reps often select clients who have had the most success and are unlikely to provide references from those with negative experiences. Instead, inquire about their average recovery rate across all their medical clients. While they might offer inflated figures, a realistic average recovery rate is around 25%. Generally, for good collection agencies, for debts assigned within 180 days achieve a recovery rate of over 33%, whereas older accounts recovery rate is below 15%.
Additionally, ask for the names of some of their largest clients, both medical and non-medical. If these clients are well-known and have trusted the agency, it’s a positive indication that you can trust this medical collection agency as well.
Act Promptly
Time is of the essence in medical collections. Implementing a systematic approach not only enhances your recovery rate but also ensures compliance with all legal and ethical standards. Don’t leave your collections to chance—take control to protect your finances and maintain strong relationships with your patients.
Conclusion
Medical collections require a careful balance of urgency, respect, and legality. By acting promptly and starting with a Fixed-Fee Collection Demand Service, you increase your chances of recovering debts while minimizing costs and preserving patient goodwill. Be proactive, demand transparency from your medical collection agency, and focus on methods that serve your best interests.