Are you being aggressive with your AR?

Running a successful medical practice involves solving many puzzles; one of the hardest is how to successfully deal with patients who don’t pay their bills.   Many medical practices turn to collection agencies for help. Although, too many health care providers insist the percentage agencies don’t live up to their expectations: 

  • Patient relationships are jeopardized
  • Recovery rates are very low
  • Percentage fees charged are substantial
  • Often there is a considerable wait before the practice actually receives the recovered money because the money goes to the agency FIRST.

Nationwide, percentage agencies have been recovering only 10 percent of the delinquent accounts they are asked to retrieve, of which they then will keep from 33 percent to 50 percent as the collection fee. Why don’t collection agencies recover more money? Percentage agencies want what group practices can’t afford to give them, accounts which are still relatively easy to collect, about 90-120 days past due. Instead they’re given accounts that are approximately eight months old, according to the American Collectors Association.

Traditionally collection agencies still serve a purpose. But rather than holding delinquent accounts eight months or more, consider a fixed-fee arrangement at 90-120 days. Healthcare providers insist turning over accounts sooner saves them thousands of dollars a year in statement expenses! A fixed-fee agency has many advantages:

It is designed to keep and maintain your relationship.

Practices turning over large balances are doing so much earlier than when using a percentage arrangement. Recovery rates often can be double that of percentage arrangements.

Fixed fee also means that the agency will place as much effort in recovering small balances as they will larger ones. 

Recovered patient money is sent directly to the medical practice, not the collection agency. Affecting your bottom line sooner. Up to five legal demands are sent.

Most medical practices think it is not cost effective to give accounts to outside agencies if there is any chance of recovering it in-house. Only after the group has used its own collection skill (and failed) will agencies have the opportunity to collect these delinquent accounts. Practices also expect collection agencies to work small balances (less than $300) but percentage agencies can’t afford to do that. Generally, percentage agencies spend little time with lower balance accounts and concentrate on the larger ones in order to make a worth-while profit.

If these scenarios sound all too familiar, consider changing the contract you have to a reputable nationwide flat fee agency, an agency that gives your practice a hold harmless agreement and is HIPAA compliant. An effective agency can give the patient a “sense of urgency” without ruining the relationship.