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How To Select A Collection Agency

March 21, 2023
Image by Isaac Smith on Unsplash

Sooner or later within your organizations’ accounts receivables cycle, you will encounter patients who neglect to pay their bill. Driven by the challenging economy, more healthcare organizations are turning to professional collection agencies to address increases in AR delinquencies. As a company with decades of experience recovering delinquent accounts and receivables management, we’ve found that choosing the right collection agency is often not a matter of
selecting the lowest bidder. There are a number of important criteria involved in informing this crucial decision, which can significantly improve your bottom line. However, to protect your company’s reputation as well as benefit your balance sheet, it is important to perform your due diligence when selecting an agency partner. Following are five things to consider when choosing and hiring a collection agency:


You do not want to be associated with shady collections practices. While the agency may be the one to directly face the consequences if they are not compliant, your name may be tied to their behavior. While there is no such thing as an agency who never receives a complaint, the real question is– do they have adequate policies and practices to work within all state and federal regulations in order to minimize complaints?

Check to see if the agency is a member of any recognized trade associations, such as ACA International or the HFMA, whose members are held to high ethical and professional standards. Also, ask if the agency has any quality control or data security certifications, such as HIPPA HITRUST, SOC2, or PCI.

Recovery Rate

-Inquire as to the agency’s recovery rate, rather than just focusing on what fees they charge. Overall netback is the key factor to consider.For example, if you turn over $5,000 worth of accounts at a 25% commission rate and the agency recovers $1,000, you will receive $750. If you turn over the same $5,000 at a 35% commission rate, but the agency recovers $1,500, you will receive $975.

Even though the agency’s fee is 10% higher in the second example, the net back to you would still be substantially more, due to the better performance of the agency. The agency fee rate by itself is only one of multiple factors that will affect your bottom line. Net return is the key.

Industry Experience

How many years has the agency been in business? Do they have experience working with your specific type of accounts, patient demographics, or the rules and regulations that apply in healthcare collections?

Technology & Data Security

Remember that a collection agency will likely store your patients’ information within its own data systems. You
need to be sure their technology and security infrastructure is safe and secure. Inquire into security certifications that will verify they are compliant within the increasingly stringent industry standards.


A high-value means of verifying the reputation and capabilities of your potential collection partner is to check their references with clients requiring a similar scope of the services you are seeking. Dig in and make some calls to their current or previous customers. Ask about the quality of their services and professionalism. Did they encounter any problems?

If you have experienced increased delinquencies and lack the resources to pursue your delinquent customers, you might greatly benefit your bottom line through the services of a collection agency. Hiring a quality collection agency can be challenging. However, you may get better results when you approach the challenge as a search for a business partner and not simply a collection agency. Your ultimate goal is not only to recover debt, but to maintain and protect your value in the marketplace.

Affiliations Audits & Achievements

  • HFMA: Healthcare, financial, management, association
  • AAHAM: American Association of Healthcare Administrative Management
  • ACA International

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