Collecting outstanding balances poses unique challenges in the healthcare industry. Unlike overdue accounts for nearly any other business, medical debt is rarely a debt of choice. Coupled with the difficult situation most patients face from health issues, confusing coverage from third-party payers, and hospitals’ goal of providing an exceptional patient experience, the collection process can be challenging to navigate.
The most effective methods for preventing aged receivables are implementing a robust and educational pre-admission and time of service collection program and appropriately training and empowering your admissions staff to ask for balances due. However, no amount of training or operational procedure will prevent all past-due accounts. Avoiding these patient collection mistakes can ensure you recover as much of the revenue owed to your healthcare organization as possible while still providing an excellent patient experience.
The Low or Long-Term Payment Arrangement Trap
Establishing and monitoring payment arrangements is a critical tool in collecting patient balances, but it can be tempting to settle for just about any monthly payment amount if it means the patient will commit to regular payments. It is essential to ensure any arrangement your staff creates is in line with your hospital’s payment policy.
Consider a patient with the $2,000 balance who wants to pay $10 per month. Quick math indicates it will take 200 months – or nearly 17 years – to pay that balance. Even a monthly payment of $50 will result in monitoring that payment plan for more than three years. To avoid the low payment trap, try asking, “how short of the balance are you today?” This question establishes an expectation of payment that “how much can you pay” does not.
Delaying Your Collection Process
The likelihood of recovering the patient responsibility portion of care is cut almost in half as soon as the patient leaves, following their appointment. From that point, the cost of collecting the balance is on your organization. That cost includes not only lost revenue, but also the time and effort of your staff, or the cost of your healthcare debt collection vendor to collect it. And that cost only increases over time.
According to the American Collectors Association, the average recovery rate on debt over 180 days old is only 13%. So, waiting too long to begin your collection process can be a costly mistake. Instead, focus your efforts on educating the patient about their responsibility, providing cost estimates before service, and attempting to collect payment responsibility in full or establishing a beneficial payment arrangement during the time of service.
We advise starting your collection efforts early, not only within your billing department but also with your third-party healthcare collection partner. The longer you wait to report accounts to your agency the more you will pay in fees and the less you will recover.