Medical debt is rarely a debt of choice. Health emergencies, difficulty understanding coverage, and ever-changing regulations can compound to put patients in a financial predicament they did not expect. For this reason, patient collections need to be approached differently from other consumer debt. Understanding your patients’ circumstances is critical to determining their ability – or willingness – to pay.
If you are working with a patient to resolve their financial responsibility, keep an eye out for these three red flags – or the stages of a debtor – to help influence your recovery strategy and keep your cost to collect to a minimum.
Partial Payment Arrangements
The first red flag to watch for on a past due account is failure to make a payment in accordance with a payment arrangement. Your team should have a policy in place for establishing payment arrangements that are mutually beneficial to both your hospital and your patients and are in accordance with your hospital’s financial policy. But the success of any payment plan hinges upon enforcement.
If a patient misses a payment or offers partial payment, your team should immediately address the plan with them again – and be prepared to explain the consequences of non-payment in accordance with your financial policy. Partial payment may indicate a willingness to pay, but perhaps the original agreement no longer works for their financial situation. Missed payments may indicate a deeper issue, like a misunderstanding about their responsibility or an unwillingness to pay – leading to red flag number two.
If your healthcare organization is experiencing a lot of failed payment arrangements, it could be your policy. We have a few tips for establishing successful payment arrangements here.
Once a patient has missed a payment, or has failed to uphold a payment arrangement, the next red flag to watch out for is whether they have gone into “survival mode.” When it comes to debt, patients will often forego their medical bills in exchange for keeping the lights on – or paying any other debts they owe that they deem to be more important.
In the case of a patient who cannot afford the minimum payment you’ve established, but still shows a willingness to pay something, you can often address their arrangement. However, a patient who is fighting back often has an underlying issue with the debt that needs to be resolved before they will adhere to their arrangement. It could be something as simple as a lack of understanding of their financial responsibility. This is why educating patients early and often with a strong pre-admission program is critical.
By the time a past due account reaches 120 days old, the likelihood of collecting the balance in full is a fraction of what it was at the time of service. The cost to collect only increases over time, and it’s often best to consider passing aged receivables to a trusted patient collections partner. You’ll know that it’s too late to collect if your patient stops making even partial payments and ceases communication with you.
If you have an unusually high number of accounts that have aged beyond 120 days, it indicates a need to address your payment monitoring system, patient collections program, or both. If you need help with older AR, Revco Solutions can help.