Make Your Collection Policy More Effective!

 
You probably know that cash flow is the lifeblood of your healthcare practice.

But did you know that many practices fail because of ineffective debt collection?

---

​Make Your Collection Policy More Effective!

The Four Basic Stages of
Debt Collection

---

You probably know that cash flow is the lifeblood of your healthcare practice. But did you know that many practices fail because of ineffective debt collection?

---

Debt collection can be difficult for virtually all business owners. But it’s particularly challenging for medical practitioners, who are more focused on the health of their patients than their own financial health.
 
In order to keep the revenue rolling in, it’s crucial that providers develop an effective collections policy. Being prepared can help mitigate a host of headaches down the road.

To keep it simple, let’s break down the collections process into its four basic stages. Each of these four stages of account delinquency requires a different tactic.

Stage One: 1-30 Days Overdue

​Soft skills are critical in this earliest delinquency stage. The focus should be on patient satisfaction and education about the payment process. You don’t want to alienate your patient or jeopardize your relationship with them.
 
The cause of the late payment in this stage could well be an oversight or a minor cash-flow problem on the patient’s part. Friendly reminders and open communication will increase the odds of being paid quickly.
 
Stage One does not usually require the aid of a debt collection service. However, if you do choose to hire one at this point, you’ll need to make sure the company is patient-friendly in their approach, offering gentle reminders of the debt. A payment arrangement may also be suggested at this stage.

​Stage Two: 31-60 Days Overdue

​Step up your collection efforts after 31 to 60 days have passed. Continue sending emails and letters, as well as placing phone calls. At this stage, communications should remain friendly but direct. You could also mention reports to credit bureaus and late fees.
 
This is also the stage where you want your patients to know when their accounts will be transferred to collections. Be sure to offer an opportunity to work with them before that happens. Stage Two may also be the time to consider partnering with a debt collector.

​Stage Three: 61-90 Days Overdue

When an account is between 60 and 90 days overdue, phone calls, letters and emails should increase in frequency.  At this point, it’s important to ascertain if the patient is encountering a true financial hardship which will require that you negotiate a payment plan. If so, you’ll want to make sure your staff is properly trained to do handle this.
 
If you haven’t done so already, Stage Three is a good time to enlist the help of a professional medical collection agency. Not only are they specifically trained in the art of negotiation, but they oftentimes are able to refer your patients to various assistance and charity programs for which they may be eligible.

Equally important, a professional medical collector is trained to comply with the complex and ever-changing regulations that govern debt collection. They can facilitate a payment arrangement without jeopardizing the patient relationship. It’s what they do for a living.​

​Stage Four: More Than 90 Days Overdue

Once the account is more than 90 days past due, you probably should employ a medical debt collection service. This is the time to bring in the experts and get those invoices paid. Your chances of recovering Stage 4 debts on your own are extremely slim.
 
With your approval, a reputable debt collector can negotiate a payment arrangement or settlement. They can also initiate legal proceedings (such as wage garnishments) on your behalf. Their expertise can save you a lot of headaches and ensure that you receive payment in the end.

--Article Continues Below--

Choose Wisely

​When selecting a third-party medical collection service, choose one that moves properly through these four stages of collection. Make sure they begin with gentle reminders and gradually increasing to more assertive tactics.
 
Not only will your patients feel respected, but you’re more likely to recover monies owed to you.  All while preserving your valuable patient relationships.

---

Sources:
Featured Image: Adobe, License Granted
All Business
Accounting Department
Buyer Zone