Ways to Maximize Effective Collections – Tracy L. SpearsJune 4, 2009 1 Ways to Maximize Effective Collections June 4, 2009 Presented by: Tracy L. Spears.

Ways to Maximize Effective Collections – Tracy L. Spears June 4, 2009 1

Ways to Maximize Effective Collections

June 4, 2009

Presented by: Tracy L. Spears

National Consultant – Medical/Healthcare Industry

Transworld Systems Inc., provider of

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Objectives of Presentation

Objectives of Presentation

Develop internal strategies for effectively collecting money

Help staff learn what to say to patients in order to motivate them to pay

Understand what options are available when accounts are overdue

Know when and how to use those options

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Collections Challenges Facing Today’s Practices

Slow paying patients Slow paying insurance carriers Understaffed Trying to work all accounts systematically,

including small balances Familiarity with collection laws

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Four Reasons to Collect

1. Accounts depreciate and get harder to collect2. Complaints increase with time3. Further medical treatments stop because

patient avoids doctor 4. Stressful for the staff and the patient

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Facts About Collections

Most medical practices wait until an account is 180 days past due before they give it to an agency for collection

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Typical In-House Collection Efforts

Day 30 Day 60 Day 90 Day 120 Day 150 Statement Statement Statement

Letter #1 Phone Calls

Statement Letter #2 Phone Calls

Statement Letter #3 Phone Calls

*According to the Dartnell Institute of Business Research, the average cost of working an account internally over a six month is $31.60 per account.

Day 180

Intensive Telephone Contact and/or Legal Action at a cost of 25-50% of recovered amounts.

-

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Facts About Collections

It costs a practice $31.60 to collect an account after it’s 60 days past due*

90% of the collections budget is spent to collect 10% of past due accounts

Delinquent accounts depreciate ½ percent per day**

* MGMA resource center**U.S. Department of Commerce study of depreciation of accounts held in-house.

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Start Early, Recover More

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Hidden Cost of On-Hold Time

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Facts About Collections

There are over 6,000 collection agencies operating the United States

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Facts About Collections

The Fair Debt Collection Practices Act (FDCPA), the primary federal law regulating third party collection agencies, which was enacted in 1977 with the support of ACA, is designed to help protect consumers from unfair and abusive collection practices

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Facts About Collections

Average fee/cost for a traditional agency is 30% According to the ACA International 2008 figures,

the average recovery rate for non-hospital medical collections is 15%

The true cost of collections is the amount of money that is not recovered

* ACA International 2008 Survey

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Facts About Collections

Smith’s Practice $50,000 15% recovery rate Collect $7,500 Collection Fee 30% Agency gets $2,250 Practice gets $5,250

Jones’s Practice $50,000 30% recovery rate Collect $15,000 Collection Fee 40% Agency gets $6,000 Practice gets $9,000 Additional Revenue of

$3,750

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Facts About Collections

Most money collected by a third party is from the first letter sent to the patient!

Working an account internally via phone, has a 10% chance that the call will get through to the patient

90% of malpractice suits are with patients who owe money (hold harmless agreement)

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Ways to Maximize Effective Collections

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1- Have a Defined Credit Policy

Policy gives staff a detailed document that they can stand behind

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What Should be Included in Your Policy?

Initial office visit or upon admission - What Payment is required

Allowable forms of payment: cash, check, money order, and charge card

Broken appointment charge and policy Patient is responsible for total charge. We do not

look to a third party for payment Medicare - Medicaid, what policy. Established

patients only?

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What Should be Included in Your Policy?

Office policy on insurance assignment. Full fee due now or just estimated deductible?

Whether or not service fee is charged for filling out more than one insurance form and, if so how much? If doctor "participates", how are those programs handled differently?

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What Should be Included in Your Policy?

Maximum number of payments allowed? Promissory notes or Truth in Lending forms? Interest, billing or service charge - rate and when

applied

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2. Make Monthly Statements Effective

Send statements promptly and regularly Do not put aging date at the bottom of the

statement

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Statement with Aging Dates

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Make Monthly Statements Effective

Do put a due date on the statement

7/10/2009

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3 – Admit and Correct Your Mistakes

If patient has not paid because there is a billing error, admit it and correct it quickly

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4 -Contact Overdue Accounts More Frequently

Contact late paying patients every 10-14 days

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5 - Use ‘Address Service Requested’

Put address service requested on all correspondence sent to patients

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6 - Use Your Aging Sheet, Not Your Feelings

Stand by your policy

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7 - Make Sure Your Staff is Well-Trained

Even experienced staff members can get jaded when dealing with past due accounts

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Qualified Staff

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Qualified Staff

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How to Talk to Patients: Asking for Payment

What you should not say: “How much can you pay?” “When can you pay?” “Can you pay something?”

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How to Talk to Patients: Asking for Payment

What you should say: “How much are you short?” “Will you be in today or tomorrow?” “Will you be paying by cash, check or credit

card?”

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How to Talk to Patients: Asking for Payment

Empathize with patient’s situation Remind them of their obligation to pay Get commitment for payment

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How to Talk to Patients: Asking for Payment

Convert outstanding balance to a time frame Arrange for bi-monthly payment arrangements

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8 – Knowing the Warning Signs of Troubled Accounts

Account is 45-60 days past due Phone has been disconnected or changed to

“unlisted” Partial payments are smaller and sent with less

regularity Patient says he or she won’t pay

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9 - Know Your Collection Options

Status quo Write the account off Attorney Small Claims Court Use a third party

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What are Your Third-Party Options?

Collection Agency Percentage collections agency Flat fee collections agency

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What to Look for in a Third-Party

Proper Accreditation/Licensed Reputable Experienced Easy to do business with Partners with key professional associations

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Disadvantages of Using a Third-Party

High cost Alienating the patient Losing control of account Already invested a lot of work to win the account

over

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Advantages of Using a Third-Party

A third party gets the patient’s attention and makes an immediate impact

Implications for patient’s credit record Removes doctor from position of “bad guy”

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10 – Remember Your Goals

• Remember your goals Have realistic expectations of your accounts receivable program.

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Useful Resources

• The Association of Credit and Collection Professionals (American Collectors Association) http://www.acainternational.org/default.aspx

• The Fair Debt Collection Practices Act http://www.ftc.gov/os/statutes/fdcpa/fdcpact.htm

• National Better Business Bureau http://bbb.org• US Chamber of Commerce

http://www.uschamber.com/default• MGMA resource center http://mgma.com/resources/

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Questions?

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Ways to Maximize Effective Collections

June 4, 2009

Tracy L. [email protected]

Transworld Systems Inc., provider of

Thank You!