12.24.10 Issue #459 info@mckenziemgmt.com 1-877-777-6151 Forward This Newsletter
 


Belle DuCharme CDPMA
Instructor/Consultant
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Collection Tactics for 2011
By Belle DuCharme, CDPMA

“I have recently opened my practice and want to know what is the best type of collection agency to use? I have talked to one who will collect for a flat rate per account and I have talked to another who wants 60% of what they collect. What do you think?” 
-Dr. J. Paylater

Dear Dr. Paylater,

Don’t throw good money after bad. If you have exhausted all in-house attempts to collect and have failed, why pay someone else to essentially do the same thing? The collection agencies that work off a commission are more successful, but in the long run very little return is realized either way you choose.

Instead of focusing on who is going to do the job of collecting, now that we have failed, let’s look at how we can create a better system for collection practices to insure practice growth. Is collection success related to practice growth? Absolutely - and here is why that is true. If a patient owes you money, you have lost the patient. Patients do not return to have more treatment until they pay off their current obligation to you. A patient that has paid for services is happier with the outcome than a patient who still owes for the services. Practices that have large accounts receivables have fewer patients to fill the schedule for treatment or recall.

Sending patients to collections can be detrimental to a practice if not done correctly, because it will create ill-will toward the practice. One practice sent everyone to collections whether they owed $30 or $300. The Business Coordinator did not know how to estimate the patient’s co-payments, so she billed the insurance and billed the patient when the insurance paid. If the patient did not understand the reason for the co-payment, there was a delay in receiving the payment. After awhile, the time uncollected went from 30 to 90 days and more, and the Business Coordinator sent the accounts to collection.

The impact of this activity is not as negative if the practice is getting 30-50 new patients a month, but if it is a smaller practice with 15 or less new patients a month, the loss of patients that owe money can severely affect the profitability of the practice. Sending out a copy of the explanation of benefits along with the statement will increase cash flow more than just a statement with a balance due. It is far easier and more acceptable to collect at the time of service than to send a statement later.

Another important factor to consider is the good-will of the practice. If a patient owes you money, they are less likely to refer a friend or relative to your practice. If this patient is sent to collections, they are more likely to warn their friends and relatives about your practice. As unfair as this is, it is human nature to want to defend ones actions.

If you have been openly defrauded by a patient and this patient has skipped town with no forwarding address, then send them to collections. For patients who still live and work in town and are having a tough time, work something out with them until they get back on their feet. If a patient still owes for a co-payment but their recall services will be covered, then invite them back into the practice with the understanding that they make a payment toward the co-payment as best they can. You will keep these patients and still get paid for recall services. 

The best prevention is to calculate and collect all co-payments and deductibles at the time of service. Understanding the patient’s insurance plan benefits before they come in for treatment and being able to give them a printout showing the information that you obtained about the plan will be appreciated. If they don’t like what they have, they can contact their HR department or the insurance company before the treatment is rendered. In this credit sensitive time and with so many people struggling, take the time to consider the impact on the practice and on the people being sent to collections. Try sending a letter in a different color envelope that says something like this:

Dear Patient,

Your account has been red flagged by our accountant. I have sent you many statements and have called you with no response. I don’t want you sent to collections where you will be reported to the agencies that will affect your being able to buy a car, rent an apartment or even get a job. This report will be on your record for seven years.  So please pick up the phone today and call to set up a payment plan with us.

Sincerely,
Bette, Business Coordinator

For more training on how to create better business systems for your practice, call McKenzie Management today and start the New Year off on a positive note.

If you would like more information on McKenzie Management’s Training Programs to improve the performance of your team, email training@mckenziemgmt.com

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