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Published - October 1999
"AROUND OUR FIFTY STATES"
By Dave Jakielo
WHY BILLING COMPANIES NEED COLLECTION AGENCIES
I remember many years ago when I used to look at collection agencies as a necessary evil to be utilized only for serious deadbeats who kept running up bills at a particular medical practice. Another time that I involved an agency, was when a patient would tell us that we could, "stick the statement where the sun don't shine."
My mindset was that if I had seen one agency, I had seen them all. My only concern with an agency was that I didn't want them to upset the patient, too much. My procedure would be to work the account to death or hold on to it for a year, two or longer then give it to an agency to perform the miracle of collections. I new that the longer I held on to the account, the slimmer the chance that the debt would be turned into cash. However, I still didn't want to give up the delinquent account.
How times have changed! Look what has happened in a few short years:
Increases in deductibles and co-pays have led to additional monies that must be collected from the patient.
Managed care has limited coverage; some items once covered by insurance must now be paid by the subscriber. An example is a patient who uses the emergency room like a doctor's office. Today an insurer won't pay for the emergency, "a runny nose."
Additionally the number of uninsured Americans continues to increase.
There are a number of other situations that have led to more of the financial responsibility for medical services falling on the insured.
In addition to the number of patients who must pay for all or a portion of medical services, other costs of billing have risen.
Continual increases in the postage rates.
Rising cost of statements, however if you outsource your statements you may have realized a decrease in your statement costs.
Phone inquiries from patients relating to the additional self pay balance, have caused us to add additional customer service personnel and more sophisticated phone answering equipment.
The balance on an account that we can complete a follow up call for is increasing. It was common practice to call on all problem accounts $50.00 and over. Given that there are so many problem accounts the ceiling has been raised and many are only calling on accounts with balances over $150.00, if they can afford to call at all.
Dealing with the increases in the above costs may cause your profitability to decline. However, there is hope to reverse this spiral. One suggestion is to utilize a collection agency and it's services.
Today, many agencies have expanded their services and many of these services can help us in our efforts to improve our clients' collections. What I'm suggesting, is that we look at collection agencies differently. They can be our partners in the collection process. Many agencies have the phone technology we are lacking and can provide necessary services that will enhance our ability to deliver great service to our clients.
A few examples are:
Sending a third party collection letter. Some refer to this service as a pre-collect letter. An agency will charge a flat fee for this service; the advantage is that it usually will get the "white collar" bad debt patients to pay. What I mean by "white collar" bad debts are folks who will pay when we show them that we are serious about collecting the balance. You collect the cash and pay a pre-negotiate flat fee for the mailing of the letter.
Early out calls. Give delinquent accounts to an agency after only one or two self-pay statements have been sent. Your reward for quick placement is a fee usually about half the percentage of what you pay for an account-aged 6 months or longer.
Complete outsourcing of your call center. Agencies can handle all of your incoming calls as well as your outgoing calls. The advantage here is no personnel hassles, and they may have longer hours of phone coverage than your office, allowing patients to make inquires or relay important billing information in the evening.
The above are just a few ideas of how you and collection agencies can form a winning partnership.
If anyone is partnering with agencies for any other services please let me know. I will include an update in a future article.
Remember this monthly feature will address topics of interest to you. I really appreciate your input and suggestions. Please send your questions or ideas on topics that you would like addressed, to: Dave Jakielo, Seminars, Training and Consulting, 86 Hall Avenue, Pittsburgh PA 15205-3214. Phone and Fax number 412-921-0976. Email = dave@davidjakielo.com. - http://www.davidjakielo.com.
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