In general, people intend to honor their debts. Others, of course, are not as responsible. In addition, intending to pay and actually paying are not the same thing. So, delinquencies are part and parcel of operating a healthcare practice, even in the best circumstances. Now, add to that the slow economy, high unemployment, large numbers of uninsured patients, and it is understandable why past-due debts are increasing.

Improvement is needed… and achievable

As past-due accounts increase, a practice’s cash flow decreases… at a time when costs are high, reimbursements are shrinking and a lot of uncertainty exists in the wake of healthcare reform. So, collecting on past-due accounts is important to the financial performance of any practice. And while collecting money isn’t easy, it is more within your control than are reimbursements and costs (or the ramifications of new reforms). Most importantly, there are things that practices can do to increase their collections, perhaps significantly. Here are some tips on ways to improve your collections, and sample collections letters you can download and use.

Know the basics

First, know what you’re up against. Besides delinquencies being a fact of life, here are some simple truths to keep in mind:

1. The longer it takes to get paid, the less likely it becomes that you will.

2. Some accounts are going to be a genuine challenge to collect.

3. A proactive, systematic approach to billing collections can decrease payment times, improve revenues and minimize the need for outsourced collections.

Improve your collections processes

First of all, you need to have processes. This is the proactive and systematic approach just mentioned. In fact, there are many steps to take, and they can have a significant positive impact on collections and revenue cycles. They also happen to be very easy to implement, Unfortunately, many practices of every type and size do not make use of these steps, to the detriment of their bottom lines. Here’s what your practice can do now to improve collections:

• Establish Clear Terms – Make sure patients know what is expected of them with regard to paying their debts. Set clear terms and inform your patients. Also, remind them from time to time (but not too often). You’ll be removing lack of understanding as a reason (though not an excuse) for delinquency.

• Notify of Responsibility to Pay – In your new-patient paperwork, include clear text about the patient’s responsibility to pay.

• Collect All Patient Info – Get as much information as you can about patients. Address, phones, emails, workplace, etc. Also get a Social Security number, which you will need if the account has to be sent to a collections agency later on.

• Get Permission to Leave Messages – With a signed agreement allowing you to leave voicemails regarding billing matters, the staff can leave messages for patients using more motivational language, such as "may be turned over to a collections agency." Otherwise, it’s "please return our call," which isn’t compelling at all.

• Remind about Co-Pays – When appointing, remind patients about their co-pay and why it’s important. Also, make sure all staffers are trained, able and happy to answer any co-pay questions that patients may have. Giving them incentives will help.

• Verify Address – This one is just too easy — and important — not to do. People move, addresses change. Be sure you always know how and where to reach patients. Avoid wasting time mailing to a bad address and make last-resort collections easier.

• Verify Insurance Eligibility – Get the card and verify eligibility at every visit to reduce claim denials and resubmissions… and to expend less labor than collections will require. Also, automated verification, included in Kareo medical billing software, can save up to $2.95 per verification, or more than $35,000 annually!

• Collect Up Front – Collect patients’ co-pays and deductibles up front. Co-pays are an increasingly large part of practice revenues. Twenty co-pays can be $80,000 annually, and much more for large practices. Every co-pay that you don’t collect up front means paperwork (labor) to chase it down.

• Offer Payment Options – Allowing patients to make monthly payments generates positive cash flow for the practice while making it easier for patients to fulfill on their responsibility to pay.

• Know When to Outsource – Accept that some accounts are genuinely challenging and possibly unmovable with the practice’s resources. The earlier you recognize them, the more likely your collections agency will be able to succeed.

• Letters – A planned sequence of well-written, professionally presented letters is essential. Remember, some people need to be prodded once, some twice, some more than that. Send the letters at set intervals (usually number of days past-due). But remember that tone matters… and should differ with each successive letter. The object is to get the patient to pay now, in full, and come back again and again as a satisfied, paying patient in good standing. We have provided a sequence of four sample letters you can download, then modify and use to assist in your new collections processes.

Spot the problems as early as possible

Following established steps consistently makes it easier to recognize which accounts are likely to be most challenging, including those that need to be sent to outsourced collections professionals. If you establish clear terms, remind about responsibility, always ask for copays up front, leave detailed messages, send letters, it’s going to become more apparent which patients demonstrate behaviors that suggest they are worst-case. At the same time, you’ll know that accounts are not being sent to collections outsourcing because of poor billing practices or processes.

Recognize the benefit and embrace simple changes

A key barrier for improving collections processes is the belief among staffers that these steps consume a lot of time and are essentially a waste of resources. Squash this belief, because it’s wrong. Unpaid accounts mean the medical services already rendered will have been wasted, and they represent the most expensive labor in the practice. Delinquent accounts also mean the practice isn’t getting the fuel (revenue) on which it runs. Plus, the proactive steps above are easier, less time-consuming and cheaper than trying to collect past-due dollars.