Making sure your practice gets its payment-due
Is a collection agency the answer?
If you are like most practice administrators, you have some experience with late payments and nonpayments of bills. (See related story, p. 113.) You and your staff have sent letters and made calls. You've filled out every form you should and still aren't getting paid. So you think about hiring a collection agency.
Before you take that step, here are some points to consider, says Barbara Babow, senior account executive at Transworld Systems International, a national collection agency in San Francisco:
r Determine how much time you want to spend on collections.
Babow says the first thing any practice should do - even before a problem develops - is to figure out how much time you want your staff to spend writing letters and making phone calls. "If you ask three times and get no response, maybe that's enough for you," she says. "You have to find a system that you are comfortable with." Keep in mind, Babow adds, that it takes an average of three phone calls to collect a bill, and even with her service, most accounts are not collected until the fourth or fifth contact.
r Know the law.
If you are trying to collect consumer debt, you may be governed by the same laws that cover collection agencies - such as when you can call, what you can say, and whether you can be sued if you go beyond the bounds of those laws, says Babow.
r Decide what kind of agency you want to hire.
Babow notes that there are two types of collection agencies and that there are clear differences between them. There is the flat fee service which usually charges between $5 and $10 per account over a set period of time. At her company, the usual contract is for two years, and it covers up to five letters per account. The other kind of service provided by Babow's agency and others takes a percentage of collections - usually 30% to 50%.
r Ask pertinent questions.
Among the things you want to know about a collection agency are:
- What is the percentage of recovery? The national average, according to the American Collectors Association, is 21%.
- What is the average recovery for every dollar clients invest in the process?
- Is the money sent directly to the practice, or does the agency collect (and hold) the money for later disbursement to you?
- If you are trying to collect from anyone located in another state, is the agency licensed to collect in that state?
- Has the agency worked for a practice like yours before? Babow says you want to ask for - and actually check on - references from businesses like yours.
The latter is vital, says Babow. "You don't want them treating your patients or payers like a typical bad debt at another business. They have to find out if the nonpayers are reluctant good guys or real bad debt, so they have to be diplomatic and polite. Alienation can cost you business."
· Barbara Babow, Senior Account Executive, Transworld Systems International, Rohnert Park, CA. Telephone: (415) 927-1988.
· Melvin Kirschner, MPH, MD, Physician in Practice, Van Nuys, CA. Telephone: (818) 782-5450.
· David Rogers, MD, Physician in Practice, Allen, TX. Telephone: (972) 727-1131.
· Bradley Reiner, Manager of Payer Relations, Texas Medical Association, Austin, TX. Telephone: (512) 370-1300.
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