How to implement an effective collections turnover process
To meet your revenue goals, you need to collect every dollar owed for the services you provide. With the increases in high deductible health plans, it is critical for practices to have an effective process for collecting patient payments – not only at the front desk, but also on the back-end once insurance payments are received. Even with the best efforts by the practice and/or an outsourced billing service, not all patient balances will be collected. These difficult balances create the need for effective policies and procedures for turning patient accounts over to a collection agency.
For billing staff, following up on past-due balances requires an increasing amount of effort for an ever-smaller return. Patients that aren’t able or willing to pay their balances will simply ignore numerous letters and phone calls. By turning older accounts over to a collections agency, staff can focus on the time-critical tasks of entering charges, following up on denials, and ensuring that current patient accounts are billed timely. Collections agencies typically work by keeping a share of the amount collected, thus allowing the practice to increase their revenue without any further work effort.
Keys to Success
- Define clear criteria for when an account will be turned over. Criteria should include the age of the account, whether the patient is making consistent payments on the balance, and the amount of the outstanding balance.
- Develop a process for consistently reviewing all accounts against the defined criteria. Review all outstanding accounts at least every other month and take action on those that meet your criteria.
- Once a patient’s account has been turned over to a collection agency, you must have a system to highlight the account so that no further services are provided until the balance is paid.
- Select your collection agency based on their rates (what percentage of payments they keep) and their results (what percentage of accounts they are able to collect any balance on). Monitor results at least annually.
- For larger practices with high turnover rates, consider contracting with at least 2 different collection agencies and comparing their results and then revising the share of accounts sent to each agency based on which is achieving the best results with your specific patient accounts.
Practices may feel the effort to develop and maintain a consistent turnover process is not worth the yield, but you may be leaving tens of thousands of dollars on the table.
For example, MSOC has one billing client who regularly turns over $50,000 in old patient balances every two months and recovers 10-20% of that amount. For very little work, they have added up to $10,000 to their revenue.
In addition, their patients are sent a clear and consistent message that they are expected to pay the amount owed. And finally, your turnover process allows you to better monitor your Accounts Receivable and more accurately identify expected revenue from services already provided. That’s a key factor to maintaining and improving the overall financial health of any practice.