Ways to Maximize Effective Collections – Tracy L. SpearsJune 4, Ways to Maximize Effective Collections June 4, 2009 Presented by: Tracy L. Spears National Consultant – Medical/Healthcare Industry Transworld Systems Inc., provider of

Ways to Maximize Effective Collections – Tracy L. SpearsJune 4, Objectives of Presentation  Develop internal strategies for effectively collecting money  Help staff learn what to say to patients in order to motivate them to pay  Understand what options are available when accounts are overdue  Know when and how to use those options

Ways to Maximize Effective Collections – Tracy L. SpearsJune 4, Collections Challenges Facing Today’s Practices  Slow paying patients  Slow paying insurance carriers  Understaffed  Trying to work all accounts systematically, including small balances  Familiarity with collection laws

Ways to Maximize Effective Collections – Tracy L. SpearsJune 4, Four Reasons to Collect  Accounts depreciate and get harder to collect  Complaints increase with time  Further medical treatments stop because patient avoids doctor  Stressful for the staff and the patient

Ways to Maximize Effective Collections – Tracy L. SpearsJune 4, Facts About Collections  Most medical practices wait until an account is 180 days past due before they give it to an agency for collection

Ways to Maximize Effective Collections – Tracy L. SpearsJune 4, Typical In-House Collection Efforts Day 30 Day 60 Day 90 Day 120 Day 150 Statement Letter #1 Phone Calls Statement Letter #2 Phone Calls Statement Letter #3 Phone Calls *According to the Dartnell Institute of Business Research, the average cost of working an account internally over a six month is $31.60 per account. Day 180 Intensive Telephone Contact and/or Legal Action at a cost of 25-50% of recovered amounts. -

Ways to Maximize Effective Collections – Tracy L. SpearsJune 4, Facts About Collections  It costs a practice $31.60 to collect an account after it’s 60 days past due*  90% of the collections budget is spent to collect 10% of past due accounts  Delinquent accounts depreciate ½ percent per day ** * MGMA resource center **U.S. Department of Commerce study of depreciation of accounts held in-house.

Ways to Maximize Effective Collections – Tracy L. SpearsJune 4, Start Early, Recover More

Ways to Maximize Effective Collections – Tracy L. SpearsJune 4, Hidden Cost of On-Hold Time

Ways to Maximize Effective Collections – Tracy L. SpearsJune 4, Facts About Collections  There are over 6,000 collection agencies operating the United States

Ways to Maximize Effective Collections – Tracy L. SpearsJune 4, Facts About Collections  The Fair Debt Collection Practices Act (FDCPA), the primary federal law regulating third party collection agencies, which was enacted in 1977 with the support of ACA, is designed to help protect consumers from unfair and abusive collection practices

Ways to Maximize Effective Collections – Tracy L. SpearsJune 4, Facts About Collections  Average fee/cost for a traditional agency is 30%  According to the ACA International 2008 figures, the average recovery rate for non-hospital medical collections is 15%  The true cost of collections is the amount of money that is not recovered * ACA International 2008 Survey

Ways to Maximize Effective Collections – Tracy L. SpearsJune 4, Facts About Collections Smith’s Practice  $50,000  15% recovery rate  Collect $7,500  Collection Fee 30%  Agency gets $2,250  Practice gets $5,250 Jones’s Practice  $50,000  30% recovery rate  Collect $15,000  Collection Fee 40%  Agency gets $6,000  Practice gets $9,000  Additional Revenue of $3,750

Ways to Maximize Effective Collections – Tracy L. SpearsJune 4, Facts About Collections  Most money collected by a third party is from the first letter sent to the patient!  Working an account internally via phone, has a 10% chance that the call will get through to the patient  90% of malpractice suits are with patients who owe money (hold harmless agreement)

Ways to Maximize Effective Collections – Tracy L. SpearsJune 4, Ways to Maximize Effective Collections

Ways to Maximize Effective Collections – Tracy L. SpearsJune 4, Have a Defined Credit Policy  Policy gives staff a detailed document that they can stand behind

Ways to Maximize Effective Collections – Tracy L. SpearsJune 4, What Should be Included in Your Policy?  Initial office visit or upon admission - What Payment is required  Allowable forms of payment: cash, check, money order, and charge card  Broken appointment charge and policy  Patient is responsible for total charge. We do not look to a third party for payment  Medicare - Medicaid, what policy. Established patients only?

Ways to Maximize Effective Collections – Tracy L. SpearsJune 4, What Should be Included in Your Policy?  Office policy on insurance assignment. Full fee due now or just estimated deductible?  Whether or not service fee is charged for filling out more than one insurance form and, if so how much? If doctor "participates", how are those programs handled differently?

Ways to Maximize Effective Collections – Tracy L. SpearsJune 4, What Should be Included in Your Policy?  Maximum number of payments allowed?  Promissory notes or Truth in Lending forms?  Interest, billing or service charge - rate and when applied

Ways to Maximize Effective Collections – Tracy L. SpearsJune 4, Make Monthly Statements Effective  Send statements promptly and regularly  Do not put aging date at the bottom of the statement

Ways to Maximize Effective Collections – Tracy L. SpearsJune 4, Statement with Aging Dates

Ways to Maximize Effective Collections – Tracy L. SpearsJune 4, Make Monthly Statements Effective  Do put a due date on the statement 7/10/2009

Ways to Maximize Effective Collections – Tracy L. SpearsJune 4, – Admit and Correct Your Mistakes  If patient has not paid because there is a billing error, admit it and correct it quickly

Ways to Maximize Effective Collections – Tracy L. SpearsJune 4, Contact Overdue Accounts More Frequently  Contact late paying patients every days

Ways to Maximize Effective Collections – Tracy L. SpearsJune 4, Use ‘Address Service Requested’  Put address service requested on all correspondence sent to patients

Ways to Maximize Effective Collections – Tracy L. SpearsJune 4, Use Your Aging Sheet, Not Your Feelings  Stand by your policy

Ways to Maximize Effective Collections – Tracy L. SpearsJune 4, Make Sure Your Staff is Well-Trained  Even experienced staff members can get jaded when dealing with past due accounts

Ways to Maximize Effective Collections – Tracy L. SpearsJune 4, Qualified Staff

Ways to Maximize Effective Collections – Tracy L. SpearsJune 4, Qualified Staff

Ways to Maximize Effective Collections – Tracy L. SpearsJune 4, How to Talk to Patients: Asking for Payment What you should not say:  “How much can you pay?”  “When can you pay?”  “Can you pay something?”

Ways to Maximize Effective Collections – Tracy L. SpearsJune 4, How to Talk to Patients: Asking for Payment What you should say:  “How much are you short?”  “Will you be in today or tomorrow?”  “Will you be paying by cash, check or credit card?”

Ways to Maximize Effective Collections – Tracy L. SpearsJune 4, How to Talk to Patients: Asking for Payment  Empathize with patient’s situation  Remind them of their obligation to pay  Get commitment for payment

Ways to Maximize Effective Collections – Tracy L. SpearsJune 4, How to Talk to Patients: Asking for Payment  Convert outstanding balance to a time frame  Arrange for bi-monthly payment arrangements

Ways to Maximize Effective Collections – Tracy L. SpearsJune 4, – Knowing the Warning Signs of Troubled Accounts  Account is days past due  Phone has been disconnected or changed to “unlisted”  Partial payments are smaller and sent with less regularity  Patient says he or she won’t pay

Ways to Maximize Effective Collections – Tracy L. SpearsJune 4, Know Your Collection Options  Status quo  Write the account off  Attorney  Small Claims Court  Use a third party

Ways to Maximize Effective Collections – Tracy L. SpearsJune 4, What are Your Third-Party Options? Collection Agency  Percentage collections agency  Flat fee collections agency

Ways to Maximize Effective Collections – Tracy L. SpearsJune 4, What to Look for in a Third-Party  Proper Accreditation/Licensed  Reputable  Experienced  Easy to do business with  Partners with key professional associations

Ways to Maximize Effective Collections – Tracy L. SpearsJune 4, Disadvantages of Using a Third-Party  High cost  Alienating the patient  Losing control of account  Already invested a lot of work to win the account over

Ways to Maximize Effective Collections – Tracy L. SpearsJune 4, Advantages of Using a Third-Party  A third party gets the patient’s attention and makes an immediate impact  Implications for patient’s credit record  Removes doctor from position of “bad guy”

Ways to Maximize Effective Collections – Tracy L. SpearsJune 4, – Remember Your Goals Remember your goals Have realistic expectations of your accounts receivable program.

Ways to Maximize Effective Collections – Tracy L. SpearsJune 4, Useful Resources The Association of Credit and Collection Professionals (American Collectors Association) The Fair Debt Collection Practices Act National Better Business Bureau US Chamber of Commerce MGMA resource center

Ways to Maximize Effective Collections – Tracy L. SpearsJune 4, Questions?

Ways to Maximize Effective Collections – Tracy L. SpearsJune 4, Ways to Maximize Effective Collections June 4, 2009 Tracy L. Spears Transworld Systems Inc., provider of Thank You!