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Simple but workable ways to improve collections

What’s the cause of poor collections?

Don’t blame it on the office, says one collections expert.

Sadly, the underlying reason for poor collections is today’s all-too-common attitude that bills don’t deserve respect. In the past, people were proud to pay their bills. No more. A bill that can be avoided gets avoided.

And along with that, “the world has changed,” says Karen Cooper, district sales manager for Transworld Systems Inc. in Shrewsbury, NJ, a national cash flow management company for business and health care.

Physicians’ profit margins have shrunk to the point that offices have neither the resources nor the staff time to give unpaid accounts enough follow-up to bring the money in.

It’s a catch-22 situation. Offices can’t afford to hire people to do sufficient collection work to be effective, but without the collection work, they don’t get paid.

Here Cooper outlines some very small, yet very effective steps managers can take to help bring in better receivables. “They aren’t a 100% fix,” she says. But in the big picture of revenues, she notes, “little things count.”

Put the phone number on the bill

Perhaps the easiest of all collection improvement strategies is simply to put the office’s phone number on the invoices.

A lot of offices don’t do that, Cooper says. And it’s an invitation to payment delays.

The patient has a question and would ordinarily call right then but sets the bill aside, planning to look up the phone number later. And later usually means it’s several days or several weeks before that bill gets picked up again.

“People don’t pay what they don’t understand,” she says. So make it easy to get the questions answered. When a patient is looking at the bill and sees the phone number, there’s a good chance the call will get made immediately. But with no number, the call probably won’t get made today.

Leave off the aging boxes

Another easy collection improvement strategy is to remove the aging line from the bottom of the bill.

It’s common for a bill to show if the outstanding amount is at 90, 60, 30, or zero days. But that doesn’t tell the patient to step on it and get the check out. To the contrary, it says “lots of our patients wait 90 days to pay, and we expect you to do the same.”

The message the patient needs to get is “here is your bill, and it’s payable right now.”

Speed it up with pink or orange

Even colored paper helps. Turn to color when the first bill goes unpaid, Cooper says. Use the office’s regular white mailing envelope, but print the invoice on pink or orange paper.

To anybody looking at a pile of bills “the color stands out,” she explains. What’s more, it’s obvious this isn’t the first bill – because that one came on white paper. She cites a CPA office that tried using color on accounts “that were months and months old” and got results it never expected.

The best money-getting colors are bright pink and orange, she says. Blue and green are weak, and yellow is muted, and none of those is especially effective.

An ongoing financial responsibility

Improve the collections further while the patient is in the office.

The office needs to keep patients constantly aware that they are personally responsible for their accounts, Cooper says. And the way to do that is to have them sign a financial responsibility statement at every visit.

Many offices get the statement signed by new patients and stop there. “But people don’t remember what they signed five years ago,” Cooper says. And over time they forget they are responsible for the bill regardless of what the insurance company pays or doesn’t pay.

Collecting the direct payments

Get another signature at each visit to a statement that if the carrier pays the patient directly, the patient “is responsible for forwarding the payment to the physician immediately.”

Direct payments most often occur when the physician is out of the payer’s network. And it’s not uncommon for a patient to deposit the check and keep the money. Thus, the statement needs to say that the physician does not participate in the plan, that the carrier may send the money to patient, and that the patient is responsible for the entire bill and should forward the payment to the office.

Cooper cautions, however, that the office has a responsibility here, which is to make patients aware when a doctor does not participate in a plan.

That’s often overlooked when a patient’s regular physician, who does participate in the plan, is on vacation, and the office schedules the visit with another doctor who is new to the practice and isn’t yet credentialed.

Always tell a patient about lack of coverage and give the option of waiting until the participating doctor returns, she says. That patient has every right to assume the second doctor’s services are covered, and if the nonparticipation isn’t explained, it’s scarcely fair to expect that person to pay.

A little psychological wording

Cooper also points to a bit of psychology to use in talking with patients about their bills.

Set the expectation of payment before the patient comes in.

When the office calls to confirm an appointment, whether it’s a live conversation or an automated message, say “your copay is due when you check in.” In other words, “bring your wallet!”

Some offices go so far as to refuse to see people who don’t have the copay at the time of the visit, she says. But her advice is not to do that because it fails to recognize patients’ individual circumstances. It can bring about ill feelings – and even lost patients.

‘Oh gee – I forgot my wallet’

Another point of psychology: have a good script ready to roll when a patient can’t pay the copay amount at the visit.

The most effective response to the forgotten wallet is to offer a payment option that’s positive – and also very personal.

Give the patient a copy of the statement plus an addressed envelope to mail the payment in. And at the same time, tell the patient “Here’s an envelope you can use to send in your payment. I’m Staffer A, and I’m putting my name here on the envelope for you. I’ll watch for it.”

The staffer then writes her (or his) name on the envelope while the patient is watching. And the key to success, Cooper says, is for the staffer’s name to be written out while the patient is standing there watching.

Now the patient hasn’t talked with “some anonymous person in the business office” but with Staffer A herself, and Staffer A herself knows that payment is due and is watching for that envelope.

There’s a personal contact. There’s somebody watching for that payment. “It’s embarrassing not to pay,” Cooper says.

A new twist to ‘what can you pay?’

Still more psychology comes from the wording staff should use when calling about outstanding balances.

When the patient says “I can’t pay the full amount,” don’t come back with “what can you pay?” Say instead “how much are you short?”

Ask how much somebody can pay, and that person is going to try for the smallest amount possible – “the most I can pay is $10.” The office has just said “we’re willing to take whatever scraps you can throw us.”

But asking how much the shortfall is assumes the person “can pay most of the bill but just not quite all of it.” Now the patient knows the expectation is high, and the office will likely get the largest payment possible, not the smallest.

Write out the collection procedures

Still more good cash flow results come from simply putting the office’s internal collection procedures in writing.

Most offices have a written procedure for getting the bills out, but few have one for following up on unpaid accounts, Cooper says.

A response she often hears from her own client offices is “well, we make some phone calls whenever we can get to it.”

She also finds that offices tend to follow up on some patients but not others. Or they do or don’t follow up depending on the size of the balance or which physician is involved.

There needs to be a standard procedure, not a haphazard, when-we-get-around-to-it system. And to make sure that procedure is followed, it needs to be in writing.

If nothing else, a written procedure is essential for new staffers. Unless things are laid out, “they have no idea where to begin,” she explains. And along with that, having it in writing keeps the office from sliding into bad habits.

The plan can be as elaborate as the office wants, but in general it should tell what letters are sent and when and what calls are made and when.

She adds that for best results, the procedure should require the same follow-up for every patient so the office never lets anybody off the hook on the argument of “oh, he always ends up paying.” That’s the very patient who may well not pay next time.

A quick response to returned mail

Along with the general collection procedures, set a system for handling returned mail.

Most offices do call immediately and try to get the correct address, Cooper says. But what if the phone has been disconnected and there’s no way to get a new address?

When a patient is not to be found, the account should go to a collection agency immediately.

An agency’s volume allows it to do skip tracing and database searches at discounts, which is far more efficient that spending staff time to hunt somebody down for a $30 invoice.

The early bird gets the money

Finally, Cooper says, collections improve the faster the work begins.

After two unpaid bills (or even after one bill), call and ask if there is a reason for nonpayment. Is there a question about the charge? Is a payment plan necessary? The patient has already ignored two bills, so there’s not much chance of getting any money from a third that carries the same information.

Then at 90 days, don’t send a third bill. Send a warning letter.

Some offices hold the warning until 120 days, she says. But if the first two invoices have been ignored and the call has produced no results, why wait?

If the warning letter doesn’t bring in the payment, absent an insurance appeal or some unusual issue, send the account to collections. The message is clear: payment is not coming.

If there were any intention to pay, there would have been a courtesy call explaining an effort to make a payment or asking for a payment plan. But no call at all is evidence enough that the patient has no respect for the office or its services or its bill.

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