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Six Good Tips for Bad Debt Collection

There are some startling realities when it comes to healthcare billing and collections, particularly when it comes to one of the biggest challenges of revenue cycle management: bad debt collection. Consider these findings from a recent study of hospital C-suite executives and administrators:

  • 21% of hospitals don’t even have a hospital bad debt collection process
  • 36% of hospitals reported their organization’s bad debts exceeded $10 million
  • 53% of patients failed to fully pay their medical bill balances

The alarming truth is that many organizations face a significant challenge in the area of bad debt collection — and know fully well it’s doing severe damage to their bottom lines and overall operational effectiveness — yet they fail to address the issue head on and create a practical and purposeful process for handling it. Not only are their bad debt collection challenges going to continue; things are only going to get more intense, pervasive, and costly.

Like all properly functioning systems, not only do the individual parts need to perform well independently; they also need to work together in a seamlessly dependent, interactive, and communication-intense method. Ideally, billing and collections needs to work hand-in-hand to resolve each aspect of the bad debt collection puzzle.

Here are some essential steps integral to a comprehensive, coordinated, and successful bad debt collection strategy.

Review Your Current Processes

As they say in tackling any challenge, admitting there is a problem and being open to change and other options is the key to coming up to a solution that works best for you. This means looking at what you’ve done in the past that might not have worked as effectively as you had wanted as well as looking at alternative tools, talents, and techniques for solutions. You can’t make a plan for where you’re going unless you understand where you’ve been and where you are.

Listen to the People on the Front Lines

Listen to your team — the people who serve on the front lines with patients, physicians, and coworkers — so you know exactly what’s going on in your organization from top to bottom. They often see and hear the most from patients and providers. This means listening for the things you do well and for those areas that could use improvements. Does your company have an open mind and listening ears that is looking for constant, continued improvement?

Implement Your Plans

Now that you’ve reviewed your current processes, received feedback from within your ranks, and know where there are holes in your processes, it’s time to set up procedures and implement them. For instance, do you have a large number of self-payers who are not paying their bills? Implement a process to collect at least a portion of their bills up front. Do you have a large number of patients returning for appointments who have not paid their previous bills? Train your team to ask for past-due payments in a sensitive way at the next appointment.

Keep Communication Central

Whether the communication is between billing or collections and patients or within the company itself, it’s critical that it be, whether with big or seemingly-not-so-big concerns, constant, concise, clear, and comprehensive. Patients need to know policies, pricing, and payment expectations. Coworkers need to be on the same page and support each other.

Adopt a Flexible Mindset

Few patients want to default on their payments, but circumstances and life issues arise that cause some to be trapped in situations in which they would rather not be. Offering alternative options for late-payers can grant them the ability to meet their financial obligations while keeping their dignity. Making reasonable adjustments to accommodate patients can turn a complicated scenario around and win public trust.

Support Your Staff

The business of business is people: people who do the right things every day and don’t have to be coaxed or motivated to doing and being their best. Especially in revenue cycle management and bad debt collection — where patients can get a bit testy and defensive — the organization that selects and supports a caring and considerate staff that understands the human side of business is the one that will thrive in the long term.

Commit to an alert and open perspective regarding operations. Develop and implement the best plan that meets your needs. Place a premium on communications — internal and external. Embrace a flexible, understanding attitude with late-payers. Hire compassionate people. If you do, you’ll be able to master bad debt collection and move on to the areas of your practice that you’d rather be spending your time on, like patients and delivering the best quality care possible.

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