Medical Debt – issue involving both healthcare practitioners and healthcare users

It is not always the case of ordinary people suffering injustice and collection problems. In the US healthcare providers and practitioners are now facing a seemingly unsolvable issue with patients who are not paying for the service provided, or plainly, not paying their medical bills. A medical practice usually has a 10-12% profit margin, and patient copay makes up around 20% of the practitioner’s revenue. The problem is doctors only collect 60% of the patient’s copay, leaving the healthcare providers with very little to work with, with 1/3 of the projected profit lost!

The issue is getting bigger and bigger, and as always, solutions for a problem give birth to new inventions like a healthcare collection agency, cutting your expenses for recovering money from patients, saving time, and the need from an in-house trained staff for debt collecting.

Probably one of the main reasons why patients are not paying for the service they have been provided is the rise of healthcare costs, but it is not the sole reason. Other reasons why this issue persists are:

• Cutting off procedures from patient’s insurance coverage
• Medicaid cuts
• Deductible health plan, unfortunately, low savings (30% of all Americans have less than 1000$ savings)
• Chronic diseases require more than one therapy, increasing the number of needed treatments, drastically increasing the bills
• Other everyday debt (credit card, mortgage, student loan, etc.)

Hiring a debt collection agency surely helps in every possible way, they have the experience, different methods and tactics for different patients (diplomatic or intensive), and have the time and resources to do it professionally. All the large healthcare providers use their services, and those small practices don’t even have the time to chase all the debt owners, and there are a lot of hints on how you can protect your practice, and do it for free!

Hints you can use in your practice:

1. List the price of the service you provide – when in need, patients will not ask for the price of the treatment or intervention, because at the moment they need help first. Making the price clear at the start might save you from a lot of trouble in the future.
2. Make a payment plan for your patients – many cannot afford high priced procedures, and finding a way to help them pay might help. A discount for self-pay patients is also a good idea.
3. When necessary, ask for advanced payment, before some intervention or procedure. This is a difficult task because as a doctor, you are bind to help people, regardless of their financial or any other condition. The question is how far can you go before going bankrupt yourself?
4. Do not wait – contact all the patients who haven’t paid in time, and don’t wait, do it often. And have a plan (written document for the frequency of contacting)!
5. In the “patient-doctor” agreement mention that medical bills which are 30-60 das past-due are transferred to a debt collection agent with all debt collection expenses added on.
6. Be clear about the patient’s financial responsibility – explain your patient the exact sum they would have to pay out-of-pocket, not just the whole price. Several tools are providing you giving this service (management systems and electronic health record systems). A proper investment in tools and training will save you a lot of time and money in the long run!
7. Hire professionals – even if you don’t have a contract with a debt collection agency, and you have a lot of patients who owe you money for the services you’ve provided, it is never too late. They will use all the legal resources to collect the debt, for a fee of course.

There are a few hints of what not to do when a patient owes you money, and these are sensitive things that you should try and avoid:

• Do not collect a debt without first investigating the law in your state regarding medical debts. Some debts are not legal after 4-6 years since the last payment, and you cannot legally collect your debt, and this can be different for different states.
• Always avoid legal sue, and use it only as last resort. It is a very bad marketing, leading other patients away from your company. Plus, there is always a chance the patient will sue back, which is time and nerve consuming, and there is a small but always existing chance you just might lose.
• Do not threaten your patient – of very obvious reasons, you will be sued for harassment, and with today’s trends, you are bound to lose!
• Don’t write off any debts – small or large, writing off debts will almost surely lead you to financial instability. Have a debt register with detailed information (as detailed as you can), and hand over your register to a debt collection agency, even if they manage to collect a fraction of the debt, it would still be better than writing off the debt.

Another thing you should look out if you decide to hire a debt collection agency is the rating of the agency. The location of the agency and whether it is near you makes no difference, so stick to a high rated agency, investigate a bit before hiring them. Some agencies charge larger fees and don’t have the efficiency as others do, so choose wisely.

References:

1. https://nexacollect.com/debt-recovery/medical-collections-patient/
2. https://blog.evisit.com/virtual-care-blog/13-steps-increase-patient-payment-collections
3. https://ampliconinc.com/2020/02/8-steps-patient-debt-collection/
4. https://www.theatlantic.com/health/archive/2019/08/medical-bill-debt-collection/596914/
5. https://www.homecaremag.com/homecare-collection-agencies-and-patient-debt