How to set up your collections process

Collecting money from patients is an important key to the success of your practice. And the key to collections is remembering two rules:

Rule No. 1: The longer a receivable (money owed to you) is uncollected, the less chance you have of collecting it.

Rule No. 2: Some people will not pay no matter what you do.

Your goal is to maximize collections, which means setting up a plan to get people to pay as soon as the bill is incurred. To set up your collections process:

1. Start by establishing expectations. Let patients know your expectations for payment from their first visit.

Include a “financial responsibility” statement with your new-patient paperwork and make sure everyone reads and signs it. Direct your staff to explain how you collect money and whether you accept insurance. Some offices print a Q&A on collections for patients to take with them.

2. Remind patients about your policy every time. Your staff must remind every patient that the service fee is payable prior to leaving. Teach your staff to remind everyone politely, but firmly: “Your charge for today is $55. Will you be paying by cash, check, or credit card?”

3. Make it easy for people to pay. Set up credit and debit card payment processing capabilities. If you don’t want to accept insurance, give patients a detailed “superbill,” so they can be reimbursed. Accept payment plans for larger bills.

4. Don’t discuss billing and/or accounts with patients. Your discussions with them should be about their healthcare. Train your staff to discuss billing, collecting money, insurance reimbursement, and other financial matters.

5. Prepare and review an ‘accounts receivable aging report.’ Look for who owes you money and how long they have owed that money. After you review the report, send out bills frequently. Don’t wait until the end of the month to send out bills. Every week, send a bill to one-fourth of your unpaid accounts.

6. Establish a process to get money from those who don’t pay. Some people are unwilling or unable to pay. Although consumer protection laws prohibit you from harassing or threatening people or violating their privacy, you do have the right to contact people to ask them to pay, and you don’t want to wait too long between attempts.

Set up your letter and/or phone process over a period of weeks, with increasing levels of expectation. For example:

• Send a friendly “oops” letter that assumes the person forgot to pay.
• Follow the “oops” letter with a phone call or letter asking the person to pay by a certain date. Be prepared to discuss payment plans if the person expresses reluctance to pay the balance immediately.
• If all efforts fail, send a final ultimatum letter that demands payment before you turn the bill over to a collections agency or attorney.

7. Use a collections agency or attorney. For those who will not pay, you will need to send the bill to collections. The collections agency works best with people who have stopped coming into the practice and you are unable to contact. Although these agencies often get your money, you will pay a large percentage deduction for their work.

8. Consider small claims court. This provides an inexpensive way to collect money without needing to hire an attorney and for small amounts owed (depending upon the state). Since this process sets up an adversarial relationship, you should only use it in extreme cases.

9. Write off bad debt. No matter what you do, some people will not pay. You can write off bad debt at the end of the year or, in some cases, you can continue to provide care for that person on a “cash only” basis.

If you set up and work sound processes, you will minimize uncollected money and bad debts.