There are many reasons why medical practices have issues in collecting their accounts receivables:

• No defined Collection Plan
• Collection tasks are delegated among employees
• Collection is not a priority (common among large practices with positive cash flow)
• Inefficiencies in the billing and / or collection department

Here are some of the causes and actions needed for improvement:

Proper Reporting
Accounts receivable management starts with good accounts receivable and aging reports. Accounts receivables should be separated by insurance companies and patient receivables. There are two different and distinct plans of action to improve outstanding balances.

Patients’ Statements
Too many providers do not send out patient statements timely and consistently.

The 10 day Collection Letter
Instead of sending multiple statements, consider this – send the statement then send a 10-day collection letter showing the patient balance with a note asking for payment. Studies show, sending more than 2 statements and 2 letters is an exercise in futility.

The letters basically send the message to the patient that

• The account is now overdue and your practice is professional and serious about collecting their outstanding debts.
• The practice is understanding and thus is willing to work with the patient to assist with a mutually favorable payment plan if full payment is not possible.
• The patient should call the office to discuss the account. The underlying message of the letters is your practice will pursue a more serious form of collection effort if a patient does not call to setup payment. After 60 days, if the patient has not called the office, the odds are they probably are not going to pay the account without additional incentive. Send these accounts for more aggressive collection action immediately.

Collecting in the office
A major collection-policy goal for a practice should be to collect co-pays and deductibles from the patient who comes to the office for an appointment, unless payment is not allowed by law. You need to conduct a periodic check of the front-desk collection activity to determine if the front-desk employee is collecting the necessary monies.  Remember: If payment is collected at the front desk, it does not become a receivable!

Insurance Claims

• Check insurance claims with the insurance company if older than 25 days
• Research why claims have not paid and when you can expect payment
• Re-file insurance claims immediately if insurance company has no record
• Document all conversations with the person at the insurance company with date and name

Collection options
3rd party collection company - Collection agencies will report debt to the credit bureau which, in itself, is sometimes enough of an incentive to entice the patient to pay. A patient faced with bad credit will often attempt at some point in the future to contact the office regarding settling the delinquent account.

Small claims court - Before filing any court action try a collection agency, the cost is less expensive and time consuming. Most 3rd party collection companies will advise if the debt is large enough and when it is time to file any court action.