In a majority of cases, medical practices approach patient collections the same way for all patients. It makes sense – there’s a standard process, and it’s easy for staff to just go through the motions for all patients.
But have you ever considered using different collections tactics for different patients? I’ve found that it actually pays to treat different patients differently -not because they are not equally valued, but because they all need something different. A good analogy might be how each body needs different exercise and nutrition.
The key to this sort of strategy is recognizing the four different kinds of patient payers and then using the right tool at the right time. Here is a breakdown of the four different types of patients when it comes to payments.
Bucket #1
You have the Reliable. You love these patients. They show up regularly and pay on time. We love those people because they pay the rent, light bills, and payroll. Send them just one statement and they pay it.
Bucket #2
You have the Distracted. You love these people too, because they mean well and have great hearts. Sure, they will need some reminders to make paying you a priority, but they will pay you…eventually. And when they can't pay or have a hard time paying, they are the first to call and let you know.
Bucket #3
You have the Disrespectful. You can call these people stubborn and difficult. When it comes time to pay, these people have two stacks of bills and you were in the second stack! That is, they have money and will pay somebody, they just aren't paying you! You can "remind" them forever, but they won't pay until they see the words "licensed collection agency."
Bucket #4
Finally, you have the Professional Debtor. These people may never have intended to pay you, and frankly never had the money in the first place, and they generally get away with it. To get paid, it takes a live collection agent who has done skip tracing to find them, asset discovery to determine their ability to pay, and tons of calls and letters to them in order to pay their balance.
Do these categories make sense? Can you picture some of your patients in these categories right now?
So, how do you collect from each type of patient?
You need a four stage accelerated approach to collections. Allow me to explain.
Phase 1- Collect from the Faithful. One statement is all it takes. You're golden. Nothing more needs to be done here because you got your money.
Phase 2 - Collect from the Distracted. Most Americans are pretty busy, so the fact that you give them a quick reminder nudge to get statement paid and be brought current is no big deal. This can be time consuming, so finding the time to make these extra calls can be a challenge. Typically it takes 3 to 5 contacts to get their attention.
The risk is that the longer you sit on these accounts, the harder it will be to collect later, so speed is everything at this point. This process must be done within the first 30-60 days of delinquency or it's not going to end well. You might just lose a patient unnecessarily due to non-payment.
Phase 3 - Collect from the Disrespectful. Okay, once the client knows that they owe and would have ignored all statements, letters, calls, reminders, voicemails etc. - now it's time to intensify the effort. If they don't have the money, they could at least call and work something out, right?
Now it's time to bring in what's called third-party impact. This should be started around the 60 to 90 day mark or you're waiting too long. Ask your agency if they provide “soft” or “pre-collections” for these types of accounts.
Phase 4 - Collect from the Professional Debtor. This is tough work but even after all the evasion, dismissing and totally ignoring all other attempts to collect, highly trained collectors could actually bring these patients back to the table.
The next question is apparent - Do you have a collection strategy in place to escalate the matter and the tools to make it happen? If so, is your system the best method available to you, or do you need something better?
Work on putting this 4-step process into practice. Tune in next month for the next post in my medical practice cash flow series!
