Healthcare providers have been using the same old tactics to collect from patients for years. There are a few great articles that you can find online that offer insight on this issue. We explore this subject below and arrive at the conclusion that financing healthcare might be a better option than sending patients to collections. Recently while discussing patient payment responsibility with a medium sized healthcare provider, I queried them regarding their collection practices and the conversation went something like this:
Conversation:
Q: What happens when a patient owes you money?
A: We send them a bill.
Q: When they don’t pay, I assume you send them additional bills, how many do you send before you take an additional step?
A: We send them bills for 4 months and if they do not pay we send them to a collection agency.
Q: How much is the average bill you are asking the patient to pay?
A: $900.00
Q: When you send the patient to a collection agency what does it cost you?
A: 30% of what they collect
Q: What percentage are they collecting?
A: Around 40%
Q: How are they collecting that 40%
A: They offer the patients payment plans and ding the patients credit
Q: What would happen if you offered to finance their healthcare up-front?
A: (After a long pause) We probably should do that
When you send a patient a bill for $900.00 it is likely not getting paid because a majority of the population simply does not have a large amount of monthly discretionary income. They are more likely to fit a $75.00 per month payment into their monthly budget. So let’s do some math.
Collections vs. Healthcare Financing
10 Accounts owing $900.00 ea. for a total of $9,000.00
Collections gets 4 accounts to pay for a gross collection of $4,000.00
Collections keeps 30% of what they collect or $1,200.00
The Practice net’s $2,800.00 or 31% of the original billed amount
Healthcare Financing vs. Collections
10 Accounts owing $900.00 ea. for a total of $9,000.00
You choose a financing source that averages 96% of all collecting efforts
Patient goes online and set’s up the healthcare financing plan for $75.00 per month
The Practice net's $8,640.00, or 96% of the original billed amount
All healthcare financing plans are not created equal and not everyone should be put on a financing plan. You can find plenty of services out there that will help you do an automated payment or collection from your patients.
We have listed below a few tips when it comes to financing healthcare:
1.) Evaluate the patients credit with a “Soft-Pull” which means it does not negatively affect the patients credit score.
2.) Review and measure the patient’s ability to pay, then set up an affordable program for the monthly payment that includes a contract for the patient to sign. This contract should meet state and federal regulatory guidelines and should be a solid agreement obligating the patient to pay.
3.) Then process the monthly payments for the full length of the financing plan that was agreed upon in the contract. If the patient does not pay, contact the patient within 24 hours of a missed payment and work with them throughout the process in a patient friendly environment.
Healthcare Finance Direct has been offering healthcare financing for over 6 years to over 2,400 providers across the nation. If you would like to know more about patient financing and how Healthcare Finance Direct could impact your practice, feel free to contact us or follow one of the links below.