In the healthcare industry, failure to efficiently collect patient revenues, or to invoice and receive payment for services, can seriously undermine a practice’s ability to meet its obligations, much less profit. While it is essential to weigh the balance between profitability and the provision of high quality patient care, it is also important to establish a revenue management cycle that is aimed at capturing and managing patient service revenue (Oregon Health and Science University, 2016). As such, the following recommendations can be made, as it relates to the selection of Hamilton-Reach Financial Services as a collection agency, or collection service provider for customer accounts.
First and foremost it is important to avoid collection agency use when possible. Ultimately it costs the practice more, if collection agencies are used, than it does if payments are received in house. As such, review should be made of each case, before electing to refer an individual account for collection (Manley & Satiani, 2009).
The practice’s specific needs were addressed as follows. An average of $366 dollars per patient is owed to the practice, and it is known that if it is allowed to go to collection, roughly 15 percent will be collected. As such, it is essential that a company that can maximize that percentage of return will (ACA, 2013, Consumer Finance Protection Bureau, 2014). Further, according to the Consumer Finance Protection Bureau, the medical debt that proceeds to collection agencies accounts for roughly 40 percent of all disputes with consumers, and so it is also important that the credit agency selected has a minimized level of disputed transactions, which can ultimately result in further losses (Consumer Finance Protection Bureau, 2014).
Vendors were screened and selected according to the guidelines recommended by ACA international, including the capabilities of the collection agency, the market knowledge they have as it relates to the practice, their professional credentials, the training and development they provide to those carrying out the collection process, the liability insurance they carry, their success at recovery, their policies and procedures, and their personal references (ACA, 2006). These features, when taken together insure that patients are respected and well treated, and that high percentages of the accounts past due are collected, so that the practice can maintain financial solvency.
A total of three local vendors were vetted, in relation to their qualification, and their ability to meet the practices specific needs, the standards of the industry, and the recommendation of our peers. The vendors were, the final recommended service provider, Hamilton-Reach Financial Services, ABC Recovery, and Longwood Financial Legal Services. These will be discussed per each of the discussion points defined by the ACA (2006).
Professional credentials were fundamentally taken into consideration. All three of the collection agencies that were considered were appropriately licensed, bonded, and compliant. This is essential to not only good business practice, but lawful collection, and was a primary qualifying characteristic when selecting agencies to consider. We also only considered companies that have active Errors and Omissions liability insurance, which would protect us in case of litigation, as the result of legal violation, perpetrated in the process of collecting the funds. All three of the considered agencies were thus meaningfully insured.
Beyond these basic qualities which acted as qualifiers, it is important to consider the capabilities of the collection agency. The ACA (2006) claims that it is pertinent to ask the question “what can the agency do for us”. This includes the services they provide, as well as their man power and other factors. We preferred a company that could provide skip-tracing services to follow up with consumers who have moved, and no longer receive services from the practice. As such, there were two options that offered the necessary services. ABC Recovery, and Hamilton Reach-Financial services. Both had the ability to network with other collection agencies in order to maximize contract with patients the practice has lost touch with, in order to successfully delivery collection documents.
However, only one of these companies had the capability to provide medical-specific services, with a high level of specialization in medical billing and coding and market knowledge that relates specifically to trying to solve medical billing issues. That was Hamilton Reach-Financial Services. This company, while significantly smaller, and having less man-power than ABC Recovery, handles medical billing almost exclusively, and so offers a far greater level of sensitivity, as it relates to consumer situations, and a better grasp of legal limitations as they are late to medical billing, coding, and collection than ABC Recovery. It should be noted that Longwood Financial Legal Services also offers medically specific services, and has a strong grasp on the legal implementations. However, they also tend to have a very stringent, and legally intimidating approach, which can result in a greater level of disputes and poorer total returns, which made them not our primary recommendation, regardless of their specialization.
Hamilton Reach-Financial Services also offers ongoing training and development to employees, and requires retesting on legal and ethical issues that are related to the collection process. This is highly recommended by the ACA (2006) and also ensures that they are professional, competent, and capable of meeting our company’s needs. We strongly feel that the agency we partner with needs to be invested in its employees and in the quality of service that they provide, and ensuring that they are trained, and retrained, in areas relating to collection of our practices is key to long-term collection success.
Base on these preferences, and Hamilton Reach-Financial Services’ general adherence to our ideals and objectives, we completed a quantitative review of the services they provided and the related successes and determined that they were reasonable in their fees, and effective in their purpose. While the industry average is a 25 percent commission (ACA, 2006), Hamilton Reach-Financial Services were only demanding a total of 21 percent commission of the collected accounts, with slight performance bonuses for funds collected within 30 days of assignment. Further, the company currently has a collection success rate of roughly 27 percent, representing a success rate well above the national average for medical collection services.
Based on these evidences, it is recommended that the company move forward with the intended long-term contract with Hamilton Reach-Financial Services, in order to provide collection services on all accounts that go beyond 85 days without payment. The effectiveness of the collection policy will be reviewed every six months, for two years, with contract extension to be negotiated at that point. This is the best recommended outcome from our findings, from the local options vetted through this process.
References:
ACA (2006). Selecting a Professional Collection Service. Retrieved from http://www.acainternational.org/files.aspx?p=/images/10963/selectingacollectionagency.pdf
ACA (2013). Healthcare Collection Statistics. Retrieved from http://www.acainternational.org/products-healthcare-collection-statistics-5434.aspx
Consumer Financial Protection Bureau (2014). Consumer credit reports: A study of medical and non-medical collections. Retrieved from http://files.consumerfinance.gov/f/201412_cfpb_reports_consumer-credit-medical-and-non-medical-collections.pdf
Manley, R. & Satiani, B. (2009). Revenue Cycle Management. Journal of Vascular Surgery 50(5): 1232-1238.
Oregon Health and Science University (2016). Revenue Cycle. About Support Services. Retrieved from https://www.ohsu.edu/xd/about/services/patient-business-services/revenue-cycle/
