Unfortunately, uncollectible debt is a major issue with most healthcare organizations. But now, new options are available to them.
An organizations debt is categorized by its stage in the revenue cycle. An account is considered “bad debt” as soon as it becomes delinquent. The standard practice is for hospitals to utilize a primary collection agency after an account has been delinquent for sixty days (self-pay accounts) and 180-days (after insurance balances). After the primary collection agency works unsuccessfully to resolve the account for 6 to twelve months, hospitals may either choose to use a secondary collection agency or elect to sell the accounts.
“Healthcare organizations need to understand that their revenue cycle does not need to end with inactive accounts,” said Susan Dale, National Sales Director, MEDCLR. “There is a point of diminishing return for traditional debt collection, but there are opportunities with a debt purchasing company to generate revenue from these dormant or unresolved accounts.”
Selecting the Right Partner
Selecting the right facility to purchase your debt can be a daunting task. Below are some questions to ask a potential partner:
- How much experience do they have with healthcare-specific debt?
- Do they resell debt after it is purchased? If yes, who handles collections and what is the approach toward your patients?
- If you sell an account by mistake, will they sell it back? At a profit or at cost?
- Are they a recourse or non-recourse company?
- Are they compliant with HIPPA and the Fair Debt Collection Practices Act?
- Do they allow you to check on an accounts status once its sold?
- How have they handled any difficult public relations situations in the past? What will your role be in this process?
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Companies like MEDCLR provide a partnership with healthcare organizations by purchasing dormant accounts, including accounts up to six years old, in a mutually agreeable manner.
One of the most important considerations is for a hospital to determine if they want to work with a recourse or non-recourse partner. Recourse companies adjust the payment made to the healthcare organization after they have assessed the viability of collection. A non-recourse partner makes an agreement based on the initial assessment of the accounts and cannot expect or request reimbursement. Another important consideration is what level of control a seller will be able to have in the debt management process once an account is sold. Some companies offer web portals to view account status and the opportunity to buy-back accounts sold by mistake.
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