All Collection Agencies are Definitely Not the Same
While there are many ways to collect delinquent accounts, they can usually be summarized into three increasingly persuasive and expensive phases of communication:
- Mailed letters
- Personal contact, usually by phone
- Legal action
Agencies mix and match these phases of communications in various ways. For example:
Some agencies only mail letters, usually for a flat fee, and often the fee is collected up front. They collect the easy accounts, and they usually collect enough to cover the flat fee they charge, so the client will see a return. However, the recovery rate is low, and clients end up investing a great deal of time and effort turning over many accounts which are never collected.
Heavy Phone (Auto-Dialer)
Other agencies send only one letter (which is the minimum notice required by law), and then focus their efforts on telephone contact, using low cost automatic dialers that can be considered harassment by patients. This strategy relies on continually hounding the patient until the account is resolved, or until the patient demands that the calls stop. There is rarely time or the personal touch to discuss the account in any depth, and to assist the patient in paying the debt. These agencies may get fast results, but at a high cost: a low recovery rate, high patient dissatisfaction, and a damaged reputation for their clients.
Jump to Legal Action
Yet another type of agency employs a different strategy – sending out the one required letter, taking whatever money comes in from that communication, and then forwarding the accounts to an attorney for litigation. This process bypasses a very critical stage – personal contact. During the personal contact phase, many accounts can be resolved and paid and the patient-provider relationship can be preserved. But the agencies that skip this phase save themselves the money and effort of hiring, educating and training a staff of professional collectors to work with patients on their delinquent accounts.
At SaVit, we use the protocols that work for your accounts. At a minimum, we send one letter, but we usually send two or three. We also have a full staff of highly trained collectors who are skilled at making contact with your patients, even those who may have moved or left their jobs. They are also great problem solvers when dealing with patients, insurance companies, and state agencies in order to get bills paid. Most of the patients they deal with end up thanking our collectors for helping them get to a solution that is best for everyone.
And finally, when it becomes obvious that legal action is required, we have long-standing relationships with several legal firms who are experienced in health care collection. We handle the legal relationship for our clients so you don’t need to hire your own attorney. Attorneys do play an important role, but since they are the most expensive method, we believe in bringing them in only when absolutely necessary.
Collection agency fees – what to watch out for
Collection agency fees can vary widely, but in almost all cases, you get what you pay for. Agencies that offer very low fees do not offer full service. Because their fees are low, they will cherry pick accounts and collect the easy money. They cannot afford to put in the extra time or effort on accounts where a little more work would result in payment. Low fee agencies, while initially attractive, usually leave a client dissatisfied in the long run because they produce low net recovery rates.
There have also been cases of low-fee agencies that have not paid their clients at all, because of cash flow problems. Very often clients who choose a low-fee agency end up changing agencies after a few months.
Agencies that charge higher rates can afford to work harder, digging into that next layer of unresolved accounts that are difficult to collect, but not impossible. Having a full staff of professional collectors and relationships with experienced attorneys allows agencies like SaVit to invest the time necessary to have success on these accounts. This effort leads to higher net returns for our clients, while preserving that all-important patient-provider relationship.