The New Model for Healthcare Debt Collection

Consumers love to hate debt collectors. And that relationship is understandable. If you’ve got financial problems, self-inflicted or not, why would you want to be reminded of them? The situation is inherently adversarial from the get-go.

Many people engage in rather simplistic, black & white arguments about this unglamorous aspect of our economy, with one side claiming (loudly) that debt collectors are “all out of control” and should be subject to even stricter limits on when, where, and how they can ask for payment (above and beyond existing state and federal consumer protection regulations), and the other side arguing that Americans must be held accountable for their financial decisions, and that the law should not be used as an excuse to avoid paying a legitimate debt.

Within this debate, the specific issue of medical debt is unique for many reasons, including the role of the healthcare service provider in local communities around the country. Tom Gavinski, vice president, Healthcare Division at IC System, offers insight into two of the groups essential to this debate: medical providers and their outsourced debt collection partners. Tom writes:

Many healthcare providers have adopted a new strategy when dealing with these patients, placing customer service as the primary objective and debt collection as a secondary priority. Debt collectors’ titles have been changed to “Financial Counselors” and their collection strategy seeks to achieve a “win-win” philosophy that is mutually beneficial to the provider and the patient. Financial Counselors become problem solvers and consultants to patients, rather than pushy or demanding bill collectors. This approach preserves the reputation of the healthcare provider in the community while helping the delinquent patient find solutions to his or her problem.

Is it time for you to check in with your healthcare clients to find out if their expectations of your collection strategy has changed? It may be appropriate to review your processes to ensure they are in alignment with your healthcare customers. Why risk losing a client due to excessive patient complaints, negative media exposure, or increased regulatory oversight? The view of healthcare collections is changing in the market and I recommend that your organization align itself with the new strategy. Caring, compassionate, and competent is the new healthcare collection model. How does your collection company measure up?

And while I’m sure some agency folks might be inclined to say, “Sure, customer service is nice, but it doesn’t really pay the bills,” let me say this about the new healthcare collection model and agency margin expectations. Our experience is that acceptable margins are achieved with this new collection strategy. While a softer collection approach could lead to a slight reduction in liquidity, it will lead to higher client satisfaction results with less patient complaints. Healthcare collectors must be able to manage a given portfolio, adjusting collection efforts and strategies to fit not only client expectations but also the servicing company’s profit margin objectives.

Tom Gavinski is vice president, Healthcare Division, at IC System, which has provided accounts receivable management services to its clients since 1938. Tom is also a member of insideARM.com’s Editorial Advisory Board. He lives and works in Minnesota.