If you have been unsuccessful in collecting money from the debtor through
the legal system, it may have been avoided by using preventative and
precautionary measures. Did you have a solid credit application?
Did you have good evidence? Did you pre-screen the consumers application?
Was your paperwork in order? Were the services and/or goods rendered
in accordance with the terms of the contract? Did you preform as promised?
Where the terms clear and understandable and simple to understand?
These are just a few of the reasons consumers can use to contest a claim.
Remember, EVIDENCE is KEY!
Businesses today, are increasingly experiencing difficulties collecting their
accounts receivable. Although many patients have insurance coverage, most
insurance companies require their insures to pay at least part of their medical
bills. Fortunately, there are certain procedures which, if followed can reduce
the likelihood of collection problems. Although difficult to cover all of
these procedures in such a short article, medical practices should develop
and adhere to a strategy for collecting receivables by establishing internal
and external collection procedures.
Internal collection procedures should govern the conduct of a medical practice
even before a physician's first encounter with a patient.
First, medical practices must know their patients. Apart from obtaining
information needed to treat the patient, medical practices should obtain
as much general background information as possible about the patient.
The practice should obtain the patient's name, address (both residence and
work place), telephone number(s), social security number, bank and banking
account number(s) and an identification of the patient's closest relatives.
Thereafter, the practice should periodically update the patient's file. It
should copy each check used to satisfy the practice's bills, and track the
timing of the patient's payments.
The practice should compare the patient's given address to the address appearing
on the patient's letterhead, envelopes and checks.
By following these simple procedures, the practice should be in a better
position to collect any judgment obtained on its behalf if the patient's
account is later placed with an attorney for collection.
Second, the practice should bill the patient immediately upon completion
of its services. The longer the practice waits to bill the patient, the more
likely it is that the practice will have a collection problem. The practice
should call the patient when it doesn't receive payment in the time frame
established by the practice.
All discussions concerning payment of the practice's bills should be either
confirmed in writing or noted in the patient's file. Written confirmation
serves to remind the patient of his or her obligation and any promises of
payment, and both written confirmation and detailed telephone notes serve
to refute the allegations of any defensive counterclaim, including allegations
as bold as the assertion that the physician committed malpractice, filed
by the patient in response to a collection suit. Although nothing will prevent
a patient from filing a frivolous counterclaim, confirmation letters and
unanswered follow up letters are the practice's best defense to same. The
practice should call and write to the patient often to collect its account
or work out a mutually acceptable payment plan.
Hopefully, by following these internal collection procedures, the incidents
of collection problems will be minimized. However, when the practice determines
that an account can not be collected without intervention by an attorney,
external collection procedures will enable the practice to consider whether
it should continue to pursue collection of a patient's account.
This is accomplished by establishing a budget and factoring in both the "inside"
and "outside" costs of collection. The "inside" costs of collection include
the practice's lost time/productivity, potential loss of good will, potential
exposure to counterclaims and office expenses.
The "outside" costs of collection include the practice's attorney's charge
for collecting the account. The "outside" costs of collection can be minimized
if the practice's attorney will handle collection of the patient's account
on a contingency fee basis; in other words, the practice only pays an agreed
upon percentage of the proceeds ultimately collected by the attorney. In
a contingent fee arrangement, it is customary for the practice to pay only
costs, which can be nominal in light of the amount of the debt owed.
Accounts receivable are a fact of life for medical practices. However, by
following the simple suggestions set forth in this article, a medical practice
can better insulate itself from the effects of accounts receivable problems.