If you are reading this article you are on the brink of deciding that it's finally time to bring in a third-party collection agency to handle your hardest non-paying accounts. You may be thinking that it’s an uphill battle to get your executives to buy into your idea and you’re wondering how you’re going to get them on board. You know that doing so will help alleviate the pressures on your billing department by allowing them to refocus on your paying patients and consumers and spend less time spinning their wheels on accounts that simply aren’t going to pay without a more nuanced approach.
So a good place to start might just be your Chief Financial Officer who is an obvious choice. You will need the staunch support of the CFO because, more than any other executive, the CFO is concerned with the bottom line and is driven by analytics and return on investment (ROI). This person’s goal is to manage expenses and ensure profit growth while minimizing risk and exposure. Like the CEO, be sure to highlight how outsourcing collections will increase revenue and minimize the organization’s risk and exposure. Use analytics to prove your points and illustrate that every penny collected is a positive ROI since there should be little financial investment (if any) and, with a good agency, the time to transition accounts over to them should take a minimal time investment on your organization’s part.
Your CFO will always be thinking about these points which clearly factor directly into your goal:
- Increasing profit
- Increasing value for shareholders
- Positive ROI
- Measuring and monitoring performance
- Doing more with less
The CFO is likely to ask the following questions:
- What is the ROI of this solution?
You will be much more likely to win over your CFO if you can legitimately show him or her that hiring a third-party agency will help to increase profits and productivity in the billing department. While no reputable agency can guarantee their recovery rate, they should be able to give you a recovery range for what they can reasonably assume they will collect given their track record, your industry and the type of consumers or patients you serve. Compare this to your current recovery rate for accounts at 60 days, 90 days, 180 days, etc. You should be able to illustrate by how much the agency’s recovery rate will surpass your own in-house efforts. Additionally, this would allow your billing department to refocus on your 15-45 day recovery efforts and current payment arrangements which should help increase your organization’s recovery rate for these accounts. By dedicating more of your organization’s time and resources in harvesting the low hanging fruit and increasing the time allotment it can dedicate to customer service for those consumers who are either current or slightly behind should also increase the revenue for the billing department as well as the goodwill received from your organization which can trickle down to referrals and repeat business.
- Why should we prioritize outsourcing our collections?
Why shouldn’t we? Doing so will increase revenue for the organization while relieving a struggling department that is presumably overwhelmed with delinquent accounts. Removing the strain of the collection process will free your organization to return focus to its business priorities, essentially getting the organization back to doing what it does best – serving its customers and patients. Collection agencies are uniquely positioned to do the specialized work required to resolve the delinquent debts that are spinning your organization’s wheels. Additionally there is very little risk involved. Outside of some of your organization’s time dedicated to shape the effort and work with the agency to receive your placements, your organization’s investment is quite small. Agencies will work by commission on each account meaning that if they don’t collect on the accounts they won’t receive any money and their fee will generally come out of the money they collect so there is no out-of-pocket cost to your organization!
- Does this comply with regulations?
Especially important for the Healthcare industry is making sure the agency is HIPAA compliant and adheres to FDCPA and TCPA rules and regulations. While not all locations in the United States require collection agencies to be licensed, many do. So be sure your agency is licensed to collect in the cities and states where your customers and patients reside. Additionally an agency should exhibit good “bedside manners” by treating them with dignity and respect – these are, after all, your customers and patients.
To learn how to build a case for hiring a third-party debt collector to shorten your days in receivables and increase your accounts receivables please download our FREE eBook, “The Ultimate Guide to Selling Debt Recovery to Your Management Team.” In this guide we will explore:
- Building a Case and Setting the Stage by documenting and explaining the rationale for hiring a third-party collection agency.
- How to position yourself to be an Effective Agent of Change or find one to help you become a catalyst to achieve your goal.
- Finding an Executive Champion that will help you outline the case for identifying and selling your ideas to a C-Suite ally.
- Working with select members of your C-Suite to understand their needs and concerns and how to frame your argument to successfully achieve your goal of bringing in a debt recovery firm. These members include: Revenue Cycle Director, Chief Financial Officer, Chief Executive Officer, Chief Information Officer, Chief Medical Officer, Chief Operating Officer, Chief Technology Officer and Chief Compliance Officer.