Are Healthcare Collections Recession-proof?
A recent survey of debt buyers and contingency agencies by Milestone Advisors suggests that healthcare collections have been negligibly impacted by the broader U.S. credit crisis. As reported by ACA International, the Milestone survey revealed that three-quarters of ARM companies specializing in healthcare surveyed described “no impact” on the liquidation rates of medical accounts. Recent conversations that Kaulkin Ginsberg has had with collectors echo some of this sentiment, but neither Milestone nor ACA has made data available to substantiate the claims.
If the experience of the surveyed companies can be extrapolated to the entire healthcare segment of the ARM industry, are medical collections somehow immune to the credit crunch affecting so many American consumers? And even if this is the case to date—how long will this apparent exemption last?
If you are a healthcare creditor working with a collection agency, have you seen similar results over the past six months? Agency owners and debt buyers in the healthcare space: do you think strong liquidation rates on medical paper are sustainable in 2008? Post a comment and let me know your thoughts.
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Comment from Larryq on February 8, 2008 at 3:43PM EST
In general, healthcare recoveries are extremely resistant to impact from the economy. The bulk of this recovery does not rely on the existence of available credit but on the existence of available cash. Payment terms on this type of inventory is generally within comfortable ranges for the payee rather than a tight stretch of a budget. While the proposed use of credit often increases the recovery of other types of inventory during times where credit is more easily attainable, the medical industry often avoids having accounts listed with credit bureaus and thus does not suffer the same setback when credit is not available.