Garbage Collectors Guide to Successful Healthcare Collections

If you think about it, garbage collectors have a unique perspective on the world. They have ready access to powerful knowledge that Madison Avenue spends millions of dollars and countless years of research to develop. Just one glimpse into your trashcan should remove any skepticism. Do you purchase name brands or store brands? Do you eat leftovers or throw them out? Do you shred sensitive documents or leave them whole? Do you bother to recycle or does everything go in the same can? All of these insights into your psyche as well as many others are right there in your garbage can!

Similarly, understanding what is in your healthcare client’s trash (bad debt) is equally valuable. Unlike consumer or commercial collections, leveraging relationships with healthcare clients isn’t always about collecting the most cash. Often the rationale behind why collections are or aren’t made is as powerful a tool as the collections themselves. In other words, analyzing and explaining to your client what was found in the trash is one of the best ways to develop mutually beneficial strategies that will serve your client’s best interest while improving your margins.

When combing through the garbage look for cues that will provide empirical data that you can share with your customer. For example, if you are collecting insurance payments from bad debt files, perhaps you could offer your client a lower contingency rate in exchange for an earlier referral date. Here, your client benefits from a lower commission rate, you benefit from a higher liquidation rate and both of you benefit since no collections will be missed due to expired filing deadlines.

If you find one or two payer groups or account types that continually show up in bad debt files, that may be a sign that a first party project would be more beneficial and could lead to significant opportunities. Here your client could benefit from a lower contingency rate and you could prevent accounts from going to bad debt. Since healthcare providers are required to reserve for write offs, helping them prevent accounts from going to bad debt is extremely advantageous as it frees up the cash they have on hand. Think of it as turning trash into gold. Imagine the love you would have for your garbage collector if he warned you that he was finding gold nuggets in your trash, helped you retrieve them and then devised a plan to make sure they never got thrown out again. This is essentially the same goodwill you can develop with your healthcare clients by merely paying attention to what’s in their trash.

A few keys:

Ask collectors to be more specific about why accounts are closed out. All efforts exhausted won’t cut it.
Ask collectors to categorize their payments and close outs and meet with them to get feedback. Examples (collected from mail return, insurance payment from blue cross, insurance denied due to late submission, patient payment from a co-pay etc.)
Don’t let micromanaging get in the way of identifying trends. Sometimes analyzing too closely makes you lose sight of the bigger picture.
Make sure your IT staff keeps all data from the client on hand even if it is data that doesn’t get imported into your database or is imported into an unsearchable field.
Routinely review collector and IT data to see if it can lead to new projects, refine current projects or facilitate collections.
Use trend analysis to educate your clients and provide empirical data that empowers their decision making and helps you bring value.

About Randy Cook
Cook combined a nursing background with collection industry experience to cofound Professional Receivables Network (PRN) LLC, a leading healthcare receivable firm located in Cherry Hill, NJ. He currently serves as President & CEO of PRN as well as CEO of Sage Capital Recovery, a commercial and consumer collection agency. Cook also cofounded Physician Payment Review Services which identifies and collects underpayments made to physicians by third party payers. For more information visit http://www.prnhs.net/.