Dana RogersNovember 30, 2017

7 Solutions to Collecting Patient Debt

Why you should avoid collection agencies
by Jack Daly

With the popularity of high-deductible health insurance plans spiking, medical practices are seeing increased difficulty in collecting payments from their patients.

Patients are confused over their owed amounts, and this leads them to delay payment on bills. Even when patients agree on the amount they owe, many simply cannot afford deductible amounts that can quickly rise into the thousands of dollars. Some patients have access to credit instruments to satisfy their obligations, but many do not. This issue is reaching a critical level for many hospitals, doctor’s offices and other health care practices.

During the past decade, the number of individuals enrolled in high-deductible health plans (HDHPs) has increased from 4 percent to nearly 25 percent, according to a recent study from the Henry J. Kaiser Family Foundation. As a result, they report that deductible amounts for employer offered health plans have increased 67 percent in just the last five years. These trends are likely to continue as the current Administration pushes for more consumerism in the health care sector.

Further complicating matters is that patients find the billing process difficult to understand. Many patients do not pay the first bill they receive from a hospital or medical practice, under the assumption that the amount can, and often does, change. The Consumer Financial Protection Bureau reported that “nearly 20 percent of consumers have unpaid health care bills due to the unfamiliar and confusing health care payment process.”

Even when the patient is ready to pay, many simply cannot afford the bill. According to a study by Availity, physicians reported that only 56 percent of patients were able to pay the full amount requested during point of service collection efforts. A big reason for this is that more consumers are maxed out on their credit limits. With more Americans falling into the ranks of the under-banked, this problem will continue to fester.

Fortunately, there are a number of best practices to follow to improve patient collections and increase cash flow at your medical practice. The real challenge is preparing and training your staff, and your patients, in understanding the importance of timely payment. A report by a SuccessEHS study found that 79 percent of patient balances that aren’t collected at the point of service will never be paid. That’s a considerable amount of income lost each year.

With this in mind, let’s look at seven ways to ensure payment for services rendered.

1. Be Clear About Financial Responsibility

Clearly communicate with patients about the expectations of being paid and when you expect payment. Make sure every staff member is aware of your payment policy and train them on how to clearly communicate it to patients at each appropriate patient engagement level. The goal is to have patients understand the need to pay for services. Though patients are in your office for medical reasons and it may feel like the wrong time to ask for money, patients are also aware you are running a business. Without payment, you run the risk of not being there for them in the future. An easy step to implement is the first patient contact. The staff member scheduling the first appointment should inform the patient of their financial responsibility, and what will be due at the time of service.

2. Review Insurance Eligibility

If possible before the patient arrives for their first visit, get a sense of your patient’s health insurance coverage, terms and conditions, deductibles and copayment options. Verify with the insurance carrier that coverage is still active. This will help you understand and prepare for what will actually be covered by insurance and, more importantly, how much the insurer will pay. It will also provide information on what your patient is ultimately responsible to pay. Reviewing this information before your patient arrives can help to ensure a successful patient collection plan and a timelier, complete claims handling process.

3. Estimate Total Patient Financial Responsibility

Patients are more concerned about what their treatment will cost them out-of-pocket, rather than the total procedure expense. Having reviewed and verified the patient’s insurance information, you will be well-equipped to estimate the cost of your service, and to provide your patient with a clearer understanding of what their requirements will be. A number of good tools are available from practice management and electronic health records systems, but only 26 percent of physician practices report utilizing these, according to Availity. Though this may not be an easy process, the benefits of improvement in upfront payments, increased patient satisfaction, and minimizing accounts receivable are well worth the effort.

4. Implement Self-Pay Policies

Allowing patients to self-pay for services is nothing new. With the rising costs of health insurance, the number of people without insurance is very high. Some people simply can’t afford the coverage, while others would rather not have insurance, but pay as they go. Having a clear process with your staff and implementing certain strategies can help reduce outstanding payments. When patients call for an appointment and there is an outstanding balance, try to collect it on the call or ask them to be prepared to make the payment at their appointment. Additional steps can be taken to ask patients to sign an agreement to take future funds from their credit card on file.

5. Save Credit Card Info on File

Establishing a credit card (or bank account) on file program can improve collection speed and cash flow. However, you should only keep patient credit card information on file if PCI guidelines—and your payer contracts—allow for it. Offering multiple ways to pay can improve collections. A report by InstaMed states that 85 percent of patient payments were made via credit card, and payments on mobile devices have risen quickly to 11 percent of all patient payments.

6. Consider Patient Financing Options

Most patients want to pay their bills and settle their balances—if given the opportunity to do so. According to a 2009 McKinsey survey of retail health care consumers, the reason 37 percent of patients gave for nonpayment was a lack of financing options. A number of credit card products exist that focus on payment of medical expenses. Many practices also offer their patients the ability to pay larger bills through a monthly payment plan. Extending payment terms for six to 24 months can assist a patient in covering their bills. While this can put additional work on the practice, it can make a big difference to realized cash flow over time.

7. Handle Collections Internally—for as Long as Possible

The ability to help a person in need is a true calling. However, without the income to pay business expenses, you won’t be able to provide your services. The use of collection agencies for past due amounts may be enticing. The ability to hand off that portion of your business to an expert seems a reasonable option. A recent report by the ACA International stated that medical practices recover less than $14 for every $100 owed once they turn bad debt over to third-party collection agencies. Instead of using a collection agency, first install an internal collection process. Train your staff to persevere with patients who don’t make timely payments. Make routine calls to patients who have outstanding balances and discuss payment options. Establish a proactive routine for initiating phone contact, and create a script for staff to follow. Give your patients a chance to repay you directly, but if after a certain time frame no payment has been made, you then need to consider outsourcing this task. While there is a cost associated with debt recovery, these groups can absorb a significant workload from the practice and meaningfully increase collections.


Following these seven steps above should improve cash flow to your practice and provide your patients with a better experience. A healthy bottom line will allow you to continue to keep your patients healthy.

Jack Daly is the chief revenue officer of Aquina, a technology company with health care payment solutions for both medical practices and their patients. Aquina offers patient finance programs. Daly can be reached at ( 678) 264-8398 or via email at jack.daly@aquinahealth.com or linkedin.com/in/jackjdaly.