Its Not Just Medicine Anymore....

I was reviewing a client’s Accounts Receivable this past week and realized in the middle of looking at various accounts and payment histories, that my large medical practice client really was in 2 distinctly different businesses.

Obviously the first was “MEDICINE”;
The second business was that of “Credit Provider”!

It was with this particular business that they were most uncomfortable. You see in this economy, with times being so tight, being a “Credit Provider” is not necessarily an advantaged position! Additionally the practice was treating collecting their money in the traditional “Salvage Operation” approach.

The Salvage Operation approach usually allows the practice to send bills from 15-90 days past due, make an in house call or two and then send to a Traditional Contingency fee agency, where you lose between 25-50% of the money and usually 100% of the control or just write it off.

Difficult times call for difficult measures, and these are difficult times!

What can you do differently?

Initially you can be realistic and understand we are in a different economic situation than we have ever been. Everyone is tightening their belts, and many are just adopting a “weather the storm” approach to their accounts receivable.

The problem is, your accounts payable doesn’t slow down, just because your receivables are.

In changing markets, it is always the innovators that stay afloat. Medicine makes astounding advances every day, and you must devote significant effort to study and training just to keep up. But, the other half of your business, the half that is responsible for collecting your profit, operates the same today as most Accounts Receivable departments have been operating for decades.

Why is this? Because, until now, progressive techniques have not been required. With money flowing freely, it has been relatively easy to collect on balances owed. But now, with money tightening across the country, it has become vital to medical practices to implement a more proactive approach to Accounts Receivable.

The first principal to implement is this: the younger the account, the easier it is to collect. Many practices spend quite a bit of time on older accounts, and not so much on newer balances. The opposite should be taking place! The amount of time and energy you apply to these aging accounts is much better invested in the young accounts where you can still catch a large percentage before they get too old.

The second principal is that it is very easy to throw away a “balance due” letter, but very difficult to tell someone you aren’t going to pay. That is why any successful accounts receivable plan must include regular phone calls to everyone with past due balances. Get them on the phone, and get them to pay. Even the most stubborn debtor has a difficult time with a real live person on the other end, asking in a pleasant but firm way, just how best to work out a payment.

The last, but most important principal is this: You must, must have an experienced and successful collections company on your team to take care of your tough cases. The only way these strategies can be implemented, and the only way you can afford to focus on young accounts, is if you have a collections company that can catch everything that gets through your net.

It is also crucial that your collections company shares your progressive approach. Most companies out there are utilizing the same techniques and fee structures that have been predominate in the collections industry for years.

In order to turn your in-house team into effective “financial counselors” it is imperative they are “in-control” of all the accounts. By approaching collections as SALVAGE, you give up control. If you partner with an organization that charges a small per account charge and drives the debtor to your “financial counselors” and has the debtor remit 100% of the money to your organization, then and only then are you “in-control”!

In today’s economy and likely over the next three years, if you continue “business as usual”, you are likely to get burned and not get the result you deserve.

If you would like the FREE REPORTS on What your Collections Company Doesn’t Want you to Know and The Questions I should be Asking my Collections Companies, then drop an email to me at bblackburn@cashrecoverynetwork.com