Collecting money from patients is an important key to the success of your practice. And the key to collections is remembering two rules:

RULE #1: The longer a receivable (money owed to you) is uncollected, the less chance you have of collecting it.

RULE #2: Some people will not pay, no matter what you do.

Your goal is to maximize collections, which means setting up a plan to get people to pay as soon as the bill is incurred. To set up your collections process:

1. Start by setting up the expectation with patients from the very first visit. Include a “financial responsibility” statement with your new patient paperwork and make sure everyone reads and signs it. Have your staff explain how you collect money and whether you will accept insurance. Some offices print a Q&A on collections for patients to take with them.

2. Every time a patient comes to the office for service, your staff must remind them that the service fee is payable before they leave. Teach your staff to remind everyone politely but firmly: “Your charge for today is $55. Will you be paying by cash, check, or credit card?”

3. Make it easy for people to pay. Set up credit and debit card payment processing capabilities. If you don’t want to accept insurance, give patients a detailed “superbill” so they can be reimbursed. Accept payment plans for larger bills.

4. Don’t discuss billing/accounts with patients. Your discussions with them should be about their health care. Train your staff to discuss billing, collecting money, insurance reimbursement, and other financial matters.

5. Prepare and review an ‘Accounts Receivable Aging Report’ regularly. What you want is to see who owes you money and how long they have owed that money (See Rule #1 above). After you review the report, send out bills frequently. Don’t wait until the end of the month to send out bills. Send _ of your unpaid accounts a bill every week.

6. Establish a process to get money from those who don’t pay. Some people are unwilling or unable to pay. Although consumer protection laws prohibit you from harassing or threatening people or violating their privacy, you do have the right to contact people to ask them to pay, and you don’t want to wait too long in between attempts (see Rule #1 again).

Set up your letter/phone process over a period of weeks with increasing levels of expectation. For example:

a. Letter one might be an “oops” letter, friendly and assuming that the person forgot to pay.

b. You might follow that with a phone call or letter asking that the person pay by a certain date. Be prepared to discuss payment plans, if the person expresses reluctance to pay the balance immediately.

c. If all efforts fail, your final letter might be the ‘ultimatum,’ demanding payment before you turn the bill over to a collections agency or attorney.

7. Use a collections agency or attorney. For those who will not pay, you will need to send the bill to collections. The collections agency works best with people who have stopped coming into the practice and you are unable to contact. Although these agencies often get your money, you will pay a large percentage deduction for their work.

8. Consider Small Claims Court. This provides an inexpensive way to collect money without needing to hire an attorney and for small amounts owed (depending upon the state). Since this process sets up an adversarial relationship, you should only use it in extreme cases.

9. Write off bad debt. No matter what you do, some people will not pay. You can write off that bad debt at the end of the year, or, in some cases, you can continue to provide care for that person on a “cash only” basis.

In short,

1. Establish collections processes that treat all patients with firmness and kindness, but which make sure that they understand their responsibility and are reminded every visit.

2. Make sure your staff follows these processes with every single patient.

3. Decide what to do when people don’t pay and then move ahead with your collections process.

If you set up and work good processes, you will minimize uncollected money and bad debts.

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