Choosing a Collection Agency: 9 Questions for Urgent Cares

For urgent care clinics and healthcare providers in general, a backlog in accounts receivable (AR) isn’t unusual. According to a recent report by Urban Institute, one in four nonelderly adults in America have past-due medical bills.

It’s no surprise that collecting unpaid debt is a burden that has to be carried by someone. Depending on the payment plans you offer and the demographic makeup of your patient base, you may be able to delegate the job to someone in house. But because many clinics run with a very lean staff, hiring a collection agency may be the most efficient and effective way to clean up your AR.

Making the choice to hire an agency is the first step. Choosing the right agency is the more difficult second step. The collection agency you choose will be a reflection on your clinic. A thorough vetting process that includes asking a lot of questions, checking references, and reaching a mutually beneficial payment agreement is essential to a successful partnership.

Ask these nine questions before hiring a collection agency:

1. Are you certified? While there are a variety of ways to get “certified” as a commercial collector, most agencies have affiliations through the Commercial Collection Agency Association (CCAA), an organization connected to the Commercial Law League of America (CLLA). The CLLA Certification Seal has been recognized by credit grantors that demonstrate professionalism. The American Collectors Association International (ACA—not to be confused with the Affordable Care Act) also offers certification through membership and course completion based on adherence to high collection industry standards. Accreditation generally indicates:
   • Substantial engagement in commercial debt collection
   • Minimum number of years in business
   • Annual education requirements
   • Separate trust account for client funds
   • A surety bond to protect client funds
   • On-site inspections

   While there are no guarantees that collectors will adhere to high collections standards, these certifications and designations are widely recognized in the collections industry and are an indication that an agency is reputable.

2. Are you licensed and bonded? Most, but not all states require licensing and/or bonding for collections professionals. Work only with licensed professionals in states where it’s required. If you’re looking for an agency that can work across state lines, it’s important that the agency you work with is licensed in all the states where they’ll be conducting debt resolution.
3. Are you insured? Collection agencies typically carry different insurance policies (Errors & Omission, Cyber Liability, and Crime Insurance among others) to protect collectors and the company against lawsuits. Insurance provides peace of mind for clinics and providers should your patients file complaints against the collections agency. If your collection agency doesn’t carry insurance, it’s a red flag. With no restitution available from your collection agency, it’s more likely that you could be named in a lawsuit.
4. Do you have expertise in healthcare collections? Healthcare collections are in many ways more sensitive than other types of debt resolution. In many cases, patients are confused about the balance they owe. They may not understand their insurance policy, or the way money has been applied. While most urgent care debt isn’t enormous, the speed and efficiency with which you collect makes a difference to your overall revenue. Add the sensitive nature of healthcare and the overall frustration about the rising cost of insurance, and you can see why hiring a collection agency with a healthcare specialty can make a difference. These collectors are often familiar with healthcare terminology and feel comfortable working with clinics and insurance companies. To find agencies that specialize in urgent care or healthcare, consult with people in your professional network including other providers, and your lawyer or accountant. And ask for referrals.
5. Flat fee or contingency? Collection agencies typically use a contingency arrangement in which they collect a percentage of the collected debt, usually between 25 and 45 percent, as their fee. The percent will often depend on the age and size of the debt, and how many times the consumer has been contacted regarding their bill. In some cases, an agency will agree to charge a flat fee per account regardless of the amount of debt. For small clinics, this may be a good option.
6. How and when will we communicate? In most cases, agencies have processes and protocols in place to keep their clients informed about their progress. Monthly reporting over a secure network is common. Choose an agency whose protocols align with your expectations.
7. What tactics do you use when collecting debt? Collection agencies are experts at collecting unpaid debt and use the latest technology and tactics to improve their efficiency. The more they collect, the more they earn. When man hours exceed their fee, they aren’t making money. Aside from mailing letters, they often use skip tracing to locate people who have changed their address or have no address on records. Specialized phone systems increase their efficiency. Reputable agencies will use ethical tactics to collect debt, and work with consumers to find payment plans that will help them pay off unpaid balances. Remember, when you hire a collection agency, it represents you. The way collectors treat your patients is a reflection of you. Be sure they have a clean record when it comes to compliance with the industry’s ethical trade practices.
8. What are you average recovery rates? Debt collection recovery rates vary based on industry. According to ACA International, the average recovery rates for non-hospital healthcare debt is 21.8 percent.
9. Can you provide references? A conversation with satisfied collections clients in your professional network is a good way to cut out some of the legwork before you choose a collection agency. Don’t just ask for references, reach out and ask about their experiences.

One of the complexities of collecting debt for medical treatment stems from the lack of transparency inherent in healthcare. Consumers (and care providers) rarely know the cost beforehand because treatment can’t be identified until a diagnosis is made. And even if a treatment is known in advance, the provider’s price and billing reflects which insurer covers the patient. So many questions must be answered before cost can be determined. In many cases, insured patients have no idea what portion of their bill is their responsibility.

Doing your part to identify patient responsibility up front, and collecting as much of the bill as possible at the time of the visit will help to prevent non-payment and reduce the need to turn to a collection agency.

With the recent increase in patient financial responsibility due to high-deductible insurance plans, many urgent cares require a patient credit card on file and preauthorization that allows the clinic to charge the card for the balance after insurance processing. For large balances, patients may be notified by a clinic courtesy call before the credit card is processed.

If you feel you’re doing everything possible to collect from your patients without the results you want, a collection agency can be the best way to recover funds owed to you. The side benefit is the time and money you don’t spend trying to collect on unpaid medical bills.