Unpaid bills are an ongoing issue for nearly all dental practices in the USA. Many patients who get dental procedures do not keep up with their promise of making timely payments. The primary responsibility of dental offices is to treat patients. They cannot recover unpaid bills as effectively as a collection agency.
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Good collection agencies are easy to use, and flexible to adapt as per your needs. They should offer you two collection choices – Fixed-fee collections or Contingency collections. The fixed-fee service is an amicable and the most cost-effective way to collect money. It works best if your invoice is less than 180 days past due. Contingency service is recommended for older accounts (more than 180 days old).
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Recommended Approach for a Dental Collection Agency:
A debt collector cannot keep the same approach for the healthcare industry, which he typically uses to recover money for car dealerships or small businesses.
- Have a deep understanding of the delicate nature of the dentist-patient relationship.
- Must protect the reputation of a dental practice by following a friendly collection approach.
- Allow the debtor to make payments in installments if necessary.
- Protection of patient’s data as specified in HIPAA privacy law.
- Adherence to the Federal and State debt collection laws that apply specifically to the medical and dental industry.
- Deliver high recovery rates. Attempt to recover late payment fees or interest if applicable.
- Avoid a firm collection approach if a patient appears to be litigious.
- Any payment reminders sent through SMS might need patient’s authorization.
The cost of fixed-fee collection service is about $15 per account, and patients pay directly to you. There is no other fee or commitment. Fixed fee recovery applies just the right amount of pressure without destroying the relationship with your patient. For Contingency collections, most agencies charge 40% of the amount collected and remit the remaining 60% to you.
Let us assume that a dental practice works on a 25% profit margin. Even if 5% of patients do not pay their dental bills, 20% of your net profit is effectively gone! Collecting money from existing patients is equally important as getting new patients.
Does your existing collection agency offer first-party and third-party debt collection, insurance follow-up, back-office support, and layered, multi-channel solutions that include reminders, calls, and letters?
According to Bank of America, starting a dental practice costs nearly $475,000. Even though a dental practice usually pays well over time, most profits will erode without a proper accounts receivable plan.
Dentists, Oral surgeons, and Endodontic practices regularly face challenges; these include:
- Finding new clients.
- Increased competition from other practices.
- Constantly changing regulatory environment.
- The cost of purchasing malpractice insurance keeps going up.
- Ongoing complexity of running a small business smoothly.
- Hiring and retaining well-qualified staff.
- Keeping up to date with new dental procedures.
- Need for equipment and technology.
- Internal staff cannot be rude when collecting past-due patient bills, which may spoil the dental office’s reputation.
A hasty approach to recoup money may result in losing even other patients due to a negative PR, either by word of mouth or via negative online reviews (on Google/ Yelp etc.).
Recent laws regarding medical / dental credit bureau reporting:
Credit reporting agencies have revised their policies regarding medical and dental debt reporting. They will remove any dental debt from records once it is fully paid. They will no longer report dental debts under $500. Moreover, collection agencies are now required to wait for one year before they can credit report any dental debts.
Suggested Dental Collection Strategy
Transferring your account after 60 or 90 days of non-payment is highly recommended because as time passes by, it gets harder and harder to recover that money.
Written Demands are an excellent tool to start the collections process as they cost a flat $15 to $20 for a five letters package. Dental collection agencies also perform several “scrubs” for the accuracy and effectiveness of their demands. Expert lawyers craft these written demands, increasing their intensity after every letter. The involvement of a dental collection agency makes your patient a lot more nervous, and he is more likely to pay off versus when your staff is requesting payments. If the patient still does not pay, you may instruct your collection agency to go for more intensive methods like Collection calls or to file a Legal suit.
Collection Calls are best suited when a debt is at least 120 days past due. A debt collector patiently explains to your patient the consequences of not paying. Debt collectors may even put your debtor on a monthly payment plan. Depending on your patient’s response, a collector’s tone may vary from amicable to firm.
A debt collector provides various options to settle the debt. There is no upfront cost for the Collection Calls service. Your dental collection agency gets paid only when they collect money for you. This service is also ideal for those practices who do not want to spend money on buying Written Demand accounts.
Finally, a Legal-suit is filed after all other recovery options have failed. The contingency fee is communicated in advance after a lawyer reviews the case. Not all accounts qualify for this step.
Send the bill to your patient right after EOB (Explanation of Benefits) is received from the insurance company, instead of raising demands only once a month
Assigning unpaid bills to the collection agency takes a lot of stress away from your internal staff. Meanwhile, the internal team can concentrate on running and expanding your dental practice. The physical location of a collection does not matter, so stop looking only for a dental collection agency near you.
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The assumption that a patient will cease visiting a dental office because their account was sent to collections is unfounded. Building trust with a new dentist takes time, as the dentist-patient relationship is not established overnight. Therefore, it’s important for collection agencies to cultivate a positive rapport with patients. This approach helps in reducing the likelihood of non-payment during subsequent visits to your dental office.