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  • Writer's pictureRMK HOLDINGS INC.

Early Out from Bad Debt

Updated: Sep 29, 2022

Implementing an early out strategy is an underused key to timely and efficient collection action, avoiding unnecessary aging of accounts.

Below are some recent survey statistics to make you think about the state of collections in the medical practice field:

  • Less than one in 10 of healthcare organizations will recover more than 20% of outstanding unpaid patient billings.

  • Half of the organizations thought they might recover up to 10% of outstanding debt and 41% felt they could recover between 10% and 20%.

  • The dollar amount of bad debt for the practices that responded to the survey ranged from less than $10 million for 64% of the companies to more than $50 million for 6% of respondents.

  • Almost 60% of survey respondents indicate that healthcare insurance changes in the form of higher deductibles and copay are the largest reason for the bad debt.

  • Just 17% of respondents used the patient's delinquency as the root cause of bad debt.

PROBLEM: The Growth of Bad Debt

The climb of bad debt is an industry issue. While insurance reforms may be the cause of a portion of the issue, dealing with bad debt requires a well thought out mitigation strategy to prevent this issue from choking your practice revenue.

In this survey, though, about 50% of the respondents suggested they used a third-party vendor for bad debt recovery assistance but 21% stated they use neither an in-house nor a third -party service to collect on unpaid debts.

SOLUTION: Early Out Programs

Early out programs have benefited many practices. The idea is to attack early stage balances to resolve unpaid balances before they blossom. As an extension of your back-end staff, the goal is to lessen back-end rework while improving the overall revenue cycle - faster.

A trained agent determines the patient payment situation and decides on the best action to resolve the account. This establishes another point of patient interaction, increases revenue management options, and corrects insurance discovery and any adjudication. In addition, while performing with full transparency and organization alignment, the early out staff functions as a valued arm of your organization.

Benefits of Early Out Programs

  • Flexibility to not only act quickly but free up key practice staff to focus on more critical areas of the business.

  • Efficiently operating the collections process prevents the unnecessary aging of accounts caused by stagnant receivables.

  • The capacity to work evenings, weekends, and penetrate accounts faster and more thoroughly reaches more patients.

  • The use of dedicated staff focusing on nothing but your unpaid accounts relieves your staff, which may be inexperienced and reluctant to collect open balances.

Implementing an early out strategy is an underused key to timely and efficient collection action, avoiding unnecessary aging of accounts.

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