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Exploring the Benefits of Self-Pay Outsourcing

With health care self-pay balances expected to continue to increase in the near future due to higher deductibles and coinsurance, many providers are choosing to outsource these balances to collection agencies.

At ACA International’s Fall Forum in November, Jon Neikirk, assistant vice president of revenue cycle for Froedtert Health in Milwaukee, discussed why his organization works with a collection agency for collection of self-pay accounts.

“We really want to focus on our core competency, which is patient care,” Neikirk said. “Patient collections is not a core competency.”  Froedtert began outsourcing its self-pay balances in 2002. Before then, the organization struggled even to handle inbound calls and, as a result, was saddled with a lot of bad debt.

“Our collection rate was pretty low, because we weren’t really collecting,” Neikirk said. “We were answering phone calls, hoping we could collect some money on the inbound calls.”  The biggest issue at Froedtert was staffing. As a large, regional health center, Froedtert sees tens of thousands of patients every year, meaning a fairly large and robust collections staff is needed—complete with the latest collections technology, such as auto dialers.

Neikirk said this wasn’t feasible for the organization economically, and even if it was, the physical space to house such an operation simply wasn’t available on a busy campus. Working with an outside agency simply made sense.

“We definitely saw this as a chance to reduce our bad debt rate,” he said.  Since making the switch, Froedtert has seen improved cash collections and better customer service, Neikirk noted.  Specifically, he said all inbound calls get answered, with shorter wait times than before. Neikirk also said the collection agency can administer outbound calling campaigns—something Froedtert simply couldn’t do when it handled collections in-house.

“We’ve had some great results from outsourcing our self-pay,” Neikirk said.  In part because of the ability to run calling campaigns, Neikirk said Froedtert is able to focus more on high-volume, low-dollar accounts.  “It’s really important for us to get in touch with as many patients as we can in the most cost effective manner possible,” he said.

Tim Haag, director of client services at State Collection Service Inc. in Madison, Wis., spoke about the outsourcing issue at Fall Forum from the perspective of the collections industry.  Haag said from a vendor’s standpoint, it’s all about understanding what a client wants.

“Make sure you have open communications,” he said.  Haag said he recommends at least weekly or bi-weekly meetings when a relationship is first formed, and at least monthly phone calls throughout.  Like Neikirk, Haag said a collection agency can offer a lot of things that in-house collections can’t. For instance, he said agencies often have extended calling hours that include evenings and weekends. This allows for a larger collections window and a greater chance of recovery.

Additionally, agencies often use sophisticated technology that can produce detailed reports. Haag said this is a big advantage for an agency.  “Technology is our friend today,” he said. “Find out what your client wants, and make sure they understand the performance reports you’re giving them.”

Neikirk said he’s seen firsthand the advantages of working with a collection agency the past 11 years.  “We haven’t looked back,” he said.

Last modified onTuesday, 14 January 2014 20:53

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