HOW TO CHOOSE A COLLECTION AGENCY LEARN THE TRICKS OF THE TRADE By Ian Shafran C hoosing a collection agency for a billing company can be a difficult decision. You may be asking yourself several questions, such as, “What is the right fee structure?”, “What type of reports will my clients have access to?,” and, “How will my practices’ patients be treated?” there are multiple fee structures that collection agencies offer. some benefit practices, while others can work against them. the best type of fee structures are either flat rate percentages or percentages based upon date of service or date of delinquency. most agencies offer a flat rate percentage. Fees Structures to Avoid some companies charge upfront costs, such as $8-$12 per account when purchased in bulk (usually around 100 accounts). these companies then offer different levels of collections, where charges can sometimes be as high as 50%. the problem here is that you are “spending good money to collect bad money;” in this case, $800-$1,200. these companies often show charts that display high returns if the accounts are turned over early enough. realistically, most accounts are held much longer than what they show, and in turn, practices are out a great deal of money. You should also avoid any fee structure that has a contingency fee based upon how long the agency has held an account. for example, some practices will offer 35% if collected within the first year of placement and 50% if the account is collected after the placement period. this works against you, as the agency isn’t being incentivized to collect up front. low-fee agencies are also important to avoid. often times you will see these agencies charge 15% to 25%. if the agency is offering a cut rate, more than likely this means that they are looking to put less effort into working on your accounts. Reports When asking for agency reports, you should make sure a history analysis or detailed client analysis report is provided. this will show the overall results in any given month, solely on the business you have referred. collection agencies are notorious for supplying their clients with data that is era to era. by doing this, they can state to you what occurred within a month, quarter, year, or any period, for that matter. for example, you may have referred $20,000, but the collection agency may say $15,000 was collected within that same period. the $15,000 may represent collections on accounts which were referred from previous months and can be completely separate from any factual data. it is critical that only the business being evaluated is the source of the analysis, and that collections only on the same group of delinquent patients in a given month are included. more often than not, collection agencies will deduct closed accounts from returns to bolster their reports. the only accounts to be deducted should be those accounts which you have turned over in error. most agencies offer these reports online through a secure website. Customer Service one of the biggest concerns for billing companies when they use an outside agency is the treatment of their clients’ patients. it is important to look for an agency that is familiar with the medical field. agencies that handle commercial and retail collections tend to be more aggressive. some practices attempt to have patients return even after being in collections; therefore, having an agency that primarily handles medical accounts is important. another way to ensure that the collection agency you work with is treating your patients in a professional manner is to audit their calls using a voice recording system. this will allow you to hear conversations between the company’s collectors and your patients in case of complaint calls. Ian Shafran’s family has been doing collections for medical practices for over 40 years. His grandfather, Harvey Himmel, started FFCC, Inc. in 1970. He first started working with medical practices in 2001. He currently works with over 200 billing companies and more than 3,000 medical practices nationwide in helping them to collect their bad debt. Ian can be reached at ishafran@ffcc.com. 38 hbma billing • march.aPril.2013
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