8 Key Steps for Collecting Debts from Your Patients


Are you stuck trying to collect outstanding patient balances with no success in sight? Well, you are not alone. Many healthcare providers are facing the same challenges with patient debt collections.

As the cost of healthcare continues to rise, it is becoming extremely difficult for patients to settle their medical bills out-of-pocket. What is even more saddening is that health insurance costs are not any better. However, as the medical balances of patients grow out of control, healthcare providers have no other choice but to act proactively to mitigate the situation.

Nevertheless, patient debt collection is not as straightforward as it might seem. You have to adhere to stringent federal and state laws when collecting past-due accounts.

So, what are the dos and don’ts of debt collection? Below we discuss what you should do and what you should avoid when collecting medical debts from your patients.

The Dos

Start listing your prices

One of the reasons most patients run into medical debt is that they don’t realize what they are getting into until the bills become too hefty for them to pay.

When you tell a patient that they need to undergo a certain procedure to treat an ailment or an infection, they will quickly agree with your suggestion without asking about the costs involved. This is because they are desperate for a cure and they seemingly have no other option but to consent to the procedure without asking about the price.

Listing all your prices for the most common procedures and medical services will go a long way in reducing uncompensated care costs. In addition, you should indicate your collection policy along with your pricelist to give your patients an idea of how much you expect them to pay for various medical services.

Moreover, listing your prices and collection policy will allow your patients to prepare for payments prior to seeking healthcare services.

Offer several payment options

Most patients typically seek healthcare services simply because they do not have a choice despite the fact that they cannot afford the unexpected costs. This means that the patients may end up accruing hefty, out-of-pocket expenses depending on their healthcare needs. Clearly, paying such large amounts can be an immense challenge for many patients.

Considering this, you should offer several payment options, particularly to patients with high self-pay expenses. Paying out-of-pocket can be financially draining and force some people to neglect their responsibility. However, by providing several practical payment plans to your patients, they will be more than willing to pay up.


Offer special discounts for self-pay patients

Besides providing payment options to your patients, you should consider offering special discounts as well. This is a reasonable way of collecting and reducing debts, especially if it involves self-pay patients.

As you might be aware, insured patients normally receive special discounts via their insurance plans. However, this is not the case with self-pay patients. The latter has to pay all their bills in full without enjoying any financial relief.

Therefore, offering a discount to uninsured patients can go a long way in encouraging them to pay their bills promptly. Nevertheless, you must ensure that your discounted offers do not violate insurance laws as you try to get patients to pay up.

Collect payments before surgery

One of the biggest challenges healthcare providers face is achieving a balance between their professional side and their human side. A typical example is that they may encounter a situation where a patient needs surgery, but they do not have the required funds to undergo the procedure.

In such cases, you should not allow your human side to dominate your decision-making. Instead, you should remain as professional as possible by requesting payment before allowing the patient to undergo any expensive surgical procedures. Alternatively, you could request the patient to pay at least 50 percent of the amount before the procedure.

Trying to collect funds after the procedure could prove futile as the patient might be coming out of anaesthesia or struggling with postoperative pain.

Encourage your clients to make partial payments

Understandably, the rising cost of healthcare has made it difficult for patients to settle their bills in a timely manner. However, this is no excuse for your clients to stop paying their outstanding balances.

If you are struggling to convince your patients to settle their accounts in full, you should encourage them to make partial payments until they clear the outstanding balance. The patients should pay at least half the amount upfront as a sign of good faith and then commit to clearing any outstanding balances.

Reach out to your patients via mail or email

Communication is crucial when dealing with patient debt collection. Unfortunately, many healthcare providers never bother to reach out to their patients as far as paying up is concerned. Instead, they rush to sue their patients without giving them sufficient time to settle their bills.

Always keep in touch with your debtors via mail or email as a way of reminding them about their obligations. In any case, many people consider snail mails and emails as formal ways of correspondence, and they will always feel the need to respond and act on your request for payment.

You can also use your correspondence with a customer as proof that the patient owes your facility a specified amount of money, in case the situation calls for it.

Retrain your social worker staff

Social workers play a crucial role in the healthcare sector. They counsel and guide patients on a wide range of topics, including discussing their financial responsibilities and payments.

Considering this, training your social worker staff in how to handle financial discussions with patients can reduce the number of pending bills significantly and make the process of debt collection much easier.

Most importantly, staff training should focus on what to say and how to say it without being insensitive to the patient or their family. This is because financial matters are normally sensitive and, therefore, require an assertive but sympathetic approach when discussing them.

Seek help from a third party agent

There is no harm in seeking help from a third party agent. Ideally, you should opt for a reputable debt collection agency if all avenues of reaching out to the patient seem to have failed.

Debt collectors with experience in the healthcare industry know how to professionally handle debt collection without infringing on the rights of the patient. Moreover, they have comprehensive knowledge of the law, and they know the nitty-gritty details such as when to call a debtor, and what type of language to use.

Interestingly, it is much cheaper and less risky to hire a third-party agent than trying to collect the debt yourself.

The Don’ts

Don’t play the waiting game

As much as it is reasonable to give your patients ample time to settle their bills, waiting for too long can actually reduce your chances of collecting the debt. In essence, a patient’s ability to pay outstanding balances decreases with time.

Moreover, different states have laws regarding time-barred debts. This means that if your patients have continued outstanding balances for 4-6 years since the last payment, the law prohibits you from pursuing this type of debt.

Consequently, you should make an effort to create a viable collection timeline to increase the chances of your patients paying up in a timely manner.

Don’t collect patient debts without full knowledge of the law

Never make the mistake of pursuing patient debts if you do not have full knowledge of the law regarding debt collection. Some patients may use your ignorance to turn the tides against you and avoid paying the debt altogether.

The law somehow protects debtors by defining who can collect a debt and on what grounds you can pursue a defaulter. With that said, it is always a good idea to review the debt collection laws in your state before you even attempt to pursue a patient who has defaulted on payments.

Do not sue your patients

The last thing you would ever want to do is to sue your patients. Filing a lawsuit against a patient who has defaulted on payments might seem like a good idea, but the truth is that it’s not. Going to court might not only tarnish the reputation of your healthcare brand but also lead to unimaginable losses as patients look elsewhere for services.

After all, you are in the business of providing healthcare services rather than in the business of placing liens on patients’ properties. In case the patient pays off their debt and become financially stable, they won’t see the need to use your hospital again.

If the situation calls for litigation, it is best you consult with a professional debt collection agency. A reputable debt collector will be able to handle the situation amicably without having to take the debtor to court.

Do not use threats to collect patient debts

The Fair Debt Collection Practices Act of 1977 protects consumers (patients) from abusive debt collection practices. The Act also limits the behaviour and actions of third-party debt collection agencies.

If you are unaware of this Federal law, you may resort to threats and harassment as a way of forcing patients to pay up. However, threats, profane language, and harassment do not work nowadays.

In fact, using threats can land you in trouble with the law as the patient may file a lawsuit against your hospital. You may end up paying millions in terms of settlement simply because you threatened or harassed a patient in the name of patient debt collection.

Additionally, do not contact the debtor outside normal business hours while pursuing your payments. The law in most states prohibits debt collectors from contacting debtors before 8 AM and after 9 PM.

Avoid charging uninsured patients over 150% of Medicare

Another mistake you should avoid at all costs is charging uninsured patients more than 150% of Medicare. Failure to do so will result in disgruntled patients who are unable to pay off their medical bills.

It is now possible for healthcare providers to discuss estimated care costs with their patients in advance. By informing the patient in advance, they won’t feel as if they are paying more than they should be. Therefore, they would be willing to pay off the outstanding out-of-pocket bills either in instalments or upfront if they can afford it.

Don’t write off large debt amounts

Some healthcare providers are usually too quick to write off bad debts that involve large amounts. However, this is not a practical solution to settling debt collection issues.

You are advised to view patient debt collection with the seriousness that it deserves regardless of the amount owed. Writing off debts simply because they seem too large or too little to pursue, can set a very bad precedent for your hospital’s financial standing.

A good way to avoid writing off bad debts and commit to pursuing patient debts is to set detailed collection policies and procedures.

Don’t let patients accrue more bills

Another mistake healthcare providers make is to allow patients to accrue bills that they seemingly cannot afford to pay. Except for emergency cases, you should not allow your patients to continue receiving treatment without making payments. The bills might accrue to unimaginable amounts, making it impossible for the patient to pay off upfront.

To avoid this situation, always discuss and share the estimate with your patients in advance, and come up with a workable payment plan before they can continue receiving treatment. Preferably, the patient should pay at least 30-50% of the total costs before they can receive healthcare services.

So what’s the next step?

Let’s face it. The healthcare industry is certainly a mess as far as outstanding patient balances are concerned. Healthcare providers are having a hard time getting their patients to pay up.

The good news is that this does not have to be you. By following the above dos and don’ts, you can easily encourage your clients to pay up and reduce their debts. If all these plans fail, you can rest assured that an experienced medical debt collection agency will always be at hand to help you recover your outstanding balances.