DECA Financial Services recently read an article regarding the ACA’s attempt to lower the uninusred ranks in America.  Please click here for the entire article.

One of the most important aspects of a medical practice’s success is collecting the money that a patient owes them. This seems like a “no-brainer,” right? Well that does not necessarily make it an easy feat. Patient out-of-pocket fees account for 30 percent of a practice’s revenue, yet once a patient walks out the door, chances of collecting that money are practically cut in half.

The bright side is that there are ways to improve the collections process in order to ensure payment efficiency. After speaking with practice management consultants, we found four strategies to improve patient fee collection while maintaining strong customer satisfaction.

1. Train Your Team

The office manager may handle claims, but the entire staff should still know insurance policies and procedures. A good way to do this is to train employees on their own benefits. That way they can see it from both perspectives.

Your staff should also be trained on how to ask for money from patients. Requesting payments can be tricky. A good method is to have a script of exactly what to say. For instance, instead of saying “you owe 30 dollars,” a staff member could ask “cash, check or charge?” This less confrontational approach lowers the chances of a patient being turned off.

2. Educate Your Patients

A patient should never be blind-sided by costs. It’s best to be as upfront as possible. This is particularly applicable for patients who have a high deductible or are self-pay. For these patients, try and talk with them before they arrive for their appointment. If your practice offers a discount for patients who pay large amounts on the spot, then discuss this opportunity with them before the time of payment. This makes patients more comfortable about paying a larger amount of the bill.

3. Automate the Collections Process

This is the 21st century. It’s time to accept credit cards. You pay a higher fee for credit card payments, but more patients are willing to pay this way. Ask your patients to keep their credit card information on file. With their permission, you can automate payments of an agreed upon amount.

Starting in January 2013, the Affordable Care Act will require practices to automate patient eligibility too. This should dramatically decrease issues in accounts receivable because patients will know their financial responsibility within 20 seconds.

In the April 2012 issue of the DECA Relay, a monthly newsletter for healthcare providers about medical receivables, insideARM.com contributing editor, Evan Albright, asks an important question about healthcare data security: in the wake of recent high-profile security breaches in the healthcare industry, how vigilant is your organization about protecting patient data. Here are Evan’s thoughts on the topic.

It’s after midnight. Do you know where your patient data is?

As BlueCross BlueShield of Tennessee recently learned, the government considers it the “parent” of all the health care data it generates on its customers, regardless of whether that data is under its control or not.

The story contains numerous “lessons learned” for health care organizations as it applies to patient data and IT security, and its relationships with its vendors who may have access or even control to those data.

BlueCross paid the government a settlement of $1.5 million after thieves stole computer hard drives containing health care information relating to more than a million of it customers. The hard drives were in a secure closet in office space the insurer had recently vacated. Security for the closet had been turned over to the real estate management company.

BlueCross denies any liability in the case, but reached a settlement to end expensive litigation.

The BlueCross case has ramifications for other health care organizations, especially as it extends to it vendors, including those in health care collections. Not only do collections vendors need to be knowledgeable and current with HIPAA laws related to collections, they also need to be well versed in patient privacy and security regulations under HITECH.

The attention of the government is not only focused on the big boys, but on smaller practices as well. Recently HHS’s Office of Civil Rights reached a $100,000 settlement with Phoenix Cardiac Surgery, a five-surgeon practice in Arizona, for allegedly scheduling patients using an “Internet-based calendar that was publicly accessible” among other alleged violations of HIPAA.

While collections agencies can be sued for violations of IT data security (as Chicago-based Accretive learned in January) the BlueCross case indicates that the federal government will go after the health care organization that created the data.

Before entrusting any of your patient data to a vendor, be sure to conduct reasonable due diligence that the vendor knows the law and has safeguards in place to protect your interests. The data you save may be your own.

For more information on current trends in healthcare IT and data security, be sure to check out the rest of the content in the April DECA Relay.

Although DECA Financial Services, LLC focuses on several industries for debt collection, a healthcare article written this year on InsideArm.com, caught our attention.

Many industries have utilized a “scoring” methodology to determine the propensity for their debt consumers to satisfy their debt obligation, yet healthcare is a recent adopter.  According to this healthcare credit scoring article from  insideARM.com, the healthcare industry has selected a patients credit score as the tool in determining the ability to pay ones healthcare debt.  We truly feel that having a scoring method is better than not, but, like the article, believe there are more “telling” statistics, especially in this economy.

Read the article on insideARM.com »

One of the key practices a small business can utilize to develop a rock-solid accounts receivable management and collection strategy within the organization is utilizing powerful analytical tools and having a data mining-based approach. Professional collection firms like DECA Financial Services use analytics to help define everything in our customer’s portfolio from accounts that are most and least likely to be recovered to identifying trends repeating themselves in consumer demographics.

Let us take a closer look at how analytics can help you closely track how your consumer behaves and some of the key features in developing a stronger collection practice in-house. In another related article, we will then talk a little more about the actual practical applications of analytics in collections.

Why analytics?

Information is the lifeblood of collections, and many of the reasons for that presumption are obvious: if you understand your customer or consumer, then you can begin to not only identify solutions to their delinquencies, but condition yourself to recognize and quickly cope with similar accounts in the future. Not only are you putting your company in a better position to collect outstanding debts and overdue invoices, but in the long run, you are also reducing your susceptibility to delinquencies and reducing your overall accounts receivable balances.

Here is a real life example of the theory. There are software service providers available to small businesses and collection firms that deploy web or desktop based programs that essentially have the advanced capabilities to import your company’s A/R data and allow the user to mine through, control, compare, and contrast that data in an effort to profile and categorize the behaviors of each account.

The end result is a powerful program that allows you to define and predict repayment probabilities and even suggestions for when and what decisions to make regarding the plan of action to reduce outstanding A/R.

There are so many ways to use analytics

In addition to client-side software and web-based application portals that offer powerful data mining and segmentation, there are other resources you can use to develop a powerful analytical system for tracking and maintaining your outstanding accounts receivable balances. You can use computer-based financial and visual modeling, scoring rubrics and forecasting tools, and even condensed US Census data aggregators.

As a small business exploring the different options at your company’s disposal for deploying a successful analytical strategy, you will find a breadth of choices.
In the next article, we are going to present a series of practical steps and examples on how to choose the right analytical approach for your ARM.

Revolving consumer credit card debt since 1968

According to reports from the Federal Reserve, for 2010 consumer credit issued and outstanding has increased, revolving credit has decreased, and during the second quarter of the year, the total amount of outstanding consumer credit in the trillions of dollars was at its lowest levels since 2005. With the passing of October came new data released by the Federal Reserve that showed consumer credit, a closely watched economic indicator, had jumped by 1.75% – a substantial increase that indicates consumers aren’t afraid to borrow.

For debt collectors like DECA Financial Services, this begs an answer to an integral question the industry as a whole must continually scrutinize: how are payer trends shaping up for this year, and what kind of trends can we look forward to next year? We’ll explore some of those trends, and perhaps find a few answers, in this article.

Like debt collectors, small business owners can use the consumer credit index and data released by the Federal Reserve to gain valuable insight into how consumers are using credit cards and paying back personal debt (the data includes short and long-term loans, including store credit, automobile, and home loans yet excludes home equity lines of credit). An increase in the percent of credit outstanding suggests consumers are feeling good about paying their debt; a decrease would suggest the opposite.

A sample of consumer credit debt trends

Let’s start by dissecting the fluctuations in consumer credit data, reported by the Federal Reserve, seasonally adjusted and last released on December 7th, 2010. In 2007, consumer credit issued and outstanding had increased for the year by 5.8%, compared to just 4.1% for 2006. Consumers all over the country likely felt secure in their jobs and elected to purchase new cars, new homes, and high-ticket store items using credit.

Many economists believe the most recent recession began around December of 2007, and the Fed’s historical data corroborates that presumption. In 2008, consumer credit increased by just 1.5% compared to 5.8% just a year earlier. Recall that March of 2008 brought on the collapse of Bear Stearns, a global investment bank doomed by subprime mortgage investments, and September of 2008 brought on the complete insolvency of another iconic investment firm, Lehman Brothers, after getting crushed by toxic, non-performing mortgage assets. It was all the result of a housing bubble and easy credit.

Remember that consumer credit incorporates mortgages into its calculations. For 2009, the index saw a decrease in outstanding credit of -4.4%, bringing the total amount of outstanding credit from $2.6 trillion to just $2.4 trillion as credit markets froze in the wake spiking existing home mortgage and credit card defaults.

That’s not to say we weren’t warned. According to a Fitch Ratings report released in January of 2008, they believed “credit card performance will noticeably deteriorate during the year given spillover from residential mortgages, weaker economic trends and higher levels of unemployment.”

For the first three quarters of 2010, consumer credit began to increase again – slowly. September 2010 saw the first increase that was strong enough to bring consumer credit issues back from negative levels, and the trend indicates 2010 should end on a positive note as the 2008 credit freeze continues to thaw and consumers continue to seek personal consumer credit. Many people are now able to afford their bills, and although at the time of this publication unemployment in our country stands at 9.8%, jobs have been added, not lost, consistently for the last 9 months.

Consumers are paying down their debt

Despite the increase in outstanding consumer credit in the data released by the Federal Reserve, there are other statistical indications available that suggest consumers are starting to pay down their credit card and mortgage debt. TransUnion, the credit scoring and data analysis firm, earlier this week said it expects seriously delinquent credit card balances, defined as those in default by at least 90 days, to decline nearly 11% this year.

After mortgage delinquencies peaked last year at about 7% nationally, a staggering statistic when compared to historical delinquency rates, TransUnion also expects that mortgage delinquencies will fall by around 20% this year. Similarly, according to the latest data released by Fitch Ratings, write-offs for prime-rated credit card holders has been falling steadily this year, and trend that’s expected to continue.

So borrowers are paying down their debt (albeit most likely by priority – although mortgage debt has been historically paid down first by borrowers, the waves of foreclosures proceedings expected to start this year is at all-time highs) and these payer trends could indicate there’s an opportunity and demand for debt collection services.

The recession inflicted serious blows to consumer confidence, the ability of consumers to stay current on and pay down their accumulated debt, and sparked widespread unemployment and relentless layoffs from all sectors of the economy that paralyzed our nation. Under typical circumstances, the debt collection industry could benefit from this scenario, but the credit crunch of 2008 proved to be anything but typical. Thankfully, the state of the economy has been experiencing a steady (yet tamed) recovery, and as such, consumers are regaining their abilities to pay their debt as unemployment stabilizes, housing prices begin to recover, and consumer borrowing and spending returns.

John Rainier, Strategy Officer, Deca Financial Services, Deca Financial Services is an accounts receivable management firm.