What type of collection cycle does your physician office use?

Which cycle does your office currently have? Hint - You better have the first one!

1. More Active Cycle

Once your practice determines the balance is the patient’s responsibility:

• Send a statement the day you receive the explanation of benefits.
• Send one additional statement in 30 days, followed by:

• • A collection letter at 45 days, and
  • A phone attempt to collect at 60 days.

• Send the second or “final notice” collection letter at 75 days.
• If you don’t receive a response, send the account to your collection vendor at 90 days, unless you have a particular reason not to for that patient.

2. Less Active Cycle

• Send two statements 30 days apart.
• Send a collection letter at 75 days, allowing the patient 10 days to respond.
• If you don’t receive a response, send the account to your collection vendor.

The timing of the statements and letters is arbitrary but should be consistent for all patient accounts. The goal of the timing is to determine quickly how likely the patient will pay the bill. Most patients will pay the balance with a reminder or two, but if they don’t attempt to contact the office, pay a portion of the balance, or set up a payment plan, the practice should assume they have no intention of paying no matter how long the collection process continues. Remember the cost to send statements and time pursuing small balances is better spent on pursuing insurance payments, marketing and building the patient base, and improving time-of-service collections

About the Author

Reed Tinsley CPA

This article is written by Reed Tinsley, a Houston, TX-based CPA with over 30 years of experience advising physicians and medical practices across Texas and the United States. Reed holds certifications as a Certified Valuation Analyst (CVA), Certified Healthcare Business Consultant (CHBC), and Certified Financial Planner (CFP), specializing exclusively in the healthcare sector. He is a published author, nationally recognized speaker, and trusted advisor to physicians on accounting & tax, practice management, and financial planning. Schedule a Free Consultation.