When Should You Outsource Your Accounts to a Dental Debt Collection Agency?

on Oct 15, 2013 | 0 comments

When it comes to collecting unpaid dental patient debt, sometimes the key to recovery is knowing when to call in the experts. But how long should you pursue delinquent patient accounts internally, and what is the appropriate dollar amount for an account to be outsourced to a dental debt collection agency? We’ll spend the rest of this blog post answering these important questions and showing you how to get the most value out of your dental receivables!

1. How long should a patient bill go unpaid before transferring the account to a dental collection agency?

It is typical for dentists and dental office administrators to manage unpaid patient receivables for approximately three to four months (usually up to 120 days) Screen Shot 2013-10-15 at 9.38.04 AMinternally before charging off the accounts and outsourcing them to a third party debt collection agency. Some dental practices advise that accounts be turned over faster (after roughly 30-60 days) due to the fact that the longer a patient bill goes unpaid, the less likelihood it has for an eventual successful recovery. The graphic at right displays this relationship and the negative correlation the value of a receivable has with its age (days outstanding).

Dental debt collection professionals commonly request accounts to be placed within 90 days of service so as to ensure the highest likelihood of collection. When your dental practice decides to suspend internal efforts and transfers accounts to an outside agency will depend on the yield and recovery rates your office is targeting.

2. Should unpaid patient bills of any dollar amount be turned over to a third party dental debt collection agency?

Many dental collection agencies will not accept accounts that are considered to be “small balance” (typically $75 dollars or less) because the cost of collection will often exceed the potential yield from a successful recovery. As a result, it is common practice for dental offices to handle these small balance accounts internally. In most cases, these types of patient accounts are simply missed co-pays or deductibles and can be recovered through a simple phone call to the patient responsible for the bill. Delinquent accounts exceeding $75 dollars are more suitable for transfer to a third party dental debt collection agency.

3. Who is responsible for the unpaid bill?

shutterstock_157485080Before an account is turned over for collection, be sure to gather and verify all patient or responsible party demographic and contact information. That ensures your debt collection agency partner won’t have to spend a ton of time trying to locate and make contact with the person responsible for the bill. Some of the key patient or responsible party information to confirm before outsourcing an account for collections includes:

  • Patient or Responsible Party demographics (name, address, phone number, email etc.)
  • Insurance Status (policy type, coverage, deductible level etc.)
  • Debt characteristics (remaining balance, days outstanding, service provided, options for payment etc.)

Also be sure to provide your dentist debt collection partner with a summary of your internal collection efforts to date. This summary should include the number of billing statements/invoices that have been sent to the patient/responsible party as well as the number of collection notices and phone calls that have been made in pursuit of the debt. Providing this crucial patient/collection information will save your collection agency partner valuable amounts of time and effort in recovering unpaid patient debt. It will also strengthen your own internal collection procedures in the process.

So if you are struggling to determine when the appropriate time is to outsource your dental collections, just answer the questions above. If an account meets the typical criteria for third party debt collection, it may be time to suspend your internal efforts and leave it to the professionals. By keeping these industry norms and best practices in mind, your dental practice will be well on its way to maximizing recovery and minimizing delinquent patient debt!

YOUR TURN: How long does your dental office typically wait before sending accounts out for third party collection? Have you found that the quicker you outsource accounts the higher the recovery rate? Let us know in the comments below!

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John Erickson