HMEs outsource private-pay collections

Saturday, July 31, 2004

BROADVIEW HEIGHTS, Ohio - Providers who routinely forgive private-pay patient debts may be surprised to learn how much that practice is costing their business. And in an era when every dollar counts to the bottom line, these seemingly nickel-and-dime losses could conceivably push a company over the insolvency line, the head of a new collection agency contends.

“I challenge every HME company to review how much of their total accounts receivable is in private pay and what percentage of that is over 120, 180, or even 365 days – it is typically shocking,” said Lisa Bargmann, owner of Homecare Collection Service. “There are too many times that the A/R is just left to age like a fine wine but it really is turning into rotten grapes.”

A 16-year veteran of the HME and home infusion industries, Bargmann launched the private-pay collection service in March and so far has landed eight HME clients. She got the idea to start the business based on her own frustrations with insurance companies and “mainstream” collection agencies.

“One of the large payers I dealt with frequently would mail the patient the check directly and because they received the checks, they felt the money belonged to them,” Bargmann said. “I tried various collection agencies and they all failed. The big drawback was that none of them truly understood how the HME industry works.”

Inherent coverage and co-pay procedures, along with unique equipment rental policies contribute to a convoluted, protracted collection process, Bargmann said.

“If the collector doesn’t understand the process, it’s easy to accept bogus information or be sent down an unnecessary research path,” she said. “The provider may still get paid, but it will take a lot longer.”

Since contracting with Homecare Collection Service a few months ago, Jennifer Sylvester, customer service and billing supervisor for Cleveland-based Integrated Medical, says the company’s collections are up 30%.

“We’ve seen some results,” Sylvester said. “I’m amazed at how fast things have turned around. We’re getting payments on accounts we couldn’t get anywhere with. For the first time in years, we’re not automatically writing these accounts off.”

Likewise, Bob Westphal, president of Northwest Ohio Medical Equipment, said those extra collections have made a significant difference to his company’s bottom line.

“We’re not a big operation here, so if we get a couple extra thousand a month, that’s a lot of money,” he said.

Debt collection is never an easy process, especially when seeking payment directly from patients. Asking for money from equipment-dependent elderly people often brings stabs of guilt on the provider’s part, to the point where they either write it off as charity or waive it entirely.

“Many providers either lack the skill set or are just plan nervous about asking for money,” Bargmann said. “It revolves around the fact that it’s healthcare and we’re nice.”

Yet collectors can still be “nice” when dealing with a patient’s delinquency – it just takes a high degree of diplomacy, she said.

“You have to be a good negotiator,” Bargmann said. “You have to offer options, such as arranging a monthly payment schedule.”

Even though employing a collection agency represents a more forceful approach to debt recovery, Bargmann concedes that there will always be a certain number of true hardship cases that should be written off. Yet too often providers just give a blanket amnesty to all stubborn debtors – an expensive practice that must change, she said.

“If you do your research, you’ll know which patients can pay and which ones can’t,” she said. “Certain people won’t have the money, but we have created an environment in this industry where we’re pushovers. We can no longer afford to do that in this day and age.”