What Really Makes Healthcare Collections Unique

Regular readers of the old Credit & Collection Daily, and now the ARM Insider, should have noticed a recent headline assessing the market for healthcare collections: “Hospitals Working To Ease Collection Policies.” Since this article was based in part on research conducted here at Kaulkin Ginsberg, I’m writing today with a few amplifications and clarifications.

It is true that healthcare providers and the receivables management companies that serve these creditors generally adopt a softer touch than is typically utilized in other types of collections. Why?

For one, hospitals tend to be much more community-centered than other types of creditors, and it is more important for these companies to have positive reputations in their local communities than, say, national credit card companies.

Also, healthcare providers frequently experience reasonable recoveries from patients that are covered by charity care and other government assistance programs. These companies want to see these patients back in the future, and may be more willing to forego payments in full for the sake of repeat customers.

Finally, bad debt problems at many U.S. healthcare companies are encouraging patient account managers nationwide to settle when possible, even if an account is not paid in full. These tradeoffs can be realistic and even profitable from the perspective of the creditor.

Thus the quote that the press has most frequently cited from our healthcare research: “Companies that emphasize more empathetic and patient-friendly collections processes, invest in collector-training programs and integrate legal compliance efforts thoroughly with collection operations turn regulatory compliance into a competitive advantage and are most likely to succeed in this market over time.”

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