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What happens when patients don't pay their bill?
In today's episode, I'm diving into a revealing conversation with Andy Grover Cleveland, the expert behind Collection Agency Ninja. Forget everything you've heard about the conventional timelines for involving collection agencies. Andy advocates for a proactive approach, suggesting engagement as early as 60 to 90 days post-EOB. This strategy not only streamlines financial operations but also nurtures patient relationships through clear communication.
Andy reveals the secrets to choosing reputable collection agencies that enhance, rather than hinder, patient rapport. You'll learn why early intervention is a game-changer in maintaining your practice’s financial health without compromising on patient satisfaction. From identifying common pitfalls in the collections process to crafting effective patient communication strategies, this episode equips practice owners with pivotal insights for balancing financial well-being and patient care.
Listen now to master the art of patient payment collections in your practice!
Website: collectionagencyninja.com
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Michael: Hey Andy, so talk to us, what's one piece of advice you can give us this Monday morning?
Andy: I'm going to give something that probably goes against everything that everyone has ever heard in the dental business. I Believe you should use a collection agency at 60 to 90 days. After the EOB, which is probably very unpopular, but it's really crucial in the business of dentistry.
Michael: Interesting. there specific communication strategies that we should implement at 30 or 45 days mark or to avoid escalating to the 60 days?
Andy: Yeah, great question. Of course you want to notify. You don't want this to be blind. you do want to notify them that they owe the balance.
And even before that, you want to try to collect it at time of service so that you never create the problem. However, you know, you have a real world and you have the perfect world. And sometimes those planets are just not aligned. So if someone does not pay that full balance, After that service is provided, you definitely want to notify that patient at least a couple of times that they owe, letting them know to please pay, but about 60 or 90 days, that's when the tide turns, Michael.
That's when people decide, Hey, I'm either going to take care of this obligation or I'm not. So that's the ideal time to use it. Now, if you had interviewed me five years ago, Or 10 years ago, I wouldn't be as staunch on this opinion. It's kind of like merchant services. I don't know if you've seen this trend where now merchant services fees are being passed on to the patient.
Have you been keeping up with that?
Michael: Yeah, I've seen that.
Andy: Okay. So if you asked me five years ago, I would say that's the worst idea. It's cheesy. Don't do it. It totally devalues your practice, but guess what? Every time I order tacos, every time I go to the doctor's office, every time I go to the car dealership, and now every time I go to the dentist, it's passed on. So we're in that kind of spot where it was unpopular, but now everybody's doing it. So why shouldn't the dentist?
Michael: Okay. Interesting. So then three steps points or takeaways that you have to streamline this or make it easier, smoother. What would be number one then?
Andy: one of the first takeaways is by implementing some type of collection agency strategy that's going to reach out.
Number one, it doesn't make you the bad guy anymore. When you think about it, do you want to be known for chasing people for money or do you want to be known for treating patients with clinical excellence? So it's nice to have a scapegoat that you can blame for reaching out for the balance because it's strictly a financial driven practice.
So I guess the number one is, it's much more convenient to blame your billing company. Then is for people to complain about someone in your office reaching out too frequently. I think we can both agree the optics aren't that great.
Michael: Yeah. I think that's where I guess the patient relationship can get iffy, right?
how do you do that then Andy? How do you balance maintaining patient relationships with the need to use a collection agency?
Andy: there's no one right answer, but at the end of the day, if you hire someone to help you with the financial part of the practice, you can basically, just stay out of it.
So if you're clinically driven, to help patients. That's your focus. Let someone else basically deal with the headache. Now, another part of how that works is it will motivate a certain part of your patient base to come back to be a patient of record. So a lot of times when dentists are doing these procedures, patients will say anything to get out of pain.
So once you make that pain go away, it's sometimes could be a little too convenient to not pay. So by having a company reach out, you can actually help motivate that person to communicate with the practice and pay. And ultimately, You want that patient to be a valuable member of your clientele. So you have a divide where you can motivate people who generally value the service you're providing and keep them as a good patient of record. Also, if people choose not to pay the bill, they probably don't value the services that you rendered anyway. And arguably they're going to go somewhere else. So that kind of helps push them in another direction to maybe go down to the practice down the road and not pay them rather than come back for more service and not pay you.
Michael: Does that make sense? yeah. So then I guess break it down for me. How does it motivate the patient versus sometimes like, stress them out or irritate him or anything like that?
Andy: So it's pretty simple, Michael. If you, you got two phone calls today, once from someone, you owed money to.
And it's just their office calling you, Hey, Michael, please pay. And then you get another phone call, Michael, from a collection agency. Again, same thing, you know, you owe the bill, but the collection agency is calling. Who are you going to pay first?
Michael: one's a friend and the other one's the collection agency.
Andy: They're both the same. you owe two parties. You have no preference one or the other, but one is that business calling you for money, the other one is a collection agency calling the question is, who are you more inclined to pay first?
Michael: Oh, I don't know. That's a good question.
What are the, data show?
Andy: Generally speaking, people are going to pay the collection agency first. Middle class America wants to protect their credit.
Michael: So
Andy: generally speaking, people are going to pay the agency first. They're going to give it more importance because there's nothing negative that happens if they choose not to pay that original vendor, they'll get another statement or call next month and they'll address it
Michael: Interesting. Okay. I like that. So then can you walk us through the process of selecting a reputable collection agency? Like What key factors Should we consider?
Andy: Yeah. I mean, You really want to, interview multiple agencies. I would say the number one most important thing that you can do, assuming that people are being ethical, providing good service and being cost effective, which most are is having an agency that works directly with. Your practice management software. So we're in, a digital age and the collections business as a whole has done a very poor job on getting involved with technology. So I would definitely steer any dentist to work with the company that works with the technology. Well, You might ask, why is that important?
There's numerous reasons. That's important. Number one. You're going to ensure safe and secure and rapid exchange of information. So accounts will be sent by their team by pointing and clicking, not manually updating a web form. The second thing it's going to do is it's going to tell who's paid. So in the collections business, Michael, and it's obvious you haven't been in collections from some of your responses, which is great.
We don't want that for anybody. But sometimes the patient will actually pay as a result of that collection company contacting them. So with companies that work within the software, they should be notified when that happens. So let's paint a picture. Let's just say you're working with a collection company manually. Okay. You've sent patient ABC over for collection and the collection company has been calling them and they will call them incessantly to motivate that person. And let's just say that person paid the bill. Well Guess what? If your front office doesn't contact that agency by logging into the website, calling them, emailing, however that feedback loop is. That agency is going to continue to call that person for money. And it's going to further damage that relationship when they did the right thing and paid. So you want to have like an automatic feedback loop so that if someone does pay, it's automatically reported to the agency. So the agency doesn't cause any further harm. Those are probably the two top biggest reasons. There's many more.
Michael: Gotcha. Okay. So collection agency is just essential to have in this process, So number two, what would that look like? Bullet point number two.
Andy: Yeah, so that was identify and motivate your ideal patients coming back into the practice as opposed to people that are just dentist shopping So we want to motivate people to pay and also be a patient of record. So when you turn people over to collection Granted, they're not happy about it, but it will motivate people that value that relationship with you to communicate and pay the bill. It will also motivate some people to leave the practice because they had no intention of paying to begin with.
Michael: Okay. Got you. Got you. Now, how do you measure any of the success of a collection agency? What benchmarks or KPIs do you track? As a practice owner.
Andy: So any agency that has technology to support you is going to give you metrics on how you can judge their efficacy. I will share with you as weird as this is, it's not all about the money. I specialize in working with independently owned dental offices. So it's a little more holistic and how they judge you. I would say that most independently owned practices, it's not about the money. That's more of a group practice thought process.
Yes, money's important, but not the most important thing. Independent dentists, they don't compete. With corporate offices on cost, right? They can't, the economies of scale are not there. The flip side is also true. corporates can't compete with independent dentists on culture, right? They have turnover, you're getting new associates every six months. It's just a constant churn. So they don't really compete with one another, but at the end of the day, I think most dentists, will gauge the efficacy of their collection company, not only on the money recovered. And of course it has to be cost effective, but even more importantly than that, does it generate negative reviews?
Does it motivate people to accept treatment? Does it allow their staff to focus on other things that are more important? So there's an opportunity cost To chasing your own accounts receivable. So it's much more multifaceted than just dollars in dollars out. Most dentists will hire a collection company basically to make their office run better.
Michael: Have you seen that a lot, Andy, where some are hesitant to, bring on or call or ask about, money more for the review. Like, Oh man, I'm going to get negative.
Andy: Yeah, of course. But in my experience, if you continue to chase your own money, you're much more likely to generate a negative review for yourself.
If you hire somebody else to do it for you, they can give a negative review on that collection agency.
Michael: Yeah.
Andy: And certainly they could tie it back to you, but you can always, claim indifference, right? Hey that's what our billing department's for you know, you need to deal with them and it absolves you from some of that responsibility.
Michael: Interesting. Okay. So then what are the financial risks and rewards of sending accounts to collections at 60 days versus waiting longer or not using collections at all?
Andy: Great question. So you have this kind of traditional paradigm with collection agencies working with dental offices and that one is a very traditional approach where the office will work the account for months and months and months and years and years and years. And then they turn it over to collections, and then that company's working on a percentage basis. That's the way it's always been, but that is just not an effective way of running a modern or contemporary dental office. Sometimes you cause more harm than good there because if you wait that long, the accounts aren't collectible anyway. Right. If you wait a year or two, they're basically uncollectible. So I'd recommend just writing the accounts off if you're going to do that. The advantage to turning it over at 60 to 90 days is that's a very fresh account. It's still top of mind for that consumer and from a statistical perspective, it's much more collectible than something if you wait a year or two down the road to go after.
So it's more about being proactive with that balance. The other thing you also have to measure in here, Michael. is a lot of times these practices are already getting hit with the PPO fee and basically reducing their billable amount. So they're already losing 30 or 40%. And then if you let that patient balance go unpaid. You're losing the rest. So in this environment, it's just too competitive to run a business like that anymore. You have to be responsible with not only the insurance portion, whether you're in network, out of network fee for service, but you also have to address that patient portion. It's crucial because again, you're taking such a big write off a hit in the beginning. It's really not cost effective for you to take another hit later down the road. You're essentially giving it away.
Michael: Interesting. So then what common mistakes do practices make that you've seen when sending accounts to collections and how can they avoid these pitfalls?
Andy: one of the things that clouds all of our judgment is emotion.
So a lot of times, People get upset, and listen, if someone owes me money, I get upset about my own business, right? It hurts, but people still have that mammalian part of their brain that wants revenge, or maybe the patient was really rude last time they came in. So you have this, Emotional part of being owed money that clouds our judgment.
that's a big mistake I see some practices, they just want revenge. That's usually where bad things start to happen when you think along those lines. So as a practice owner matures and goes through practice ownership, there's developmental stages where right in the beginning, it really hurts. Then you can start to kind of objectively step back and look at things more objectively. But at the end of the day, recommend the practice owners look at this from a very non emotional, like a CPA would, right? If you're producing a million dollars in revenue annually, and you have less than 1 percent of the people that owe you money, not pay you, write it off.
You're collecting 99%. No one gets a hundred percent. I don't care how cool it is to say in the Facebook groups, nobody gets a hundred percent. There are times where it makes sense to write things off rather than pursue it. Especially if those services are disputed or you're dealing with a really difficult person, a lot of times it's just not worth it and you just have to let it go.
Michael: Interesting. I love that. Thank you so much, Andy. I appreciate your time. And if anyone has further questions, you can definitely find them on the Dental Marketer Society Facebook group, or where can they reach out to you directly?
Andy: Probably the best way to do it is going to my website. collection, agency, ninja. com spelled just like it sounds.
Michael: Awesome. Collection, agency, ninja. com. that's going to be in the show notes below. So if anyone's interested, want to pick Andy's brain a little bit more and so forth, definitely reach out to him there and Andy.
Thank you so much for being with us on this Monday morning episode. Appreciate you having me. Thank you very much and keep up the great work. I'm honored to be here.
Andy: Thank you.