Internet-based search tools can help reduce bad debt - Business

Healthcare Financial Management, June, 2002 by Lynn A. Degrote

Due to the increase in returned mail and the difficulty in tracking down accurate billing information, All Saints Health System analyzed Internet-based search tools, choosing one that met its cost and benefits expectations.

As a result of implementing an Internet-based search tool, David has decreased the number of accounts she sends to a collection agency by 30 percent. In addition, she knows that if missing information cannot be found within three minutes, the search probably will not produce results, so she then can forward the account to a collection agency.

David uses her Web-based search tool about three hours each day to gather information on an average of 60 accounts per day Besides spending considerably less time per account, she is able to find correct information on about 70 percent of the people she is searching for, compared with 30 percent before using a search service. She receives less than half the amount of returned mail that she used to receive.

Conclusion

Healthcare organizations should try to limit the number of accounts they send to collections professionals.

When they send a returned bill to a collection agency because they do not have the means to redirect the bill, they lose money. Because collection agencies typically keep an average of 35 percent of the amount collected as their fee, healthcare organizations are likely to realize a cash benefit from first performing their own search to correct inaccuracies or find missing information.

Internet-based search tools offer an effective means to conduct such a search and thereby reduce bad debt. When selecting an Internet-based search tool, healthcare organizations should weigh their options, make an informed choice, and fully use the benefits that Internet-based search tools have to offer. Although Internet-based search tools will not eliminate bad debt, they improve the chances that healthcare organizations will be able to recover money they are owed.

Additional Resources

* Lynn DeGrote will discuss "Web-Based Collection Tools' at ANI on Monday, June 17, from 2:30 PM to 4:30 PM in Seattle, Washington.

* For information on criteria, record keeping, and disclosure regarding charity care, see Principles and Practices Board Statement No. 15: Valuation and Financial Statement Presentation of Charity Service and Bad Debts by Institutional Healthcare Providers (www.hfma.org/ resource/P_and_P_board/ Statement_15.htm).

(a.) Zimmerman and Associates, Uncovering the Industry's Best Kept Secret to improve Hospital Profit, Hales Corners, Wisconsin: Zimmerman and Associates, p. 2.

(b.) American collectors Association, 2000 Top Collection Markets Survey, Minneapolis, Minnesota: ACA, 2000.

(c.) Tieman, Jeff, "Firms Help Address Billing Problems," Modern Healthcare, November 27, 2000, p. 56.

(d.) Zimmerman and Associates, ... p. 6.

Lynn A. DeGrote is senior vice president and general manager, SearchAmerica, Maple Grove, Minnesota, and a member of HEMAs Minnesota chapter.

Questions or comments regarding this article may be sent to the author at lynn.degrote@searchamerica.com.