Medical ARM Firms Feeling Pressure of a Sour Economy

Like their financial services counterparts, businesses on both sides of the health care accounts receivable management equation are seeing more accounts that need collection work, but less cash flowing from recovery efforts, according to the latest Kaulkin Ginsberg Quarterly Credit & Debt Collection Industry Confidence Survey.

More than 70 percent (70.7%) of healthcare collection agency respondents said that current account placements are up “Moderately” or “Significantly.” As solid as the work queue is now, agencies expect it to only increase: 88.7 percent think that placements will be higher in 12 months than now.

But as medical collectors work those accounts, they are seeing dwindling returns, prompting many to change their approach to collections. The survey asked how likely agencies were to modify collection strategies given the economic situation, and 36.4 percent answered “Very Likely.” Another 55.7 percent said they were “Somewhat Likely” to change strategies.

In the free response area of the survey, one healthcare collector shared his view on shifting collection strategies: “We need to find new ways to help patients liquidate assets.”

Healthcare creditors – commonly self-identified as hospitals and hospital systems – revealed that they, and their collection agency partners, are having a hard time collecting on past due accounts right now. But the outlook among healthcare creditors was downright bleak.

When asked how service provider (collection agency) recovery performance would fare six months from now, a combined 71.4 percent answered “Weak” or “Poor.” The outlook dimmed even further looking 12 months ahead, as 85.7 percent answered the same way for the period 12 months hence.

Of the healthcare creditors that responded to the survey, 77.8 percent said they outsourced at least some part of their recoveries.

Hospitals were eager to share their thoughts in the free response part of the survey: “As a small regional clinic I’m seeing more and more of our receivables taking longer and longer to collect. When a receivable hits a certain delinquency state, we turn the account over to a collection agency to assist in the collection of the debt. I’m also seeing a slight slow down in the amount they collect on our behalf,” said one participant. Another phrased a similar though more succinctly: “Self pay debtors will be paying smaller amounts.”

For the complete results of Kaulkin Ginsberg’s Third Quarter Credit & Debt Collection Industry Confidence Survey, please download our free results report.

Editor’s Note: Kaulkin Ginsberg is the parent company of insideARM.com.