50 Year - $5 Account - Goodwill at a Price
The high cost of managing self-pay CONTRACT ACCOUNTS is seldom apparent to all parties involved in the collection process.
Contract accounts are those that have a written (or underwritten) agreement to pay a certain amount each month.
By default, many hospitals “agree” to accept partial payment on an account when a payment is posted and the next statement reflects the payment and a new balance.
Often the hospital is glad to have something coming in on the account, and the fact that a monthly payment is being made keeps the account from aging into a category that requires follow-up by an employee.
What we are saying is that many times hospitals unwittingly agree to carry contract accounts simply by posting the payment and sending our the next statement.
In situations where there is a tacit agreement by the hospital to accept $25 a month on a $500 bill, the guarantor does not always make good on the agreement to make the monthly payments. Contract accounts often lapse into past due accounts because they are not monitored properly.
Hidden Costs
From the time a patient is admitted until collection or write-off, the hidden cost or contract accounts are mounting. Reports are generated, distributed, analyzed and monitored. Statements are prepared and mailed. Telephone contacts may be made. Lots of employee time is spent on the accounts. What about the less-obvious costs such as the cost of money not collected? When all of these costs are averaged on contract accounts they are often higher than the payment on the account.
Fair and Square
Often a normal account becomes a very expensive contract account when an employee agrees to accept a minimum monthly payment amount without proper investigation.
When the hospital is asked to accept monthly payments, the hospital is within its rights to request detailed financial information from the guarantor. This means that you can ask for salary and other income information. This means you can ask about monthly expenses. This means that you and the guarantor can sit down and work out payment arrangements that are fair to the guarantor and fair to the hospital.
Are your contract accounts costing you $$$$$$$$$?
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