When Should Hospitals Place Accounts with Collection Agencies?

Hospitals often ask, “When should I place an account with a collection agency?”

Generally, if an account is 120 days delinquent from date of service or discharge, a hospital should initiate placement with a collection agency, particularly if no response has been received from the patient or guarantor.

At that point, most hospitals have sent out several statements and collection letters and made several collection calls. They have tried to bring to the patient’s attention the delinquency and their concern about it. The patient's lack of response to collection calls and letters indicates either indifference or a cash flow problem. In either case, a collection problem exists, and the account should be placed with a collection agency.

There may be times, however, when a hospital should place an account earlier with a collection agency. The following provides a guideline to such events:

Two or more broken promises of payment. Payments were promised, but no checks have been received and customer will not send immediate payment.
Your customer's telephone is disconnected. Double check with the directory assistance operator and if no new listing can be obtained, place the account immediately. Most hospitals are ill-equipped to perform a thorough skip-trace action.
Your customer repeatedly requests documentation even though you have supplied the documentation previously. This common practice is used to delay payment of the account.
Your customer indicates an inability to pay and refuses to provide a specific date for payment or to initiate a realistic payment schedule. This is a sure indication of a serious cash flow problem and immediate steps should be taken to protect your interests.
Your customer states she will “take care of the account,” but refuses to make a realistic commitment for payment or to work out a payment schedule. This is another indication of a serious cash flow problem.
Your customer suddenly indicates, in response to your requests for payment, a dispute regarding the services provided. Such a dispute was not raised previously. If your investigation shows the dispute groundless and the customer will not take steps to make payment or resolve the matter, the account should be placed with a collection agency.

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