When in Doubt, Early Out?

Remember when someone in a hospital or physician’s office talked about “early out,” they were telling about Uncle Harry who was being released early from the state prison?

“Early out” now means that the provider is releasing its non-bad debt receivables to an outside billing agent. The agent handles the accounts for the provider, sending statements and contacting debtors instead of the provider doing this. What is it that has occurred that would cause hospitals and physicians to no longer handle this work in-house as they have in the past?

The first, and probably overriding, reason for this is because there may not be sufficient resources in the business office to accomplish normal billing and follow-up. Manpower cutbacks combined with larger numbers of outpatient and emergency visits mean that many accounts are simply not being monitored and worked. It is certainly acceptable that, given the choice, business offices should concentrate on larger, more current and collectible balances. Limited resources must always be used in the most productive way possible.

When we evaluate a business office, we often find that older receivables have been unrealistically held beyond the point that they can be collected by the provider’s employees, much less a collection agency. Prudent providers realize that something must be done with these accounts before they become as stale as a month-old donut.

Another factor, which has contributed to “early-out” popularity, is the inability of older billing systems to keep up with the volume of accounts being generated. Some billing systems are struggling to generate statements and provide meaningful reporting and statistics.

If you are thinking about “early outing” some of your accounts what should you consider and look for?

Borderline bad debt accounts are not a good choice. Accounts should be no older than 60 days since date of service or last payment.
Accounts, which are making regular monthly payments, are good candidates. They should have good addresses, and any questions about the account on the part of the debtor should have been resolved.
Current outpatient and emergency accounts may be a good place to start if you are attempting to reduce some backlog.

We have handled early out accounts for almost 50 years! Our program, Preferred Billing, makes the patient contact as close to the way your business office would do it as possible. We pride ourselves on keeping down potential patient problems.

Back to the Receivables Talk Index