One challenge that unites healthcare organizations is the increasing burden of bad debt — debt that’s considered uncollectible. While administrative blunders contribute to bad debt, patient inability to pay is a primary driver. 

Effective medical debt recovery means balancing compliance with positive patient relationships. While sending statements to bad debt is necessary to meet regulatory requirements, relying on this practice alone often fails to recover the full amount and can damage patient relationships. Unfortunately, this has been the traditional approach for providers. 

Beyond straining your organization’s finances, uncollected balances impact the patient experience. With reduced revenue, it can be tough to maintain adequate staffing levels and vital services, possibly compromising care access and delivery. Given that 41% of American adults are in medical debt, more innovative collection strategies are crucial. That’s where patient payment outsourcing partners come in.

The Limitations of Traditional Debt Collection Methods

Healthcare practices traditionally follow a rigid bad debt collections process to address patients’ outstanding balances. This approach typically involves sending patients multiple statements and turning to debt collection agencies if necessary. Here’s a closer look:

1. Account follow-up: Providers typically follow up with the first statement as a reminder to settle the account.
2. Communication escalation: If patients don’t respond to the initial statements, the next step is to send additional statements with increasing frequency. These usually emphasize deadlines, the consequences of non-payment and resolution options.
3. External resolution: In cases where internal collection efforts are unsuccessful, providers may turn to debt collection agencies. Before transferring unresolved accounts, patients must be notified and made aware of the available financial assistance programs.

This approach falls short in many ways. When each patient receives identical statements followed by routine calls, you don’t account for the fact that everyone has unique challenges and communication preferences. Research shows that personalized communications yield higher payment rates than generic reminders.

Plus, while collection agencies may succeed in recovering some payments, their fees typically range from 25% to 50% of the total amount. In the end, providers still forfeit a substantial portion of the revenue they’ve already earned. Sometimes, despite both internal and external collection efforts, some accounts remain uncollectible. In that case, your only option may be to write them off as expenses, which impacts your bottom line. 

Though a patient collection agency or early out vendor may offer a more proactive solution, they also overlook individual patient circumstances. While some patients can only pay small amounts on payday, others just need help understanding their bills.

The Advantages of Outsourcing Patient Payments

Though bad debt is inevitable, working with a patient payment outsourcing partner like Millennia can help you reduce it as much as possible. When you hand off your financial operations to specialists who handle everything from billing to payment plans, you reduce your organization’s administrative workload while improving collections and the patient experience.

1. Advanced Expert Support

These vendors provide access to a team that specializes in managing the financial interactions between your organization and its patients. They bring expertise in healthcare collections and are dedicated to helping practices enhance their operations and achieve better results.

Providers must adhere to two key regulations when collecting payments — the Health Insurance Portability and Accountability Act and the Fair Debt Collection Practices Act. By outsourcing your organization’s patient payments to a third party, you benefit from their regulatory knowledge to stay compliant.

Beyond their healthcare finance experience, patient payment specialists offer advanced technologies. At Millennia, we’re continuously innovating and implementing new features to give our clients all the benefits of upgraded capabilities without the complexity or added costs.

2. Improved Collection Rates 

Outsourcing patient payments can improve resolution rates through more proactive and personalized collection efforts. For example, our Patient Payment Solution uses engagement intelligence to determine the best approach for each patient. By analyzing when and how to contact patients, you can implement customized strategies that deliver more revenue. Providers working with Millennia recover two to four times the national average in patient payments, while seeing self-pay revenue jump by 100% to 300%.

While not every patient can manage immediate payment, that doesn’t mean they’re unwilling to pay. Many simply need more flexibility to meet their financial responsibility. Another advantage of working with a third party is gaining a dedicated team focused on helping patients explore their options. Our patient support specialists serve as an extension of your practice and will work to resolve issues affecting individuals’ ability to pay, such as offering payment plans.

For substantial medical debt — especially bills over $1,500 — offering smaller installments makes payment more achievable for patients. Even though these plans extend the payment timeline, they can significantly increase your chances of collecting outstanding balances. With the newest feature on the Millennia Patient Payment Portal, patients can set up Self-Service Payment Plans. This way, they can choose from all your organization’s preestablished extended payment schedules.

3. Reduced Administrative Burden

Managing medical billing and collections in-house can overwhelm a provider’s internal resources. By partnering with specialists, an experienced team equipped with advanced technology can take over time-consuming work such as sending statements and following up with patients. This relieves your team of the administrative burden and frees them to focus on more complex tasks, from claim management to denial appeals.

With administrative costs already consuming over 40% of healthcare spending, chasing payments can drive this number even higher. Efficient collections are crucial — working with a third party can help optimize this process and reduce your organization’s cost to collect. For example, our clients have decreased their collection costs by 50%.

4. Enhanced Patient Relationships

Outsourcing patient payments improves the patient-provider connection as these specialists understand that collections require empathy. They use streamlined systems to offer clear, easy-to-understand communications through text, email or phone, ensuring patients feel supported through their preferred channels. Thanks to this professional yet compassionate approach, you can preserve positive relationships, even during more challenging financial conversations. 

Vendors like Millennia give patients more control over their bills through flexible digital payment options and personalized support. This highly specialized focus on service creates a more convenient payment process, enhancing the overall healthcare experience while relieving financial stress.

5. Targeted Reporting and Analytics

Your organization’s data can tell you a lot about collection performance. By analyzing self-pay trends and identifying gaps, you gain insights that help you make more informed decisions to strengthen your patient revenue cycle.

While your electronic medical record and practice management systems offer visibility into initial payments, they can’t track post-insurance collections, representing almost 58% of bad debt. Millennia’s specialized reporting and analytics bridge this gap.

Our Patient Payment Solution integrates with your existing systems, using analytics, artificial intelligence and machine learning to reveal opportunities for better engagement and collection strategies. With clear and comprehensive dashboards that display key metrics like payment activity and resolution rates, it’s easy to spot trends and adjust your approach.

6. Better Turnaround Times

When managing healthcare accounts receivable, every day counts. The longer balances remain outstanding, the less likely providers are to collect the full amount. Prompt processing and follow-up are essential for collection success. 

Outsourcing can significantly accelerate your patient payment revenue cycle. Though some payment delays are inevitable, Millennia has a proven track record of improving collection speeds. Our clients collect over half of payments within 30 days post-statement, while the industry average hovers just below 30%.

The Impact of Effective Bad Debt Management

Healthcare leaders often rely on conventional cost-cutting strategies like service and staffing reductions to improve margins. However, effective bad debt management can drive impressive results without causing disruptions or compromising care. 

Even small reductions can create significant revenue opportunities. Plus, since bad debt and charity care have increased by 32% since 2022, the impact of improved collections is more important than ever to help boost your organization’s financial stability.

The benefits of better debt management extend far beyond your organization’s bottom line. You’re able to deliver more value to patients by:

• Expanding service offerings. 
• Growing your clinical team. 
• Upgrading facilities. 
• Enhancing care quality. 

These improvements create a positive cycle. In addition to boosting operational efficiency, patients will enjoy a better experience overall.

Improve Collections With Millennia’s Patient Payment Solution

For over 10 years, Millennia has facilitated over 1 billion patient interactions to help healthcare providers achieve better financial outcomes. Drive results while enhancing the patient experience with our Patient Payment Solution. Schedule a consultation today to discover how Millennia can help you reduce bad debt.

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