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Collection Agencies: Who They Are. How The Do It, and What To Expect


When determining the profile of prospective collection agencies, consider the following criteria:

  • Number of years in business: You want to deal with an organization that’s stable and has a good reputation. Usually, if a company has been around awhile, you can expect it to be around a while longer. Anyone can go into business, but to stay in business, an entity must be effective and continually satisfy its clients. It’s nice to give upstarts a break, but it’s smart to put your receivables in the hands of professionals with a proven track record.
  • Verifiable clients as references: Success in one type of collection activity is not always a guarantee in another. Ask for and check out medical references within specific fields. If you are told that the client list is “confidential,” you’re looking at a bright-red warning flag. You have a right to ask a company’s references whether they’re satisfied with the agency’s results, and whether the agency is easy to deal with.
  • Insured, bonded and licensed: Requirements for these vary from state to state, from totally unregulated to completely restricted. An experienced agency will know the requirements of your state and be able to document its compliance.
  • Experience and maturity of principals and key employees: Meet or call individuals who actively run the business and collection activities, and make sure they can describe the collection process and answer questions unique to your business. If the collection officer or manager does not know the difference between the technical and professional components of a medical bill, keep looking. Use your experience to evaluate their experience and trust your instincts.
  • Efficient and professional-looking workplace: We’ve seen agency workplaces ranging from “kitchen table” operations to modern high-tech environments. When possible, visit the agency as part of your investigation. If a visit isn’t practical, ask for pictures or send an emissary who lives near the candidate agency. Usually you can determine at a glance whether a workplace at least looks efficient and professional. It surprises us how many clients blindly enter into business relationships.


You should also determine a prospective company’s modus operandi. Here’s a check list of what to investigate:

  • Customized collection strategies: Ask for specifics. At what balance level is there a “letter only” procedure? When are the telephone calls deemed effective? What is the frequency of the letters and telephone calls? Timing should shift with the size of the balance and large balance strategies. Are collectors knowledgeable people who understand the medical business and have the ability to sympathetically overcome objections with effective rebuttals?
  • Rebilling and insurance follow up: Despite your best efforts, certain patients will not furnish you with the correct information to submit an insurance claim. Frequently, these individuals will make the effort to resolve matters when they hear from a collection agency. Make sure any agency you are considering has procedures in place to deal with these issues.
  • Expert knowledge of FDCPA: The Fair Debt Collection Practices Act (FDCPA) is the legislation that regulates collection agencies and others in the collection industry. The agency must assure you that all of its people are trained in FDCPA regulations and an active program exists to ensure compliance. Documents should be available as proof of these activities. The agency should also be able to answer any questions on your in-house efforts. Additionally, the agency should be willing to place a “hold harmless” clause in its contract with you, giving it responsibility for any lawsuits against you resulting from its activities.
  • Knowledge of the medical field: Whether it’s anesthesia, surgery, OB/GYN, radiology, etc., collection personnel should not be surprised by any medical terminology introduced by the patient in the course of a collection conversation. The agency should be able to explain the service rendered and how the bill came to be.
  • Quality of correspondence: Collection letters and other documents from the agency should be professional looking, effective and legally compliant. The quality of the printing and paper stock should have a subtle but significant effect on patient responses. Unprofessional looking letters are less effective and reflect poorly on your practice.
  • Computer technology: The agency’s computer system should fully support the efforts of the collectors. Features such as online credit bureau inquiries and motor vehicle department searches should be demonstrated. In addition, collection procedures should be fully automated and paperless, and accounts should be prioritized and routed to collectors by management driven priorities. The agency should also demonstrate systems controls and eliminate overlooked accounts, missed follow up dates, out of schedule conditions, etc.


Finally, you’ll want a clear idea of what to expect from an agency. Use this list below as a guide:

  • Reports that meet your needs: You should expect placement confirmation, account status reports, inventories, and remittance statements to be clear, timely and easy to understand.
  • Prompt monthly remittance: Your agency should be willing to commit to a schedule of regular monthly remittances. Each payment should be reported with name, agency account number, date of payment receipt, the commission rate, and the apportionment of each payment to client and agency.
  • Periodic analysis: Request examples of the agency’s self-examination that it is willing to share with you. Insist on key data such as percentage of collections to placements both cumulative and by month of placement. The agency’s ability to make collection forecasts and projections also indicates that it has a strong grasp of its business.
  • Easy communication: When you have a question, the agency should respond immediately. In addition, you should have direct access to supervisors, managers and officers of the agency. The agency should also exercise good judgment in determining the level at which you need to communicate.
  • In-house support: An agency should be willing to support your in-house collection efforts even if such support could reduce its future placements. Also look for an agency that offers news bulletins, training material, seminars and in-house evaluations.

Overall, be sure to find a company that delivers results and matches the image you want to project. By doing so, you’ll be cool; calm; and, best yet, collected.