Why Credit Reporting is a Simple, Yet Effective Tool for Minimizing Bad Debt!

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Oftentimes prospects will ask us, “Why should I outsource collections?” or “What advantages in recovering my patient’s debt do you have that I don’t?” And we always answer these questions in the same way: Our advantage as a professional healthcare collection agency is we simply have the tools, resources, and industry expertise required to achieve the recovery rates our clients are targeting. For example, one of the most effective tools we have as a collection agency and data furnisher is the ability to report patient debt to the major credit bureaus.

Credit history. Financial conceptBut why is credit reporting such an effective tool in chiropractic debt collections?

Authorizing your collection agency to report your delinquent patient debt to the major credit bureaus is effective in two ways: For preventing patient delinquencies, and for resolving patient delinquencies when they do occur. But before we get into how credit reporting can assist in those two areas, first lets discuss why having a debt reported to the major credit bureaus is a bad thing in the first place.

When a person fails to pay a bill or a financial obligation and the debt is reported to a credit bureau, the person’s credit score is negatively impacted (decreased). Banks, credit card companies, and other lenders (like healthcare providers) use credit scores for determining an individual’s creditworthiness or potential risk as a borrower. Credit scores are also used to determine if a person will qualify for a loan, at what interest rate, and at what credit limit. So for these reasons, most people (like your patients) seek to have the highest possible credit score – so as to minimize their risk as a borrower, to have an easy access to credit for purchases like buying a new car or home, and to minimize the interest rate they pay on those loans.

So if you are partnered with a collection agency that has the ability to report medical-related debt to the major credit bureaus, don’t be afraid to use this as an effective tool for collecting your accounts receivable! On your billing statements, inform patients that if a bill goes unpaid, it will be sent out for 3rd party collection and that all delinquent debts will in turn be reported to the national credit bureaus. Explain the value in maintaining a strong credit score and the negative consequences that accompany a poor credit report. You’ll be surprised at how effective this can be for motivating your slow-paying patients to pay and for minimizing costly write-offs.

Chiropractor examining a charming woman's backAnd for those patients that are already in major arrears on their accounts, make sure your collection agency informs these patients that their debt has been reported to the credit bureaus and that this will have a negative effect on his or her credit score. Just the idea of maintaining or repairing one’s credit score is often all the incentive a person needs to pay off an unpaid bill. So keep this handy tool in mind when determining the right course of action for recovering patient debt.

But just remember, in today’s highly regulated healthcare environment, there are many unique requirements imposed on data furnishers and those companies who report medical-related debt. So make sure you partner with a collection agency with strong compliance management processes in place and only uses credit reporting in full accordance with the law.

YOUR TURN: Does your chiropractic collections partner already report your patient debt to the national credit bureaus? Have you found this to be an effective tool for managing your accounts receivable? If yes, tell us about your experience! If not, why do you think it hasn’t been effective? We want to hear from you!


No Legal Advice Intended:  This communication is for informational purposes only and is not intended, and should not be taken, as legal advice on any particular set of facts or circumstances.  This communication does not create an attorney-client relationship between you and I.C. System, Inc.  You should contact an attorney for advice on specific legal issues.


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