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With Medical Debts Rising, Doctors Are More Aggressive About Payments

WebMD News from Kaiser Health News

By Jenny Gold

Tue, Apr 15 2014

ALEXANDRIA, La. -- Mid State Orthopaedic and Sports Medicine Center is hard to miss. The practice’s new, 30,000-square-foot building is marked with an enormous sign along one of the main roads in this central Louisiana city of about 48,000 people.

In the elegant, high-ceilinged interior, the practice’s 11 doctors see about 300 patients daily to bring in $10 million in revenue each year. It’s a highly successful operation. But when practice administrator Spencer Michael started here two years ago, the business was struggling with a common problem: collecting payments from patients.

The recent economic downturn and the increasing use of high-deductible insurance plans “has driven patients to want to put off paying their bills,” Michael explains. Whether it’s for a hip replacement or a broken bone, he frequently sees patients on the hook for a $3,000 to $5,000 deductible.

“We have to be able to be the creditor,” says Michael. “We’re essentially a bank at that point.”

Between 2008 and 2012, multispecialty practices saw their bad debt go up 14 percent, according to a survey by the Medical Group Management Association (MGMA), a trade organization for doctor practices. That’s money that practices were owed but couldn’t collect. Some of them have begun to change their billing strategies to combat those debts, says Ken Hertz, a principal consultant with the MGMA Health Care Consulting Group.

“In the past someone at the front desk would say, ‘Would you like to pay today?’ Because the simple answer to that is ‘Well, no! If I can walk out without paying, I’m walking out without paying!’ ” says Hertz. “Today, it’s more of ‘Mr. Smith you have an outstanding balance. How would you like to pay for that?’ ”

One option for the doctors is to send patients who don’t pay their bills to collection agencies faster. Practices generally used to wait a full 180 days before taking action. But that could mean patients who were well past the treatments didn’t feel the import of settling the debt, according to Hertz . “That’s six months. I’m feeling a lot better. Six months? Beat me up, try to collect from me,” says Hertz. He is encouraging practices to send patients to collections after six to eight weeks instead.

Another option is to collect the payments before a procedure even happens – an approach that’s proved particularly effective at Mid State Orthopaedic.

On a recent morning, patient Gayle Jackson-Pryce, 63, stopped by the practice to have her shoulder checked.

“I was on a business trip and I picked up my luggage and immediately thought, ‘Ooh, did I tear something?” she recalls. 

Dr. Michael Leddy tells her she needs surgery on her shoulder.  As she leaves the exam room, she passes by the billing desk, where she pays her $50 copay for the office visit. 

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