Author Topic: Pricing a Medical Collections Business  (Read 931 times)

bpark73

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Pricing a Medical Collections Business
« on: November 10, 2016, 02:04:44 PM »
I see a lot of post about starting a medical billing business but can't find much info about starting a medical collections business.

I'm interested in knowing how med collections company's price their service? What is the percentage from receivables? Any other pricing structures like additional flat pricing?

Does anyone have any experience or information in this field?

Thank you
Brian

PMRNC

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Re: Pricing a Medical Collections Business
« Reply #1 on: November 11, 2016, 07:11:57 AM »
Starting a collection agency/service is a bit more involved than a medical billing company. First, you may not be able to charge % of revenue depending on state laws. Next, there is the FDCPA which has to be followed TO A T. In some states, you may even need to be bonded and bonds can be pretty expensive. There are even states that require the bond even if you are not collecting the money but just merely acting as a collection agency requires a bond.

Again, a lot more involved. Then there is the biggest hurdle, doctors when turning over accounts usually look for collection agencies that have been in business a while so it can be really hard to break in a new business.
Linda Walker
Practice Managers Resource & Networking Community
One Stop Resources, Education and Networking for Medical Billers
www.billerswebsite.com

bpark73

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Re: Pricing a Medical Collections Business
« Reply #2 on: November 16, 2016, 01:20:36 PM »
Linda thanks for the good info. I was aware of the surety bond but didn't realize it would be more difficult than starting a billing company.

What about a scenario where I'm NOT an "official" collections company instead I'm simply making calls on behalf of the provider and collecting money on their behalf as if I was just an extension of their in-house office staff? Would this still require a bond and other formalities?

Also if a collections company doesn't charge by % then by what other means can they charge their client?

Thank you
Brian

PMRNC

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Re: Pricing a Medical Collections Business
« Reply #3 on: November 16, 2016, 01:33:10 PM »
Many billing companies provide what is called "Soft collections" which would be what you describe, follow-up with patient statements, etc. Some states require the Mini Miranda be on all correspondence. And there are SOME states that still require a bond if you are just acting as collection agency. You def want to look at state law and of course FDCPA.

As for pricing there are various other ways, I'm in NY where % is prohibited for physicians/providers so many charge by the account or by service. It depends. There are various methods. If you are doing billing along with collections you can create an all inclusive flat fee and base it on an hourly rate. If your just going to provide collection remedies, well then it might be wiser to setup as a full collection agency and go all the way because you'll have less competition that way. Most if not all billing company already provide soft collections/follow up with patient accounts and balances so you would have a tough time with just that service.

Linda Walker
Practice Managers Resource & Networking Community
One Stop Resources, Education and Networking for Medical Billers
www.billerswebsite.com

bpark73

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Re: Pricing a Medical Collections Business
« Reply #4 on: November 16, 2016, 02:02:39 PM »
Thank you Linda,

My initial thinking was to start by doing soft collections for providers who do not use a billing company. My hope was to get in the door this way and eventually convert to doing full billing services for them. After reading your response I'm now wondering if it's just easier to start with a billing service instead. I'm in CA btw.

Thanks for the info
Brian

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Re: Pricing a Medical Collections Business
« Reply #5 on: November 16, 2016, 05:57:23 PM »
I think that is a better option because most billers in-house are already providing the follow-up and patient billing plus inquiries. Having a full practice management business might be the better option.
Linda Walker
Practice Managers Resource & Networking Community
One Stop Resources, Education and Networking for Medical Billers
www.billerswebsite.com