How to Select a Collection Agency

I have seen a noticeable number of dentists post requests on social media, such as:

“Can someone recommend a good collection agency?”

This request prompted me to write this article on how to select a collection agency. My goal is to help educate, motivate, and empower the dental community to make informed decisions regarding this important topic.

Avoiding the need for collections

Selecting a collection agency is similar to purchasing a car or a toothbrush: not all are created equal. Mainly, it depends on the customer and the options that are most important to them. Factors to consider are cost, risk versus reward, patient relationships, staffing scenario, and maintaining your brand.

It is essential to acknowledge that using a collection company is merely treating symptoms of a system of dental billing that is not working at optimal efficiency. Here are some quick tips you can implement today as a dental office manager to reduce your reliance on a collection service.

PROPERLY PRE-ESTIMATE INSURANCE PORTION AT TIME OF SERVICE.
This can be performed internally, or you can hire a person or a company to do this for you, but it needs to be done properly.

HAVE AN ARRAY OF THIRD PARTY FINANCING OPTIONS FOR PEOPLE WITH A SPECTRUM OF CREDIT SCORES.
Consider using in-house financing with guaranteed methods of payment in certain circumstances.

TRAIN AND EMPOWER YOUR STAFF TO COLLECT AT TIME OF SERVICE.
If there is not a cultural expectation to be paid at check out, all your efforts will be after-the-fact. If patients are walking out expecting a bill in the mail, you are creating the problem.

Choosing the right collections agency

Regardless of your dental practice’s efficacy, you will inevitably have AR on your books. If you are outside your comfort zone, it could make sense to hire a company to help you with the collection of these balances.

Here are some prudent questions to ask a potential partner. Keep in mind: the answers are not necessarily definitive, but knowing them may be sufficient in your evaluation.

IN WHICH STATES ARE THEY LICENSED OR BONDED?
Knowing this will help you determine if their geographical coverage is sufficient. If your collection company is not authorized to collect in a neighboring state, that can be damaging. Choosing a nationwide company—like mine—ameliorates this problem.

DO THEY HAVE A PROVEN PROCESS?
Do they show you what is communicated to your patients? If they are vague, it’s possible they may be “winging it”; this can be a liability. Ultimately, how they communicate with your patient is a direct reflection of your values. The last thing you want is for your patients to leave negative reviews if they are treated unfairly.

HOW IS THE COMPANY COMPENSATED?
Are they working strictly on a commission basis? If so, it may be initially attractive; however, there is no promise for performance from either party, which often leads to disappointment.

Also, if they are working with a large client (with high volume and large balances), whose accounts are they going to call first? Skimming is a big problem in our industry; it’s nothing malicious; it just makes good business sense. Dental patient balances are generally considered smaller from our perspective.

TECHNOLOGY.
Do they integrate with your software? How do you provide them with data? Are they HIPAA compliant? If you have substantial AR, not only will your staff resent you because of the laborious data entry—the reality is, it won’t get done.

Look for a partner that can seamlessly sync with your practice management software. If you need help in this area, we can do it in about 15 minutes.

DO THEY SPECIALIZE IN THE DENTAL FIELD?
If they work in other industries, how comprehensively can they understand your business? I take pride in the fact that I specialize in working with dental practices. It’s what I am passionate about, and it is my core competency.

ARE THEIR CALLERS LOCATED IN THE U.S. OR OVERSEAS?
Are you willing to allow your patients to be called from someone in another country for cost savings? Cost is significant, but customer service, public perception, and value is of bigger importance.

DO THEY REPORT TO THE CREDIT BUREAU?
Many collection companies insinuate but do not follow through. Why is it that every financial company reports when a debt is unpaid, but most often, dental practices do not?

DOES THE COMPANY OFFER FIRST PARTY BILLING SOLUTIONS?
Will they work as an extension of your practice like a virtual assistant to your team? If you can get the majority of your accounts to pay before 90 days, you reduce the problem of having to turn people over to “collections,” and the patient is more likely to stay loyal to your practice.

If you wondering how to select a collection agency, I hope you found this article helpful. Do not hesitate to reach out if you need further guidance.

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Meet the Author

Andy Cleveland, “The Dental Accounts Receivable Ninja,” has been in the revenue cycle space for 20 years. Andy works with individual and group practices, optimizing their patient accounts receivable process to ensure maximum profitability and efficiency, frustration reduction, and patient retention. You can check him out www.andycleveland.com

He is the creator and Sensei of www.DentalPracticeNinjas.com, a free resource designed to help dentists find reputable partners to help with other crucial functions in their practices.