Q: What percentage of collections should we expect from the company that handles our bad debt collection early out? Our company has SP and SP after insurance from day one—which will be in their bucket for 120 days prior to rolling over to bad debt collections, of which they will have for an additional 120 days.
Is there a suggested guideline for this? Should the expected percentage not be more than 8 to 10 percent of the early out? Or is the early out company not being accountable? I know this varies somewhat on a regional basis, but I’m looking for an average to help us in the review process.
A: A fairly reasonable number is that the bad debt collection agency should not collect more than 5 to 7 percent of dollars turned over from the early out program. We recommend that a hospital use a different collection agency for bad debt versus early out. That way both companies have incentives to collect as much as they can.
Two Forum experts answered this question together: Dawn Boyd, director, managed care contracting, The Godbey Group, Irving, Texas, and Dan McAffee, senior managing director, payor contracting and reimbursement strategy, The Godbey Group.
In addition, Financial Resources Group, a strategic partner, provided the expertise on this question.