Third party healthcare collection agencies – it’s time to take a deeper look

The age-old thinking that third party collection agencies have an incentive to collect as much as possible, because of a contingency fee arrangement may not be as true as one thinks. There is a tipping point where a third party collection agency’s margins begin to erode. If they are in a champion-challenger, collection competition, there is an incentive to collect close to or slightly over the competitive agency, so collection agencies can keep their collection costs down. Third Party Collection agencies should be rewarded by the results of their performance, not by an arbitrary assignment. The challenge is, how do you know your third party collection agency is collecting at their maximum potential? The best way to determine this is to utilize a validated scoring tool which identifies the collect-ability by account segment. This is the only true way to determine the potential performance of a third party collection agency portfolio and should replace the alpha split placement methodology. Once the client has a verifiable trend baseline, it becomes less important to employ a champion-challenger collection agency competition. Consider new tools for the management of bad debt portfolios by checking out scoring technology options.

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