Key Strategies Followed By Healthcare Services to Recover Debt.
Healthcare is a noble service. It is different from banks and other financial institutions that serve customers only when they are rich enough. Healthcare services need to extend the best services to the customers in good faith. They cannot follow stringent procedures as followed by financial institutions to recover the medical bills from the defaulting patients. So, how they recover debt and continue businesses? Let’s find out.
Accounting is the spine of any business including healthcare. In-house accountants of healthcare services need to take care of debts and also settle them in such a way that they do not prove to be a thing of concern. This is how healthcare services take care of their debts.
- Writing off the bad debts for tax purposes
There are situations when the patients are not able to pay for the treatment they take. The first step is to send reminder and then repeat the process till the patient or his family responds. In some cases, reminders do not result into receiving payments and the bill continues to build up. Thus, to make the business process smooth and to maintain clear picture of income, the accountants categorize the unpaid bills as ‘bad debt’ and write it off against income to seek deduction in the taxable income.
- Making use of collecting agencies
Healthcare agencies appoint collecting agencies and instruct them to work within the ethical framework to recover money from the patients. They have to ensure that the collecting agencies do not have a notorious track record and that the agencies will not use force or coercion to recover debt from the defaulters.
The recovery agencies and healthcare service provider work in close coordination and the latter ensures that the actions of the agency do not reflect badly on its image. If this happens, they may lose the tax exemption benefits and so no instance of complaint from the patient is acceptable.
- Suggesting bill payers of debt consolidation programs
When the hospital has lost all hopes of receiving the payment, they resort to suggesting healthcare financing schemes to their patients. This is their last hope of recovering the unpaid bill from the patient or his family. These debt consolidation support providers offer temporary relief to the defaulter and give the debtor the bill amount as unsecured loan. This arrangement works quite similar to the credit card bill payment where a minimum due amount is set per month so that the debtor can escape penalty and continue to repay this loan as per the convenience.
Thus, hospitals are able to reduce their bad debts with the support of these debt consolidation and management services and offer temporary relief to already distressed patients in return.
Healthcare business can run smoothly only if there is a separate cell for bill recovery management. This aspect of extending services to needy cannot be ignored and at the same time, the healthcare providers need to maintain the capital position to stay in business. Thus, they use every trick possible to protect themselves from unforeseen loopholes.
