A great collections agency will improve your accounts receivable management, increase your collection rates, and help you collect the most money that you’re owed, right? If you’ve selected the right healthcare collections agency that manages to do all of that while also maintaining or even improving your patient-provider relationships, you’ve surely partnered with a winner, correct?
While all of these outcomes are desirable when it comes to ensuring that your healthcare collections agency is doing a good job, there are more tangible ways for you to evaluate the agency’s performance. You should definitely pay attention to all of these aspects of your collection results. But how do you best evaluate your healthcare collection agency, anyway? We’re glad you asked.
Establish key performance indicators (KPIs) to monitor and assess your healthcare collections agency’s performance.
KPIs are critical numbers that reflect the status of your collections. Common KPIs to measure include Age at List (AAL), Collections Cost, Promise to Pay (PTP), and Collection Effectiveness Index (CEI). In the following steps, we’ll define these metrics so you know what they mean and why they’re important indicators of your collections agency’s success.
Check for a low AAL and a high CEI.
An Age at List (AAL) consists of the average number of days an account has been past-due. When it comes to healthcare debt collection, collecting in a timely fashion is essential to maximizing the collection. As time goes on, you are less and less likely to collect on the outstanding account. If your collections agency is effective, they will maintain a low AAL, which means that they’re collecting sooner than later. On the other hand, a Collection Effectiveness Index is the amount of monies you’ve received in a specific period compared to the amount of receivables you’ve gotten in the same period. A higher CEI percentage means that you’ve recovered more total receivables in the given time period.
Aim for a high PTP.
A promise to pay percentage reflects the number of individuals your agency has secured promises to pay from during their outbound calls. You obviously want your PTP to be as high as possible because having a plan in place to collect is the reason why you hired an agency in the first place.
Keep the Collections Cost down.
Think of the Collections Cost as a simple ratio of how much you’re paying your healthcare collections agency to collect for you. Rather than the total amount they’ve collected. A lower Collections Cost means that your agency is more efficient and providing more value for every dollar you’re paying them. This is integral to keep your margins at an acceptable level while maximizing your collections. Compare your collections cost before outsourcing with the agency’s collections cost to see how much more (or less) money you are making as a result of hiring outside collections help.
For more collections agency KPIs, this article is a great guide.
Are you looking for a healthcare collections agency to partner with that improves your patient-provider relationships, frees up some of your staff’s time, and increases your collections? Frost-Arnett has over 125 years of experience collecting with empathy, honesty, and integrity. We help you receive the money you’re owed so you can focus on the work you do best. Contact us today at 1 (855) 287-7043 to learn how we can help improve your accounts receivable management.