The Reason Your Collection Letters Are Not Effective

Most patient collection letters I’ve seen come off very threatening and standoffish. They are written to intimidate. For example, they’ll say, “Final Notice” or “…your account will be sent to collections if you don’t respond...” The notion one is trying to convey is, you better pay now or else.

At our practice, we sent out letters with these aggressive words. And most of them got ignored. So what did we do? We sent another letter but this time, with stronger words like  2nd Notice or Final Notice… you know, to get them to shake in their boots.

Again, most of them were ignored. My guess is that at best, 1% of parents would respond to them. I think we offended more parents than those that sent payment.

Clearly, this was the wrong approach. Not to mention highly counterproductive. I wondered if there was a better way.

I thought about the reasons someone would disregard  2 or 3 statements (plus another 2 or 3 collection letters) from the doctor’s office? These 5 reasons came to mind:

1. Genuine Oversight – This is the crowd that forgets, or procrastinates  or miss places our correspondence.
2. Overwhelming Feeling – This is the group of people that have so many bills, thus so overwhelmed, that they take the out of sight, out of mind approach.
3. Confusion – These are the parents that don’t understand their bills. So they set the statement aside with the hopes to call one day to find out what the deal is, but never calls. Out of site, out out mind creeps in until next billing cycle where the process starts again.
4. Can’t pay the balance outright – Since this group can’t pay all their bills, they ignore the ones that aren’t on the priority list, like for example, cable TV.
5. Disingenuous Oversight – These are the professional debtors. These are the people that never had intentions to pay. These are the people that intentionally disregard anything that they don’t want to pay.

If we slice up your A/R into 5 equal parts, and we trust that these are indeed the reasons parents haven’t paid, we’ll find that 80% of our patients aren’t deadbeats. Consequently, one is doing more harm than good when you consider that only the people that are in group 5 (or 20% of the people that owe you) are the deadbeats.

The 80% or more of your parents just need help.

The problem is, the stern letters are written under the premise that everybody that owes you is a deadbeat. Not to mention, people have a harder time paying people they don’t like. Sending them a nasty letter simply stirs the pot. At the very least it adds a bit of friction to the relationships between the practice and the parent.

And for those that the stern letter is truly intended for, they don’t really care. Nothing is going to motivate them.

How do we solve this problem?

With this in mind, I took a different approach in writing our patient collections. My focus is still wanting patients to pay their bills, but instead of threatening them with legal action, or telling them we are going to send them to collections, I wrote the letter with the intent of offering help.

Here is an excerpts that we use in our letters:

If you have a question regarding your bill or need help reading your insurance’s EOB, we’d be happy to help. We understand medical billing is not always simple to understand, but we can help. 

By lowering our guards a bit and reaching out rather than growing aggressive with every letter is simply  a better and more human approach. In other words, kindness is the approach.

The letter continues with this:

We understand that many of our patients experience financial difficulties. If this is the case, please let us know so we can assist you in making budget payment arrangements. 

The most stern part of the letter is written like this:

We want to help you fulfill your commitment without causing undue hardship, so please do not hesitate to contact our offices.

Lastly, we personalized each letter with the patient’s PCP. Most people really like their pediatrician. And the thought of sticking them with the bill may be enough to persuade the “good” debtors to give us a call.

Here is an example of the wording we use:

Your prompt attention is appreciated. Dr. « Insert_Patient_ProviderName» would appreciate it very much.

We found that our response went from 1% (at best) to around 25 to 30% by merely changing the tone of the letter.

It is worth noting, that the sooner one starts sending the letters, the better results you will have. If you wait 90 or 120 days before sending out the “friendly” collection letter, your chances of getting paid are less. The friendly letter, however, is very effective in the beginning stages of the collection process.

Before the day is over, take a look at your collection letters and see how you can come across as caring, compassionate and empathetic (which all pediatricians are) instead of the opposite. I’d be willing to bet someone else’s money that you will see better results.