Case study: A/R collection strategy leads to $120k in recovered payments

June 3, 2021

Recently, Vachette was hired by a laboratory client under new management to review their outstanding accounts receivable (A/R). The goal was to assess the full scope and realistic collectability of their outstanding payments, while at the same time analyzing the patients into various categories based on outstanding balances, days aged, etc.

With nearly $500,000 in total outstanding A/R, the client initially expected to recover only about 10 percent of the balance. However, we provided three alternative collection options, each taking into account a different focus to produce the most desired outcome, while also enabling us to collect a greater percentage of the outstanding payments.

Those included:

  • Offering to accept a rate below 100% of the outstanding balance.
  • Determining which balances to pursue/write-off based on a tiered approach.
  • Accepting payments based on the Medicare Physician Fee Schedule.

The root of the issue is that much of the balance was more than 240 days old, and many patients with the highest balances had not previously received a statement for the services performed by the lab. With this in mind, we had to assess how to bill these patients without upsetting them with the shock of a bill they may not have been aware of.

After presenting the three alternative collection options, we then reviewed the impact of those options on the following areas: Patient experience, physician experience and realistic collectability. Essentially, which collection strategy would allow the lab to collect the largest percentage of its outstanding balances without damaging its reputation with its patients or physicians?

After implementing a hybrid approach preferred by the client, we were able to collect more than $120,000 — nearly 2.5 times what the client and their biller initially thought possible!

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