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Monday, December 29, 2008

To send to collections or not, that is the question.

The decision to send people to collections or to simply write off bad debt is a difficult one to make and should not be taken lightly.  You and your managers need to balance the difficult economic times that we all face with the business's own needs for cash flow.  In addition, sending people into collections is unpleasant and I think it just feels wrong.  As a human being, I can understand that difficult choices that many people face in deciding where to spend their hard earned yet meager wages.

Despite these challenging times, most people pay their bills conscientiously and feel ashamed at not
having the ability to do so.  Even people who can not pay the bill in full are eager to pay in installments, even if it is a small amount per month and others are happy to accept a settled amount and pay it on the spot.  Most people just don't like to "stiff" another person. 

However, there are others, a very few, who brazenly withhold
payment as if they can do it with impunity.  They answer their phones and simply refuse to pay or they say they'll call back some other time and then never do.  Others say that the check is in the mail when it is not.  A very few even write bad checks.

They are the deadbeats and
these type of people plague every business, even
medicine.

I recently, 2 years and 9 months into my own practice, have decided to outsource my deadbeat accounts to a collection agency.  This was prompted by several events:
  • I have been seeing a patient I know to be a deadbeat around town, eating out in restaurants and having Starbucks coffee.
  • I have had several people simply refuse to pay their co-insurance because I did not "do anything"--other than provide them with information and advice.
  • I've had a few people become very belligerent to my staff as they tried to collect moneys.
In my practice, deadbeats owe me in excess of $10,000 dollars.  That is a lot of money.  I need that money to pay my staff and my vendors and my bills.  Though I only came to this decision after several years and some glaring examples of "how not to act when you owe money", I have finally come to grips with the notion that sometimes you just need to resort to a collection agency.

I just never thought I'd have to do so.

Dr S