At 02:34 AM 7/2/98 -0400, David L. Arkin wrote: >I'd like to respectfully disagree with Michael Sachs regarding receiving >payment from families who have declared bankruptcy. We have had many >families in our practice either have their accounts turned over for >collection or declare bankruptcy, who subsequently have gone on to pay >off their bills and become steady, paying patients. There's quite a difference between collections and bankruptcy. Families who've been sent to collections have been given several opportunities to call or write and make at least a token payment in anticipation of working out a payment plan and/or discount. When they at least contact us we try almost anything to avoid sending them to collections. After enough letters and phone calls have been ignored it's a fair assumption that the family has no intention of paying the bill. This may not always be the case (maybe they've moved or changed phone numbers), but I'd say it is far more often than not. I've only had one family who went to collections and then came back - and it was made clear it would be on a cash only basis. There are different types of bankruptcy. Someone can correct me if I'm wrong, but when a family declares bankruptcy I believe they're permitted to keep a certain amount of cash and certain possessions to live on, then the rest is liquidated to pay off the (usually numerous) creditors. In a Chapter 11 bankruptcy, there will be some assets distributed to the creditors, though it may be pennies on the dollar. In Chapter 7 (which is what I've usually seen), there's basically nothing left and the creditors will be paid nothing. In general, each creditor is paid based on their individual percentage of the total amount owed to all the creditors involved. So if a family owes $100,000 to all involved and their bill to the provider is $500, the provider will receive 0.5% of the total assets liquidated for distribution. However much the court assigns to be paid to the provider is all that can be collected - the rest of the debt is wiped clean. Of the dozen or so families who've gone this route since I've been in practice, I've never collected any of the amounts owed and none of the families have ever returned to the office once the proceedings were done. >You have to help these families (and all your patients) control their >expenses by not letting them "string you along". In other words, you >have to stay on top of collections, not let people run up huge bills in >the hope they'll eventually pay you. Debts should not get "old" before >you try to collect them. Many families in our practice have had accounts >turned over for collection for amounts as small as $25 or $30, if no >payment has been made for more than 90 days. This represents a >manageable sum for a struggling family, one which they are more likely to >pay off. Afterwards, we take them back on a cash-up-front basis. > I agree that we shouldn't let bills get too large, but, especially with newborns, it can be tough to avoid or anticipate. A typical example would be a new family assigned by an OB. Two hospital visits, 5 office visits, a couple of sets of vaccinations, and suddenly the bill is several hundred dollars. The insurance has been billed and the family has been paying their $5.00 co-pay. Now the denial notices come in from the insurance company - the premiums haven't been paid, the child wasn't covered, and the family is never seen again. >Of course, in unusual situations, we have provided services gratis. But >we always put a time limit on such situations at the beginning, such as 6 >or 12 months. When an established family is going through tough times we all certainly want to help. But it's tough to distinguish the folks who truly need help from those who will take advantage of you. I know I've heard families cry poor, yet their kids are in $12,000/yr private schools and the family rides around in a brand new Lexus. Every time they come in (frequently with 2 or 3 kids to be seen) they run up $50 or $100 or more in charges and make a payment of $25. Before too long there can be a $500 or $1000 balance. A family truly going through tough times will have a really hard time paying it off even if they want to, and a family taking advantage of you will change providers as soon as they realize you'll not put up with their stall tactics any longer. >In short, we have certainly lost patients and money due to bankruptcy, >but the situation is not as bleak as you might think. I agree it's not totally bleak and staying on top of collections will help prevent the problem in the first place. In any business a certain amount of receivables will always be written off as bad debt. There are a couple of aspects to medical providers which make it a little different than most businesses. First, almost all services are provided on credit, with the assumption that either the patient or an insurance company will eventually pay the bill. Also, legally, someone can come in and has to be seen even if they were to say to our face "I'm never going to pay this bill!" Unless a letter discharging the family had been sent one month earlier, to not see them could be considered abandonment. Then morally, most health care providers in general make finances secondary to medical care. I think most of us have to be pushed pretty hard before discharging a patient due to non-payment. I'd wager a guess that if different professions were compared, medical offices wait a lot longer than most other businesses before resorting to this last step. Michael Sachs, M.D. General Pediatrician