Medical Practice Debt Collection

It seems that the number of lawyers advertising as specialists in medical malpractice are increasing every day and that the media is obsessed with finding areas to fault healthcare practitioners around every corner. Television shows dedicated to responding to the smallest hint of medical error airs every week. But who looks after the rights of the healthcare practitioners?

It seems that the public is poised, expecting healthcare practitioners to fault. But what about the time, knowledge and resources invested in patients by healthcare professionals? What about the hours spent by the qualified professionals to heal and to save?

What happens when the very patients that have consumed the time, knowledge and resources of the healthcare professional don't settle their accounts? There are no medical shows on TV about healthcare practitioners that can not pay their expenses because patients are not paying their accounts or the healthcare industry having to write off millions of Rands in bad debt.

It is with this in mind that Medical Practice Debt Collection, in association with Spies, Bester and Potgieter (SBP), registered attorneys, wish to offer our members a range of debt collection services. Our commitment to service is your peace of mind, as all debt collection services are performed by SBP, ensuring that your patients are treated with the same level of respect as when they entered your practice.

Increasing the recoverability of accounts receivable, will increase profits as well as cash balances effectively bettering the financial position of the healthcare practice.

Applying for a debt collection quote is made simple by applying online - simply register an account with www.mpconsulting.co.za, free of charge, and apply for a debt collection quote online or navigate to www.mpdebtcollection.co.za for an application.

At Medical Practice Debt Collection we prefer to focus on the rights of healthcare professionals not their errors. Isn't it time that someone starts looking after the health of your practice?

The management of bad debt within a medical practice

One of the main risks associated with the management of any business and not just a medical practice, is the differentiation between revenue and the realisation of revenue into positive cash flow. What must be noted is that revenue does not necessarily constitute positive cash flow and will in many cases end up as a corresponding expense in the income statement through the write-off of accounts receivable that have become impaired due to the inability of debtors to pay their accounts.

This has been noted as a global issue and has not just affected the South African economy and healthcare industry but also that of the United States of America and many European Union members. The accumulation of revenue in accounts receivable has been noted as a growing concern in the healthcare industry and has been carried as an asset on many a balance sheet up until the pressures of interest rates and high debt levels started to catch up with the ability of patients to generate sufficient income to settle all their accumulated debt, as required by creditors.

The impairment of accounts receivable has had an adverse effect on the ability of the healthcare industry to generate positive cash flow from their current assets (outstanding patient fees) and has led to most of these balances being expensed in the income statement and having exactly the opposite effect on bottom line profits, than the initial delivery of healthcare services had when the income was first accounted for.

A mind shift should be made to understand that when debt is concluded to be "bad" and written off, it is as good as writing the debtor (revenue capitalised as an asset due to the legal right to recover the debt) off twice. The reason for this is that the healthcare professional will now effectively have made a loss due to the opportunity cost of time that was spent on a patient that now can not pay his bills. The healthcare professional does not only lose the revenue from the patient that can not pay his account but also loses the potential revenue from another patient that could have been consulted during that time.

Revenue can not have a positive impact on a practice if the revenue is not realised into positive cash flow. The focus on revenue has been over emphasised by management of companies for many years, but due to the results of the international economic climate change, management has noted that focus should be shifted to the realisation of assets and the net results of the cash flow statement, rather than the down right assessment of the increase in revenue.

The expenses encountered through the management of debt is also an item that adds its toll to bottom line profits through the appointment of debtors clerks, credit controllers and administrative personnel which in turn drives human resource expenditure.

The effects of bad debt can be traced through the income statement right through to the balance sheet and may even catch up from prior periods.

It is with this in mind that Medical Practice Debt Collection wishes to apply the proverb "A bird in the hand is better than two in the bush" to bad debt and debt collection - it is better to recover a percentage of your accounts receivable, then carrying it as an asset up until it is required by International Financial Reporting Standards to be written off completely and realising a 100% thereof to the income statement as an expense, due to the fact that it has become unrecoverable.

The basic warning of "A bird in the hand is worth two in the bush," is that one must take care when assessing the financial position of your practice and not to place all your confidence in the ability of debtors to settle their accounts fully. If you are holding a bird in the hand, you have your meal for the evening. You can take that one bird, and be well fed (by managing bad debt you are able to realise a large portion of that debt to positive cash flow). If instead you let it go to pursue two birds (leave the debtors unmonitored and ungoverned) you've spied in a bush (allocated to the balance sheet hoping for realisation), you may catch neither, and wind up hungry for the night (a large portion of your accounts receivable balance may end up unrecoverable and as an expense).

This proverb points out that by passing up the opportunity to recover a large portion of doubtful receivables for a more promising possibility of realising the entire amount in the event that they should one day pay; you also run the risk of losing both the asset and the promising possibility of profits.

It is with this in mind that Medical Practice Debt Collection wishes to assist healthcare professionals in realising patient accounts receivable to positive cash flow and help prevent the assets realising as expenses.

What differentiates Medical Practice Debt Collection from other debt collection agencies?

Medical Practice Debt Collection is the product of a consulting company operating in the South African healthcare industry (Medical Practice Consulting) and a law firm specialising in debt collection (SBP).

The services have been based on the experience gained by SBP through the performance of debt collection but to the needs of the healthcare industry, as noted by Medical Practice Consulting, during the performance of consulting services.

The main fact that differentiates Medical Practice Debt Collection from other debt collection agencies is the active involvement of registered attorneys throughout the entire process of debt recovery as well as the collection thereof. This vastly improves the turn around time of bad debt recovery, due to the fact that cases do not have to be outsourced to a third party law firm, should legal actions be required - collections are administered by the very attorneys that would take legal action on behalf of you, the healthcare professional.

This also saves on debt collection costs, due to the fact that no additional attorney fees will be payable. All fees whether for litigation or claims is included in the debt collection rates charged by Medical Practice Debt Collection, due to the joint venture with SBP.

You and your patients will thus not have to deal with a number of different parties that usually constitute the process of debt collection and there will be no time delay between the process of recovering the debt and having to go to legal action, should this be deemed necessary, due to the fact that all processes will be administered by SBP Attorneys.

All MPDC clients also receive access to the MPDC website - www.mpdebtcollection.co.za whereby they can track the status of the process online. This means that you as healthcare professional will be able to ascertain the level of completion within the debt collection process at any time, be it for individual patients or for groups handed over for collection. Clients also receive e-mail updates regarding the level of completion of the debt collection process from MPDC at the start of each phase.

How does debt collection work?

Debt collection is the process whereby an agent (the debt collector) is contractually appointed to recover debt on behalf of a principal (the debt holder). Medical Practice Debt Collection will thus attempt to recover debt on behalf of the healthcare professional, who is the legal owner of the accounts receivable. The agent is paid a service fee for services delivered, upon successful recovery of the debt.

At Medical Practice Debt Collection we believe that the only time that a cash outflow in terms of an expense can be justified is when the expense results in a larger cash inflow. This is why our fee structure is based on this principle - if we can't recover debt on your behalf, we won't charge for any service. This fee structure is designed to hold a 0% risk for the healthcare practice. The reasoning is that in the event that debt has aged and has become "bad" the amount will be expensed to the income statement due to unrecoverability which will reduce profits and will not have a positive effect on cash flow. In the event that Medical Practice Debt Collection would not be able to recover any of the debt, the healthcare professional would be in the same position as prior to the debt collection agreement, but won't be worse off, due to the fact that no fees will be charged for the delivery of services.

In the event that the debt collection does succeed, the healthcare professional will realise higher profits and positive cash flow.

Debt collection fee structure

Debt collection fees are charged on a no - success - no - fee base, by Medical Practice Debt Collection. At Medical Practice Debt Collection we are so confident in our ability to assist you, as healthcare professional, to improve the realisation of bad debt to positive cash flow that we will carry the risk and all expenses associated in the debt collection process and you will only be charged a fee in the event that we are able to recover the debt. This means that you won't pay a cent if we can't realise the debt to cash flow.

This means that you as healthcare professional will incur no additional cash flow commitments should the process be unsuccessful. You will only be billed for services, as a percentage of bad debts recovered, upon receipt of cash. It is clear from our fee structure that the services delivered by Medical Practice Debt Collection can only have a positive effect on the cash flow of any practice. This is due to the fact that the fees charged (cash outflow) can never exceed the value of the debt recovered from patients (cash inflow).