Some thoughts on outsourcing collections

The other day, a member of the social networking group on LinkedIn posted an interesting question to a healthcare discussion group: "What do you think is more cost effective: to hire new staff members to handle your accounts receivables/delinquent accounts or to outsource that job to an agency with a proven record in health care?"

In the posting, Pamela Rachil of collections firm Transworld Systems went on to suggest that hiring one collector at, say, $45,000 per year to handle accounts receivable, delinquent accounts and insurance resolution was unlikely to get the job done. That person, she suggested, could only work, say, 20 accounts a day, and if your hospital had 5,000 accounts to address, plus new accounts, that collector had no chance of keeping up.

On the other hand, Rachil said, her organization could work 5,000 accounts far more effectively, given their greater level of resources, and would charge less than $45K plus bennies.

The gauntlet thrown down, another poster challenged Pamela, asking whether hospitals could be confident that agencies like these were meeting state laws getting tougher on collections practices, and what incentive an outside agency had to be kind to struggling patients. (After all, if nothing else, if you're a local hospital collector, these are people who live in your community.)

Pamela said that by giving hospitals control of which accounts go into collections--and when to take them out--and how aggressively to pursue accounts that are in collections, hospitals could be pretty comfortable that patients were being treated right and that no laws were being broken.

My question to you, readers, is this: Where do you stand on the in-house versus outside collector question? Do Pamela (and competitors') arguments that it's better to outsource collections to make sense to you? If not, why not? What worries do you have about outsourcing--price, professionalism, control, something else?

Please write in and let me know. If I get enough responses, I'll summarize them in a future column. - Anne