More change is afoot in the collections space, with the three main credit reporting agencies, TransUnion, Equifax, and Experian changing the way they will report medical debt. This presents a critical challenge and opportunity for those focused on revenue cycle management. Much like with the case of the changes due to Regulation F, a customer-centric and empathetic approach to debt collection will be an important part of weathering this latest storm.
In a live conversation with Sameer Maini, Chief Information Officer at State Collection Service, we discussed the impact of these changes on medical debt collection companies as well as how compassionate collection practices will continue to play an important role in shaping the future of the industry at large.
The medical debt landscape in the U.S.
Americans had a reported $88 billion in medical debt as of June 2021, making up 58% of all third-party debt collection tradelines, according to the Consumer Financial Protection Bureau. Once the second phase of the change in reporting goes into effect, the number of debts reported will be significantly reduced, with bills lower than $500 becoming ineligible to be reported at all. Debts that do qualify will not be eligible for reporting for one year.
Medical debt most often rises from unexpected circumstances – whether injury or illness – that ultimately outstrip a patient’s ability to pay. Under- or uninsured patients are even more heavily impacted by such debts, putting the already financially vulnerable in a more challenging position. Regardless of any changes in the industry, these facts alone are a key driver for empathetic collection practices.
The shifting face of revenue cycle management
Employing an empathetic collections strategy means that organizations may have to consider a different approach. For one, those performing debt and payment collection need to have a stronger emphasis on empathy throughout the process. While empathy is often a topic medical providers receive training on, back-office staff might not be as familiar, making intentional empathy a huge coaching opportunity.
As an organization, one way to connect with consumers on a more compassionate level is by considering the channels through which they can reach you. The recent changes around Regulation F have already presented an opportunity for organizations to provide more convenient conversation channels, including digital and self-service forms of communication, that remove barriers to helping people pay.
It has already been established that direct calls and voicemails are less effective during the collection process so it’s no surprise that, in addition to being more convenient, these types of discrete conversations seem to be the preferred mode of communication for those looking for customer service. Text-based interactions between consumers and businesses reached 2.7 trillion in 2020.
Make no mistake-empathy training is not strictly for humans. Organizations need to train their artificial intelligence and machine learning bots as well. This can be done by programming bots and IVRs to use language that evokes feelings of empathy. For example, phrases in response to common questions can be updated to use language like, “Thank you for bringing this to my attention” or “I’m sorry you’re facing this issue.”
Improving empathetic collections
A Forrester study found that a customer service phone costs an average of $15.50 per interaction. By contrast, the cost of a text chat ranges between $1 to $5 per session.
Considering the impending decrease in liquidation, lowering the overall cost of communicating with debtors will help retain more margin. “At State Collection Service, we’re re-evaluating our complete technology stack. We have a portal, SMS, outbound calling, and an intelligent virtual agent (IVA). They’re all very silo-ed. We’re investing deeply into mapping the customer journey to ensure we can keep tabs and metrics on the expense of collection,” shared Sameer. Simply put, by tracking what works, you can be sure that you’re communicating in a way that aligns with the patient’s everyday actions thereby increasing the number of recovered payments.