Time to Pony Up: The Secret to Collections Letters that Work [2 Free Templates]

Thanks to mobster movies, we all fear the repercussions of unpaid debt. And while receiving a past due notice isn’t quite the same as a meathead pummeling you, both methods of money collection deliver swift blows. After all, bills often fall into the land of overdue not because we were lazy, but because we didn’t have any money.

Flip it to the collector’s perspective, and people not having money to pay their bills is a big problem. After all, how can businesses keep their doors open if they, too, don’t have any money? Again, thanks to the mobster movies, the collectors immediately go the stern route. “The assumption is that the debtor is blowing the practice off,” Brandon Betancourt explains on Kareo’s blog. “And our response as collectors is to intimidate and scare the debtor into paying us. In essence, the letter is saying, pay us or else!” But what’s effective for mobsters isn’t necessarily effective for medical practices—a point Betancourt makes by posing the following question: “But does [this approach] work?” Power Your Practice offers a similar take on the matter: “When it comes to patient collections, many practices think: the more aggressive, the better. Patients need to know that you mean business. The thing is, if you use threatening language, you also run the risk of putting people off.” So, if your private practice has patients with overdue accounts, you know you need to collect—but now, you’re probably wondering how to go about it.

Pro tip: Check out this blog post to learn how to reduce your chances of ever having to send a collections letter in the first place. Hint: It involves collecting payment at the time of appointment—even for past due accounts.

Now, before I launch into my collection letter how-to, let’s first examine why patients let bills become overdue.

Why Patients Fail to Pay on Time

As Power Your Practice reports, “According to a McKinsey survey of retail healthcare consumers, 98 percent of patients want to pay their medical bills,” but one of these reasons forces them to delay payment or avoid paying altogether:

1. They’re confused about what they owe or puzzled by the bill itself.
2. They can’t afford the bill.
3. They actually missed the bill or simply forgot about it and never received any reminders from the practice.

Of course, there are those pesky two-percenters who simply don’t want to pay their bill and are resisting your demands. An aggressive letter certainly won’t work for these folks; as Power Your Practice explains, “Not even a medical collection letter, no matter how masterfully drafted, is going to convince this group. Sending them to a medical collection agency remains inevitable.” But heavy-handed communications won’t work for the patient types listed above, either. They need your help—not your aggression. And you certainly don’t want to burn bridges with current patients by making them feel bullied.

How to Write a Collections Letter that Doesn’t Offend, But Gets You Paid

1. Be helpful and empathic.

Patients with overdue accounts need to pay up; your business depends on your success in collecting those funds. So, how do you get that point across without making “final warning” threats to turn delinquents over to a collections agency? You need to walk the fine line of urgency without intimidation. Power Your Practice recommends this line: “We understand that you may be experiencing financial difficulties; however, we rely on payment from each one of our patients to continue providing quality medical care.” In addition to putting yourself in their shoes, Betancourt urges practices to acknowledge that medical bills can be tricky and to offer help deciphering the bill: “...if [the patients] have questions, they should ask us. We are here to help.”

2. Present just the facts.

Leave collections agencies and attorneys out of the conversation. Detail how much the patient owes and for what services. Then, explain the patient’s payment options. And as Physicians Practice notes, “Accept all forms of payment.” Also, in the spirit of presenting the facts, write concisely and clearly. You’re not specifically mentioning attorneys, and you shouldn’t write like one, either.

3. Send more than one letter, but not more than three.

When a bill hits the 30-days-past-due mark, send your first letter. In it, take the “friendly reminder” road, and set a new payment due date. If you don’t receive a response by that date, give the patient a call to let him or her know you’ve yet to receive payment and to answer any questions he or she might have regarding the bill. If you still have past-due accounts at the 45- to 60-day mark, send another letter. At this point, Power Your Practice recommends a firmer approach. For example: “‘If we do not receive payment or hear from you by November 1, 2015, we will need to consider taking alternative action.’”

{{inline-form}}

If you send a third letter, that’s where you should use the word “collections,” says Physicians Practice. “The third letter should be stamped FINAL NOTICE and inform the patient that his [or her] account is being sent to collections. If he [or she] still doesn’t pay—send him [or her] to collections.” (See sample warning and dismissal letters here.) Keep in mind, though, that this is only one route. Not everyone recommends entrusting a collections agency, as Power Your Practice explains here.

The movies have taught us that mobsters can actually be complex characters—and their efforts to “collect” from those who do them wrong often have calamitous consequences. For this reason, the best advice I can give is to avoid the past-due collections process altogether. Still, if you find yourself with delinquent accounts, suppress your inner Al Capone, and instead, follow the above recommendations. You catch more flies (i.e., happy patients and paid accounts) with honey than you do with brass rings.