What does patient balance recovery cost? Contingency pricing explained
Most patient balance recovery is priced as a percentage of what is actually recovered, with nothing owed if nothing comes back. The percentage rises with the age and difficulty of the accounts. The number matters less than what it is a percentage of.
How contingency pricing works
You place accounts. The vendor works them. Each month you receive a statement of what was recovered and the vendor's fee, which is an agreed share of that amount. If an account pays nothing, it costs you nothing.
The vendor carries the cost of the work and the risk of failure. In return, its fee on a successful account is higher than an hourly rate would be. For accounts you had stopped expecting to collect, that trade usually favors you.
What moves the rate
- Age. A 60-day-old balance is typically easier to resolve than a two-year-old one. Recent accounts carry lower rates.
- Size. A greater volume of eligible accounts results in a lower fee.
- What has already been tried. Accounts that have been worked by a prior vendor are harder for a secondary vendor to work.
- Type of work. More involved collection strategies require higher costs.
- Placement frequency. Consistent placements allow costs to be offset across multiple placements, as opposed to one-off batches.
The percentage is not the price
Two vendors quote you 20% and 30%. The first recovers 10% of what you place. The second recovers 25%. On $100,000 placed, the first sends you $8,000 and the second sends you $17,500.
What you take home is the recovery rate multiplied by what you keep. Compare vendors on net dollars back per dollar placed, over the same kind of accounts, and the rate takes care of itself.
Seven questions to ask any vendor before you sign
Put these to every vendor you are evaluating, including us. The answers vary more than the headline rates do, and they are where the real cost hides. Our own answers are in the next section.
- Percentage of what? Of payments received, or of balances "resolved"? Only the first is money.
- Do you charge on insurance payments you find? If the vendor discovers coverage and the insurer pays, is the rate the same?
- Are there fees besides the percentage? Setup, monthly minimums, letter costs, portal fees.
- Who holds the money? Do patients pay you directly, or does the vendor collect and remit?
- What happens to accounts you can't resolve? Returned to you, and when?
- Is there a charge on payments that arrive after I end the contract?
- What does the monthly report show, account by account? Ask to see one.
How we answer them
We charge a percentage of what we recover, agreed by category in writing before we start. No setup fee, no monthly minimum, and no charge for the analysis, onboarding, portals, or monthly review. If we recover nothing, you owe nothing. Our remit shows the fee and the rate on every account.
Questions
Is a flat fee ever better?
For very recent, high-volume balances, a flat fee per account can be cheaper. For anything older, contingency keeps the vendor's interest tied to yours.
Why would a vendor want a minimum?
To cover its costs on small clients. It is a sign that small clients are not who the vendor is built for.
