Medical Chronicle invited us to write an article focusing on debt collection in the healthcare industry. Our company has a great deal of experience in the aforesaid sector, as it forms a large part of our clientele. We hope to share some practical advice to improve your recovery rate on outstanding debts.

Be proactive, act swiftly and partner wisely to minimise the financial impact of outstanding debt on your business.

There has been an exponential increase in non-paying clients in all business segments of South Africa. The current economic climate, combined with the high unemployment rate, is most likely to blame. Unfortunately, we have no control over these external factors and can only deal with the aftermath (in the form of non-paying clients) to the best of our abilities. So, what can you, as a medical practitioner, do to improve your debt collection results?

Be proactive

As Stephen King said: “There’s no harm in hoping for the best as long as you’re prepared for the worst.” Being prepared starts long before prospective patients/clients enter your establishment. In most instances you will provide your patient/client with a form of some sort, gathering all their personal, financial and medical information. This form should also state the terms and conditions of your institution. The patient/client signs the document, agreeing to these terms. Adding specific clauses to this agreement may ease the collection process dramatically.

The new buzzword in all industries is “POPI” or “POPIA”. What is POPI/A? POPIA refers to the Protection of Personal Information Act. In short, this legislation aims to protect consumers’ personal information. Although the legislation has only been partly implemented, it is estimated that it will be in full effect by mid-2021. It is therefore important to know what POPIA expects of you as the “responsible party”.

To be future proof, a clause granting permission for the collection and processing of the patient’s/client’s personal information (for a specific purpose like debt collection etc), would be a wise addition to any form. To compliment the aforesaid clause, it is advisable to add a clause consenting to the tracing of the specified individual if it is ever needed.

It is imperative to explicitly state that should the patient/client be handed over for collection, they will be personally liable for all costs and fees (including legal fees) relating to the recovery of the outstanding debt. This acts as an extra precautionary measure should the matter ever end up in court.

The importance of internal credit controls cannot be overstated. These controls are set in place to prevent accounts from being dormant more than 90 days. Ensuring that you have confirmed contact numbers and addresses are key for successful debt collection for both you and your future debt collection partner. A credit control strategy is always advisable. It can be as simple or as complicated as you deem necessary. For example, communications (telephone calls, emails, text messages etc) sent to debtors around payday, reminding them of their outstanding accounts, can prompt them to make payment.

Act swiftly

The prescription clock starts ticking the moment the debt becomes due (the date payment should have taken place). What is prescription? This is not your usual medical prescription you issue to patients/clients for their medical needs, but rather the time period allowed to act against a debtor.  Prescription can be interrupted (restarted or stopped) in various ways, for example receiving payment, an acknowledgement of debt or issuing summons.

If prescription is not interrupted, the debt will usually prescribe within three years of it becoming due. It is also noteworthy to mention that collection success rates are always better on more recent accounts. If you intend listing a specific debtor at a credit bureau, you should take note of Guideline 002/2014 issued by the National Credit Regulator regarding the requirements for listing medical accounts.

Partner wisely

If your efforts to collect your outstanding debts have failed, it is time to contact a third party for assistance. Choosing the right partner to serve your specific needs is critical in determining the effectiveness of your debt recovery. Do thorough research on the party, contact their existing patient/clients for references and do not shy away from asking questions. Once you have decided on the third party, you will usually be presented with a service level agreement to formalise the arrangement. Take special note of the duration of the contract, how fees and costs are calculated, cancellation clauses, if it is a sole mandate, and how often payments will be received from this party.

Outstanding debts are unavoidable. Be proactive, act swiftly and partner wisely to minimise the financial impact thereof on your business.

*Disclaimer: The information in this article does not constitute professional advice and is general in nature. Contact your relevant professional for assistance.

AUTHOR: Hugo Homann, Legal Advisor: VeriCred Collections