Credit Bureau Data

Collection specialists work in the call center at Credit Bureau Data, Inc. in La Crosse. Erik Daily

Customers’ unpaid bills and bad debt are just a part of doing business for Winona Health, like a lot of other companies. Also like a lot of businesses, the health system is turning more and more to third-party debt collection agencies for their training, resources and expertise in handling bad debts.

“We prefer not to have anybody end up in a collection scenario,” said Winona Health Chief Financial Officer Michael Allen. “But it does happen, and it does happen a lot.”

Allen said that more than 3 percent of Winona Health’s revenue is lost to unpaid bills and bad debt, a number higher than most businesses due to the fact that Winona Health can’t and won’t refuse services to patients. The amount of bad debt also is rising as changes in the economy and health insurance have placed more of the burden for payment on patients.

Allen said Winona Health does offer what is called charity care, reducing or eliminating the bill for low-income patients. But any lost revenue has to be made up some other way.

“Bad debt gets pushed onto the rates we charge insurance companies and affects pricing for those who do pay their bill,” Allen said.

Also changing is how the health system handles its bad debt.

A few decades ago, Winona Health did much of its collection work in-house, Allen said. Only after unpaid bills had been left for a very long period of time did they involved a third-party. But with the costs of doing business increasing and the regulations on debt collection becoming tighter, Allen said Winona Health uses third-parties more and more.

“Collections are what they do full time,” Allen said. “They have all these technologies and resources we don’t have.”

Winona Health works with Credit Bureau Data, a collection agency headquartered in La Crosse. Along with unpaid bills, the health system also contracts with the collection agency for pre-collection services, like setting up payment plans and sending out notices for late bills.

“We try to be negotiators rather than debt collectors,” said Credit Bureau Data business development manager Tom Weber. “That’s been a key driver of our success.”

Weber said the company offers an economy of scale for businesses. Instead of having to hire a full-time staff to handle collections, Credit Bureau Data can offer the same services at a lower cost, freeing up staff and resources to do other things.

Larry Geier, president of regional collection agency Tri-State Adjustments, also said collection agencies offer increased expertise to businesses. All of the staff at Tri-State are trained in debt collection and the laws that regulate the industry.

“Our expertise is collecting debts,” Geier said. “Our collectors are extremely professional. We’re able to protect their public relations.”

Both Geier and Weber agreed that bad debts and unpaid bills are hard financial hurdles for businesses, especially small ones.

“A bad account can be extremely devastating,” Geier said. “It’s lost revenue, and they could be on the hook for products and materials. Bad debt is never good for business.”


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