Should We Charge Patients Interest If
They Don't Pay Their Bill?

Clients often ask us this question. There is no "right" answer, but there are a lot of issues to consider.

First, consider the bad PR it may cause if things are not handled properly. Since most practices don't charge interest, yours may get a bad rap for doing so. Prepare the staff for unpleasant patient phone calls.

Second, think about how you will manage the process. Does your computer track interest charges? Can you run a report to monitor payments? If you can't automate, managing the interest policy will be administratively cumbersome. Will someone on the staff have the time to do it properly, and will it be worth it for the amount of money you'll likely collect?

Third, think about the enforcement of this policy. If you charge interest for overdue balances, you must hold everyone to the same policy. Exceptions can't be the rule. Make sure you are comfortable with that.

Drawbacks aside, some practices will decide that charging interest is right for them. If you are one of these practices, cover your bases before you implement.

1. Contact your attorney or an attorney from the state medical society. Most states regulate interest charging under the state banking law, and there are also statutes from the Federal Truth in Lending and Fair Debt Reporting Acts. Before making any decisions, listen to what an attorney has to say. Doing so can help you avoid penalties and fines associated with violating state and federal guidelines.

2. Add the interest policy to your financial policy. New patients shouldn't be surprised to find interest charges on their bill. Inform them up front.

3. Be smart about how you introduce this change. A well-written letter to the existing patient base will go over better than adding interest to the bill of an established patient who isn't expecting it. Disclose what you plan to do ahead of time so established patients aren't caught off guard.

4. Automate the process. Most practice management systems have interest collection functions. Be sure the staff are trained how to use them.

Do You Charge Interest on Past Due Patient Balances?

Tell us how you do it and what has worked. We'll put responses in this Idea Box column