Here is a situation that I recently heard about, perhaps your practice has or could face something similar.
Our office has a family that recently declared bankruptcy and we had to write off over $1,700. Now the family would like to return to the practice after a two-year absence. They were never dismissed from the practice and all collection efforts were ignored. Is the office obligated to take them back as returning patients? Is it in the practice’s best interest to alter their financial policy for this family to prepay only? We want to care for the family but don’t want to lose money again.
Here’s what we know:
When a patient files for bankruptcy they must list each and every person to whom they owe money. This means the practice must follow proper billing protocols to be listed as a creditor. During the bankruptcy proceedings, each of the people or businesses owed money are notified that they are being listed as a creditor. Each business will be given an opportunity to attend the creditors’ meeting for the person filing bankruptcy. If the practice did nothing either by non-participation in the meeting or by not responding to the notification, they have accepted, through default, the non-payment of the outstanding bill. This money is gone with no way to collect it.
In this situation, we would recommend different collection protocols so this situation was less likely to happen in the future and we would recommend that all money owed for services performed be collected by prepayment or, at a minimum, at the time of service.
Before starting NEW treatment you must have a financial discussion with the patient; be understanding yet clear regarding the office payment policies for this family. Require they sign a financial agreement for each new treatment plan. This will be your documentation if it should happen that you must go to small claims court. The family may have better cash flow now as everything has been zeroed out in the bankruptcy, assuming they still have employment. In your favor is the fact that they cannot file for another bankruptcy for another seven years.
Open communication is a must. Don’t treat this as the 1000-pound gorilla in the room and choose to ignore the obvious. For most patients and families this would be an embarrassing situation and by coming back to the office they will expect communication. Communicate your policy and how you will handle their situation.