Success is the Cessation of Inefficiency

March 4, 2010 at 12:03 pm Leave a comment

One of the greatest impediments to a successful B2B relationship is leadership entrenched in the status quo.   In looking around at a variety of industries, the companies with the greatest success tend to be those who resist this temptation and adopt a change management philosophy of continual process improvement.  

When discussing bottom line opportunities with prospects, the most common response received is that the internal process is working.  Yet annually American companies leave hundreds of billions of dollars in missed collection, subrogation and unpaid judgments on the table.   When this is pointed out, most managers will admit that they have some shortcomings that could be alleviated with more resources.  

The reality is that in all industries, debt collection and subrogation often take a back seat.   In a recent meeting with the CFO of a fairly affluent county I was told that they simply didn’t have the resources to chase down money.   In another meeting, a manager said that they recognize there is opportunity but recouping this money would bring unwanted attention from above.    A Midwest hospital indicated that they write off millions in co pays and deductibles because of a preconceived notion that nobody has the money to pay. 

With bottom lines suffering like never before, the last thing a tax payer, shareholder or board member wants to hear are excuses.   Without a doubt collecting money can be tough, especially for novices.   As with any profession there is a learning curve and a specific skill set that ensures success.   However, many organizations opt to bypass those who possess these skills for cheaper labor.

The old adage “you get what you pay for” is particularly true for that business model.   Creativity and innovative solutions are the key to collecting money.   In the arena of insurance subrogation, understanding statutes, contract law and case law are the difference between winning and losing cases; directly impacting a bottom line.   In the medical industry, a keen understanding of eligibility and the ins and outs of aggressive, up front collection of deductibles can make or break an organization.  

If this is so basic then why do so many struggle?   Simply stated, the status quo.   If an organization suddenly realizes a 30% lift to their bottom line someone above will start asking questions.   If an external business partner provided the solution to finding this money then often times there is a legitimate fear of being kicked to the curb by those on the inside who have not been maximizing bottom line recoveries.  

When asked about this by company leadership my response is often not what they expect.   Pointing the fingers at the existing process is just part of the problem with the bigger problem being a lack of expertise.   In many organizations those least suited to collect money or pursue subrogation are placed into those critical roles.   Because of the complexities  associated with effective collecting techniques, many in management positions lack the collection savvy required to hit on all cylinders.   Making matters worse or pesky little regulations like the FDCPA that can result in legal costs and fines against those not in compliance. 

There is certainly a time and a place for handling things within ones internal workflow and this holds true in collecting money.   Somewhere between 20 and 30% of collections are going to provide a level of difficulty that will impede internal processes.  This is what should be outsourced to experts who have the resources to understand and effectively pursue money.  

By adopting this type of hybrid approach a business is virtually guaranteed of dramatic bottom line increases, provided they leverage a high quality business partner with a proven track record.    Contrary to popular belief, now is a good time to streamline your process and engage in improved collection practices that will give those who do a competitive edge in their industry.

 ___________________

Chris Tidball is the author of Kicked to the Curb and former executive for multiple industry leaders in the financial industry.   As Vice President of Sequoia Financial Services he provides some of the nation’s largest and most respected insurance carriers, hospitals, utilities and government agencies with innovative solutions to maximizing their bottom line.  He can be reached at chris@christidball.com.

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Entry filed under: Debt Collection, Insurance, Subrogation, Workflow Optimization. Tags: , , , , , , , , , , , , , , , , , , , .

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Chris Tidball is a claims and revenue management consultant and author of the "20 Essential Rules" series of self and organizational improvement books. You can ask him a question at chris@christidball.com

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