Medical Debt in the United States: A Complex Financial Burden
American society has embraced the concept of debt, with people comfortably taking on significant mortgages, car payments, and multiple credit cards, often with substantial credit limits. However, there is one type of debt that few are fond of or adequately prepared for – medical debt. While elective cosmetic procedures may garner more acceptance, medical debt remains a challenging financial burden that many individuals find difficult to manage.
Recent data reveals that a staggering 30 million Americans currently have at least one debt in collections, highlighting the pervasive issue of debt management in the country. With over 300,000 people working in the debt collections sector, the industry has become fiercely competitive. However, challenges have arisen as discounts and profits on debt have markedly decreased over the last decade due to improved debt recovery performance and heightened demand.
Yet, the landscape may undergo significant changes in the near future, given the onset of a potential new recession and the potential impact of the end of Obamacare. These factors could reshape the dynamics of debt collections, creating new opportunities and challenges for both debt collectors and debtors alike.
In the realm of third-party debt collection, the Healthcare sector stands out, encompassing nearly 40% of all collected debt—forming the largest share among various types of debt, reaching tens of billions of dollars.
Startlingly, over 20% of US households bear the burden of unpaid medical debt, making it a prominent concern. In fact, unpaid medical bills are believed to be the leading cause of bankruptcy in the United States, as reported by KFF.
However, the foremost challenge that medical debt collectors encounter lies in successfully contacting and connecting with debtors, constituting a staggering 90% of the battle. Overcoming this hurdle proves crucial in effectively managing and recovering medical debt.
While some individuals may have faced bankruptcy and currently lack the means to settle their medical bills, there exists a strong willingness and necessity to honor these debts. Surprisingly, data reveals that 63% of those with health insurance who encounter difficulty in paying medical bills are prepared to utilize a significant portion, if not all, of their savings to meet their obligations. Additionally, 75% have made sacrifices in their daily lives, cutting back on expenses such as clothing, food, and other essentials to fulfill their debt obligations.
Many are going to great lengths to repay their medical debts, including seeking extra employment, borrowing from family and friends, or even opting for more modest housing arrangements. The stakes are high, as some are realizing that failure to repay could lead to denial of services even by local hospitals and emergency rooms.
Evidently, the desire to pay back medical debts exists strongly among debtors. Thus, the main challenge in collecting more on medical debts lies in implementing effective strategies to address communication barriers and facilitate a smoother debt recovery process.
In some cases, individuals may not genuinely owe the debt due to billing errors or overcharges, leading them to ignore collectors regardless of the situation. However, for the majority, there is a strong willingness to pay, and they will make sincere efforts to do so. When collectors can establish a warm and empathetic connection with debtors, the chances of reaching a favorable payment arrangement are significantly higher.
Two primary roadblocks hinder successful communication in this context. Firstly, it proves incredibly challenging to engage individuals long enough to deliver the message, as getting them to answer the phone remains a persistent hurdle. Secondly, inexperienced debt collectors and call center representatives sometimes adopt an overly assertive approach, inadvertently discouraging future communications. The toll of dealing with the wrong audience and the stress of meeting quotas with limited responses can contribute to this frustrating situation. Finding effective solutions to these obstacles is essential to improve the overall effectiveness of debt collection efforts.
Achieving successful communication with the right tone and message can lead to positive calls and favorable outcomes.
Traditional efforts to contact debtors have been met with considerable failure. Some collectors have attempted to reach debtors up to 15 times a day, but this approach has proven to be highly inefficient, wasting significant time, labor, money, and energy. Outbound calls, emails, direct mail, and social media stalking have all fallen short in achieving the desired results.
Ringless voicemail technology revolutionizes medical debt collections by providing a powerful tool to deliver well-crafted and consistent (or personalized) voice messages directly to debtors’ phones. Since the phone doesn’t ring, there is no risk of the message being bounced or ignored. Almost everyone listens to their voicemails, ensuring that your message reaches its intended audience when they have the time and inclination to respond. Unlike traditional methods, ringless voicemail ensures a clear and objective message, independent of the emotions or moods of call representatives. This technology simply works much more effectively, offering a game-changing approach to medical debt collection efforts.
As a result, collection staff only engage in conversations with live inbound callers who actively seek to resolve the situation. These inbound calls differ significantly in dynamics from outbound attempts. Consequently, the outcomes of each call vary greatly, with a higher likelihood of successful resolutions when dealing with willing and engaged debtors.
Additional advantages include:
- Lower operational costs
- Reduced labor costs
- Enhanced team happiness and higher retention levels
- Attractiveness to new hires
- Increased collection amounts from existing customers
- Improved profit margins
Moreover, implementing ringless voicemail technology increases the likelihood of debtors’ friends and family members also paying their collection accounts. Shared experiences, such as similar accidents or health issues, often lead to a “two or three for one” effect, benefiting both debtors and collectors alike.
One of the most overlooked advantages of this technology is its potential to acquire more profitable new debt accounts. Utilize ringless voicemail to reach out to those individuals who have debts requiring collection. By employing ringless technology as a marketing tool, you can enhance your collection results significantly. With all these benefits at your disposal, it’s certainly worth giving it a try.
