How to Write & Improve Medical Collection Letters: Best Practices, Examples and Templates

How to Write & Improve Medical Collection Letters: Best Practices, Examples and Templates

Your message’s tone might matter more than the message itself. Uncover expert secrets to optimizing your medical collection letters. Explore essential elements, empathetic approaches, and the benefits of using a patient portal.

Inside this article:

• What to include in a patient collections letter
• Best practices for medical collection letters
• Medical collection letter templates
• Using ChatGPT and AI to help with patient collection letters
• How patient portals increase patient collections

The Importance of Writing Better Medical Collections Letters

Medical collection letters notify a patient about an overdue balance. Better medical collection letters increase the chance that a patient will respond and pay. A better letter will save you money, improve your cash flow, and foster a better patient-provider relationship.

Healthcare providers send medical collection letters, or “patient collection letters,” to patients who have an overdue, outstanding balance for a service that the provider already performed.

Traditionally, patient collection letters use an indifferent or even threatening tone to urge the patient to pay quickly. However, these types of medical collection letters may not motivate the recipient to pay. Poor medical collection letters may make the patient ignore the letter rather than address the balance.

“Just because you send a bill and a letter, that doesn’t mean the patient is going to pay,” says Lakshmi Narayan, Assistant Vice President of U.S. Healthcare Operations for Plutus Health Inc. “In fact, many don’t for various reasons. And a provider who just spent a significant amount on mailing costs and printing winds up not even receiving a response.”

Narayan adds: “Then, it costs money for the provider to figure out why they’re not paying, continue to notify them, or, in the worst-case scenario, engage with a collection agency to collect the amount owed.”

Medical collection letters are becoming more important in today’s healthcare landscape, where costs are rising, insurance providers are paying less, and patients are paying more. This situation places more burden on patients to pay directly and on healthcare providers to collect these payments.

"Today, the amount of patient contribution is higher than ever," Narayan says. "This presents a challenge to providers: They need to communicate the outstanding balance clearly to the patient, offer their help, but also notify the patients of the consequences of nonpayment. It’s a thin balance between being compassionate and helpful while also notifying the patients of their responsibilities."

The reality is that many Americans have medical debt. For example, the 2023 J.P. Morgan report “Trends in Healthcare Payments” reveals a troubling trend: One in three healthcare consumers have medical debt, even though 93% have insurance. The report also says two in five healthcare consumers delay or skip their payments. These statistics portray an environment where many patients don’t pay their debt and providers struggle to collect payments they need to stay afloat.

A February 2024 study from Kodiak Solutions, which examined more than 3 million claims across 1,850 hospitals, showed that most providers are collecting only 47% of what patients owe them, which amounts to millions of dollars in lost revenue.

The situation is delicate and presents challenges for all the parties. Providers find themselves in the difficult position of needing to collect more from patients while remaining empathetic and understanding of their financial constraints. Simultaneously, patients are grappling with mounting financial burdens, particularly when it comes to their health. Navigating this situation requires a pragmatic approach to patient communication and an understanding of the challenges patients face.

Collection letters are an opportunity for healthcare providers to improve their communication and boost patient collections simultaneously. Often, patients can pay, but they don’t understand the charges or payment options. Improving the tone, quality, and clarity of your medical collection letters can help motivate patients to pay.

“It’s not just about what you say, but how you say it,” says Gayle Kalvert, Founder and CEO of Creo Collective, a marketing agency specializing in meaningful customer connections.

Key Findings:

• Writing effective medical collection letters is crucial in today’s healthcare landscape, where patient payments make up an increasing share of providers’ revenue.
• A good medical collection letter conveys the provider's support for the patient while stressing their responsibility and the potential consequences of nonpayment.
• Experts highlight the importance of adjusting the tone of your letters for better results. Use an empathetic tone for large balances and a neutral one for regular statements.
• When reaching out to younger patients, send letters and statements via email, but keep traditional options available for those who prefer them.
• Patient portals are the best way to streamline patient communications and improve the efficiency of the collection process.

Items to Include in Patient Collection Letters

Including key items in your patient collection letters will help the patient understand the letter and act promptly. These items include basic patient information, medical practice information, and the provider’s contact information. Also, make sure the payment balance and due date are very clear.

• Patient information Including the patient information ensures that the patient knows the statement is for them. This information will also be critical for the patient’s records and to document tax deductions. Specifically, include the following:
  
  • The patient’s full name
  • The patient's account number

  

  “The first thing a patient should see is how much they owe,” says Laura Sandoval, a Client Success Manager at Plutus Health Inc. “They shouldn’t have to work to find the amount. Use a bold font, different colors, design elements like borders — anything you need to direct their eye to the outstanding balance due.”

  She adds: “It’s also important to include an itemized statement that clearly shows how much the insurance provider is paying. That way, they’ll know that the amount you highlight in the letter is their responsibility.”

  • Billing department phone number
  • Billing department email address
  • Billing department hours
  • Practice name
  • Practice logo
  • Practice address
  • Practice contact details

  Best Practices for Medical Collection Letters

  Following best practices will help you write effective medical collection letters. Experts say it’s important to use an empathetic tone, especially for higher balances. Also, use clear, concise language and send personalized letters. Also, send letters via email, not just through the mail.

  • Understand your reader and the action you're trying to elicit "One of the most important aspects of any type of writing is understanding your reader," says Kalvert. "It’s important to understand and acknowledge their situation. “For example, you can assume that many readers are going through both financial difficulties and health problems. They might be experiencing real struggles. A good place to start is by acknowledging their situation. You don’t want them to feel guilty for not having paid yet. Instead, you want them to tell them that it’s okay that they haven’t paid yet – you want to tell them that you understand.” By writing your letters from this standpoint, you’re more likely to connect with your reader and make them feel like you understand their perspective.
  • Grab attention quickly with a clear title or headline
    If you’re sending out collection letters and statements in the mail, it’s important to distinguish your letter from the junk mail someone might throw out. This practice encompasses the 3:33 marketing rule: you have just three seconds to grab attention and 33 seconds to hold it. With mail, you can include your letterhead or logo on the envelope or letter. “That way, the recipient will hopefully recognize your logo, trust the letter, and be curious enough to open it,” Narayan says. Likewise, it’s important to use a clear and bold subject line if you’re sending out email statements. Make it to the point so the reader knows exactly what the email contains. For example, one clear subject is “Your Recent Medical Statement: Review and Confirm.”
  • Keep it concise and aim for an eighth-grade reading level
    Keep the language straightforward and easy to understand. “Don’t make things complicated with complex vocabulary or long sentences,” explains Sandoval. “Instead, try your best to get straight to the point and use succinct sentences that convey.” Kalvert adds to this sentiment: “It’s very important to be clear and direct with your writing. If someone is stressed, they’re going to just scan the letter quickly, trying to figure out what they need to do. Make sure you communicate that to them immediately and concisely. Otherwise, they might just give up altogether.” Some experts suggest aiming for an eighth-grade reading level. You can use free online resources to check the readability of your text and see what grade level it falls into.
  • Include a clear and detailed patient statement
    Every medical collection letter must contain a patient statement. “Make their responsibility crystal clear,” Sandoval advises. “Provide an itemized list detailing the service, its cost, the insurance coverage, and the patient's portion. Lay it out plainly, without any extraneous details. Too much information overwhelms, but too little leaves them confused about whether they need to pay or if their insurance provider will handle it.”
  • Make it clear how to pay
    “The action you’re trying to elicit is a payment,” says Kalvert. “Provide clear, detailed information that shows the patient how they can follow through with that action.”
  • Triple-check the patient’s address
    “If you're sending statements and letters through the mail and haven’t received a response from a patient who usually pays, it's worth verifying their address,” suggests Narayan. “For instance, many patients move and forget to update their providers or arrange for mail forwarding. Or the front desk staff forgot to update their records.”
  • Personalize if possible
    “Approach the letter as if it’s a personal communication, not merely a bill payment notice,” advises Kalvert. “You don’t need to customize each letter for every patient. That would be impractical. But small details can make a difference.” She suggests addressing customers by their first name instead of using detached titles like “Sir” or “Madam.”
  • Avoid threatening tones or scare tactics
    You never want to make the recipient feel like they’re in trouble,” emphasizes Kalvert. “A threatening or reprimanding tone will just make someone who’s already delinquent avoid dealing with it altogether. People can get a pit in their gut and just not even want to read the letter, let alone act on it.” Kalvert suggests imagining writing that type of letter to a relative or someone you know. Most people would shy away from these types of tones with people close to them, even if that person owed them something significant, like money. Instead of adopting a “pay or else” approach, say you’re committed to working with the patient to find a solution. “Let them know you want to help and that together, you are all a team and will find a solution.”
  • Change your tone (neutral vs. empathetic) based on the situation
    “It’s important to adjust your tone based on the situation, particularly the balance or type of service,” says Sandoval. “If it’s a high-balance bill from the ER or surgical department, it probably was an emergency that may have left the patient with a medical condition and a significant balance. In these cases, it's crucial to be empathetic, offering gentle reminders rather than stern warnings. These situations can be tough for everyone involved, and adopting a cold approach to a huge balance, when the patient is still dealing with the aftermath of whatever happened, is not reflective of good customer service or basic decency.” Sandoval adds that being kind and empathetic in general is a good idea, but overdoing it for a recurring co-pay or routine visit might be counterproductive. “Being overly empathetic for routine visits might make the patient feel like there’s something unusual going on and may lead them to question the bill.”
  • Sandwich your message in empathy
    “In serious, high-balance situations, you’ll have to deliver hard news eventually,” says Kalvert. “But there’s no reason you can’t sandwich statements like that in between positives.” Kalvert suggests beginning with an empathetic statement like, “We hope this finds you in good health.” End with something like, “Thanks for your time and understanding.” This can sandwich a tough message like, “We may need to refer you to a collection agency” between statements that show understanding and care. “People react better to communication that takes the time to acknowledge them and their situation, instead of just delivering bad news like the grim reaper,” says Kalvert. “Just because you need to warn them, you might send them to a collection agency, which doesn’t mean you hope they’re not doing well.”
  • Try calling the patient
    Sometimes, the best course of action is to contact the person directly. People may be more motivated to act if a real person connects with them, offers a solution, or has a friendly conversation.
  • Exercise caution before directing debts to collection agencies
    "Directing your patient to a collection agency might erode the trust and goodwill you've worked hard to build,” says Narayan. “Unfortunately, many providers find themselves in the precarious position of deciding whether to let the payment go, continue to notify the patient in hopes of a response, or send it to collections. It's worth noting that when making that calculation, sending it to collections does have long-term impacts — you might receive part of the bill, but that patient may never return because they will feel outed or disappointed."
  • Use different channels for various audiences (text, email, and snail mail)
    Communicate to your audience using the channel they’re most comfortable with. “Your Medicare seniors? Send them letters in the mail,” says Sandoval. “But make sure you can also use emails for statements for younger patients and text reminders, too.”
  • Use a patient portal
    “Patient portals make everything easier for the patient and the provider,” stresses Sandoval. “It lets patients view their statement and pay on their own time. A good portal is easy to navigate, offers auto-payment, and is safe, secure, and is very convenient.” Sandoval also highlights the benefits of patient portals for providers hoping to optimize their collection letters. “With a patient portal, you can segment your audience based on the reasons you believe they didn’t pay or their balances,” she says. “Then you can write different types of templates that use different tones, like empathetic or neutral tones, and batch-send those emails or letters across your target group. It’s a targeted, precise way to communicate with your patients based on their history and your former relationship with them.”

  

  Medical Collection Letter Samples and Templates

  Templates for medical collection letters can standardize your communications, helping you become more effective and efficient. Try our free sets of letter templates: one in a neutral tone and one in an empathetic tone. Each set includes three letters, ranging from the first collection notice to the final notice.

  

  Download our empathetic medical collection letters for high-balance, sensitive cases. This set includes three letters: the initial collection notice, a follow-up, and the final notice.

  

  Download our neutral medical collection letters for more routine visits. This set includes three letters: the initial collection notice, a follow-up, and the final notice.

  Different Tones for Patient Collection Letters

  Patient collection letters will be more effective if you choose the right tone for the situation. Depending on the circumstances, use empathetic, collaborative, or neutral tones.

  • Empathetic An empathetic tone conveys an understanding of the patient's situation. Use this tone when addressing high-balance bills, especially those resulting from emergencies or unexpected medical procedures. This approach acknowledges the patient's potential financial stress and emotional burden, helps to build patient loyalty, and makes it more likely that the patient will resolve the balance. “It’s important to the time to point out that you understand and acknowledge their situation,” Kalvert says. “That message is the core of empathy.” She gives this example: "We understand that unexpected medical expenses can be challenging and difficult to manage. We hope this finds you well and want to collaborate with you to manage your recent bill of $2,000. Please contact us to discuss flexible payment options."
  • Collaborative A collaborative tone communicates partnership and cooperation. Use this tone when you want to collaborate with the patient to find a solution to their outstanding balance. This tone is best for second collection letters where the patient hasn’t responded to the initial letter. By offering to discuss payment plans or other options, you show that you are willing to collaborate with the patient and find a mutually beneficial solution. Here’s an example:
    "We are committed to helping you resolve your outstanding balance of $500. Let's work together to find a solution that fits your budget. Please call us to discuss payment plans or financial assistance programs available to you."
  • Neutral A neutral tone is professional and straightforward. It provides clear, actionable information without any emotional tones. Use this tone for initial collection notices for routine communications about smaller balances, like co-pays. Here’s an example:
    "This is a friendly reminder that your payment of $100 is due on May 30th. Please contact us if you have any questions or need further information.”

  Reasons Patient Payments are Delayed

  Many patients delay paying their statements because the cost of medical expenses is rising, and they can’t afford to pay right away. In other cases, the patient is confused about the bill, how to pay, and what their insurance may cover. A small percentage of patients never intend to pay.

  “There are many reasons why a patient may not pay their bill, and it’s rarely because they simply don’t want to,” says Narayan. “Financial hardships are a major factor, and it’s only getting worse as insurance companies cover less and charge more. Additionally, many patients may be confused, thinking their insurance will pay or that they don’t owe as much as they do.”

  Many research studies suggest that most patients want to pay their bills but may be confused or unable to afford them immediately.

  • Confused about their balance Many patients feel confused when they receive a medical bill statement. Some can’t follow the charges and are unsure of what they owe versus what their insurance has already paid. A single doctor’s visit might result in multiple bills from different departments, adding to the confusion. A YouGov survey from the artificial intelligence medical firm AKASA shows that at least 40% of patients are confused by medical bills and may delay paying because they’re not sure of how much they owe.
  • Intended to pay but forgot Busy schedules and overwhelming responsibilities can lead patients to overlook or forget about outstanding medical bills. In a LendingTree survey of 1,600 U.S. consumers, one in four respondents said they have outright forgotten to pay their medical bills.
  • Can’t afford it Financial constraints are the primary reason patients delay or don’t pay their bills. “In today’s climate, the onus is way more on the patient than it used to be,” says Sandoval. “Deductibles are rising every year, and insurance is paying less for expensive, specialty services. It’s putting a lot of financial hardship on people, especially those who need frequent care.” The statistics back Sandoval up. In a KFF survey of 1,292 Americans, 50% report not being able to pay a $500 medical bill upfront, and 48% of insured adults worry about affording their monthly insurance premiums and out-of-pocket costs.
  • Never intended to pay In some cases, patients may intentionally delay or avoid payment altogether. Some patients feel dissatisfied with the quality of care or the healthcare system in general. Others have financial hardships they perceive as insurmountable, even if the provider offers sliding scale payments or financial plans. Surveys suggest that the portion of the population that never intends to pay is small. A PYMNTS survey showed that only 7.1% of patients never intend to pay.

  Using ChatGPT to Help with Patient Collections

  Language AI models like ChatGPT can help you review and revise your medical collections letters. You can use ChatGPT to improve the tone of your letters and to make them clearer and more readable. It’s important that you don’t rely on ChatGPT to generate your original text but to review it.

  Language AI models like ChatGPT will reshape the patient collection process. Many already use ChatGPT and other language models to refine outlines, improve the quality of their writing, and review drafts.

  • Improve your tone Try using ChatGPT to tailor the tone of medical collection letters more effectively to specific audiences. A 2024 study from Anuradha Welivit and Pearl Pu from the School of Computer and Communication Scientists at the Swiss Federal Institute of Technology Lausanne asked whether ChatGPT answers more empathetically than humans. The pair published their findings in arXic, a free open-access archive for scholarly articles. They report in their article, “Is ChatGPT More Empathetic than Humans?” that, on average, ChatGPT’s responses were 10% more empathetic than responses from human participants, based on a standardized “empathy rating.” Specifically, the researchers created several artificial statements that they asked ChatGPT and human participants to respond to. They instructed ChatGPT to respond in an empathetic, compassionate way. The human participants did not receive specific instructions; instead, the researchers allowed them to respond naturally and use their best judgment. For example, they asked participants and ChatGPT to respond to prompts like “The head of marketing at my job recently dumped a bunch of new tasks on me and my coworker. I feel like she’s just lazy and making us do her job.” Overall, the human participants rated ChatGPT’s responses as more empathetic, by an average of 10%, using a defined empathy score that the researchers provided. They suggested that language models like ChatGPT-4 could potentially improve the empathetic tone of communications in situations like life coaching or wherever compassion is needed. However, they did say that anyone using ChatGPT needs to define empathy properly and always evaluate the responses. Additionally, the study implies that ChatGPT can assist in adapting other tones, such as neutrality or collaboration, if users clearly define the tone and evaluate the responses appropriately.
  • Simplify your language and lower your grade level ChatGPT can help you refine the language of your patient collections letters and lower the reading level to eighth grade so your patients can easily understand them.
  • Use ChatGPT to review your work, NOT to write it While ChatGPT can be an asset when refining your writing, relying on it to generate content for patient collection letters comes with inherent risks. ChatGPT lacks the contextual understanding that human writers have, which can lead to unintended consequences. There's a risk of generating content that is insensitive, inaccurate, or inappropriate for the intended audience. Additionally, ChatGPT may inadvertently produce language that violates HIPAA patient privacy laws or other regulatory guidelines.
  • Use specific prompts
    The strength of ChatGPT's response hinges on the specificity of your prompt. For example, here are two sample prompts for each of the situations we discuss:
    • Adjusting the tone
      Prompt: “Revise this medical collection letter so it adopts a more compassionate, supportive tone. It should also show that the provider understands the difficulty of medical debt and wants to help.”
    • Reducing the grade level
      Please simplify the following text to an eighth-grade reading level. Use straightforward sentences and clear language, and avoid complex terminology. Ensure that the content is easily understandable for someone with an eighth-grade reading level.

    The Best Channels for Medical Collections Letters

    The best way to send medical collections letters depends on your audience. Most people like using digital communication, like email and text messaging, but many older people still like to receive letters in the mail. It’s important to communicate with your audience in the way they prefer.

    “Choosing how to send your medical collection letters can really affect how many people respond," says Narayan. "Lots of adults and younger people prefer to receive eStatements, and sometimes even a text with a link to pay. But older patients, like those on Medicare, might not like getting messages on their phones. So, sending letters in the mail might be better for them. The main thing is to know who you're talking to and how they like to hear from you.”

    • Mailed statements
      According to JP Morgan’s 2023 Trends in Healthcare Payments, nearly half of providers still send paper statements in the mail. While this method remains popular among older populations, it's evident that the healthcare industry has been slow to embrace digital trends. The report notes that "even as consumers fully adopt digital tools, healthcare has not yet adapted to this new reality."
    • Digital eStatements
      In the same JP Morgan report, a survey revealed that "three-quarters of consumers want to pay medical bills online." Additionally, 62% of respondents indicated that they pay recurring bills online immediately. Moreover, 38% of patients expressed a preference for paying online through the doctor's website. These statistics underscore the growing demand for digital solutions in healthcare, mirroring trends seen in other industries such as utilities and online shopping. This highlights the importance of providers investing in technology that can deliver statements via email and direct patients to online payment portals.
    • SMS texts
      Another effective method for alerting patients about statements is through SMS text reminders. That’s because SMS texting boasts the highest reading rate of any channel. For example, one Forbes article cites the statistic that 90% of texts will be read within three minutes of opening. However, it's essential to recognize that SMS texts are best suited for brief reminders and payment links rather than longer, more personalized communications. SMS messages are limited to 155 characters, and exceeding this limit would require the use of more expensive MMS texts. Therefore, while SMS texts are effective for shorter reminders, they may not be suitable for conveying longer letters or messages.

    How Patient Portals Increase Patient Collections

    Patient portals increase patient collections by simplifying the payment process for patients and providers. They make it easy for patients to pay online and securely store their payment details for future use. Providers can also use portals to create customized collection letter campaigns.

    • Intuitive and streamlined payment process
      Patient portals streamline the payment process with a user-friendly interface and workflow that align with today's digital payment norms. Most portals offer multiple payment options, allow patients to store credit card information, and set up automated, recurring payment plans. In general, patient portals reduce friction in the payment process. “Patient portals are intuitive,” says Sandoval. “Many patients feel naturally comfortable navigating through the online dashboards and interfaces to pay.” Naryan adds that “the only real barrier in patient portals is the initial registration period. Once a patient registers and adds their payment information, the portal is the definition of convenience. Patients can see their statements, review their payment history, and even set up auto-pay programs.” The convenience of patient portals minimizes the friction a patient must endure to make a payment, which will significantly improve their response rate and potentially improve collections for the provider.
    • Mobile accessibility
      Many patient portals offer mobile-friendly interfaces and applications, allowing patients to access billing information and manage their healthcare accounts conveniently from their smartphones or tablets. This mobile accessibility may motivate them to participate and make timely online payments.
    • Tools to help providers communicate with patients
      Top patient portals offer tools to providers that help them communicate with their patients through multiple channels, such as email and text. For example, providers can send email or text patient reminders that include a direct link to make a payment on the portal. These reminders and statements can save the practice money on printing and mailing costs while also helping them engage with patients on their preferred channels. Providers can also use these tools to gather patient data and then create targeted collection letter templates and campaigns. For example, one provider utilized AnodynePay to identify patients with significantly overdue balances. They then prompted these patients to sign up for the portal and sent them text and email reminders. Leveraging these tools helped the practice collect 75% of their outstanding balances within just one month of introducing Anodyne to patients.

    How Anodyne Pay Helps with Patient Collections

    Anodyne Pay improves patient collections by taking a patient-centric approach to communications. It offers built-in, customizable letter templates, automated reminders, and robust patient data. With Anodyne, your patient collection system is in good hands.

    AnodynePay understands that improving patient collections relies on clear communication. That's why it developed a top-notch, personalized patient portal that allows you to communicate directly with your patients wherever they want to hear from you. AnodynePay’s robust patient portal offers customizable templates and the ability to segment your audience based on balance or patient history. This feature means you can target your tone and messaging to specific groups. With the click of a button, you can send a personalized message to thousands of recipients facing similar circumstances—whether it’s a lofty ER bill or just another routine co-pay visit.

    By improving the content of your message, how you communicate it, and ensuring it reaches your patients where they are, Anodyne will make a lasting, positive impact on your collection process.