Receivable/Accounts - Information for Credit and Collection Issues

Sunday, January 13, 2013

Medical Debt Collections in Canada

This week we will look at the subject of medical collections.  While it is a sensitive subject, over seven hundred million dollars each year is incurred in Canada for various medical services.  Most of these financial losses come from hospitals, but also include private medical, dental, optical, chiropractic, physiotherapy, and holistic medical services.

There are many complications with the recovery of medical sector bad debt.  We will take a general overview of some of the specific traits to each industry

Third Party Collection Agency Involvement

When collecting medical debt, typically a medical service provider should expect 30-35% liquidation on accounts assigned.  While trace accounts may represent up to 50% of assigned inventory, debtors contacted for the most part cooperate and resolve their accounts.

Out of all industry segments, medical service debt is one of the most frequently subject to multiple accounts belonging to the same debtor.  This can be from multiple or repeated services at the same medical location, or from habitual non-payment to various medical service providers. 

Because of the sensitive nature of medical collections, I believe a hospital or medical facility should have ongoing direct communication with the collector or collectors involved in representing them.  More than any other industry, trust and communication between a collection vendor and creditor must exist. 
Also, because a tactful approach to the consumers is necessary, typical predictive dialing strategies are less than effective, and can generate consumer complaints.  Manual collections will achieve a significantly higher liquidation and prevent complications.

Hospital Debt Collection

Hospital debt is one of the more common receivable problems in Canada, and for the most part is small amounts owed for hospital rides.  In Ontario, for example, a patient properly covered by OHIP incurs a $45.00 debt.  Many patients are not aware of this debt, and while these accounts can be easily resolved, it can require a great deal of manpower to reach out to these debtors who have not responded to individual letters.

A smaller but significant segment of debts incurred by hospital patients are those who have received private rooms, cosmetic surgery, or have failed to be covered by a provincial health plans.  In these cases, the outstanding amounts can be incredibly high – a non-private bed alone can cost thousands of dollars per day, an ambulance ride can cost hundreds of dollars.  Often collection agencies will focus on these accounts to the exclusion of the smaller accounts, and the overall liquidation will likely hover around 10-15% rather than 25-35%.

Many hospitals collect the names of guarantors who also become responsible for the debt if the account is unpaid, and may be held responsible.    If coverage was not presented during medical service, patients can often submit proper proof of coverage within 30 days to resolve their account.  If a hospital properly presents this information to their agency and the agency in turn imports the information for their collection agent to access, it will account for 1-5% further liquidation on overall assignments.

Hospitals are very concerned with public image, and require professional and compassionate representation.  In cases of hardship, fixed income, or services involving patient transfer or presentation of coverage will have the account closed rather than enforce collection.  An effective collection agency will handle these accounts with discretion and tact.

Dental Debt Collection

Dental debt collection often involve balances from $200 to $8000 outstanding, and many smaller health service providers simply do not have the wherewithal, time, or expertise to collect the amounts outstanding.  In many cases, the patients are shocked to be sent to collections, but work out payment or payment arrangements.

Because a dental clinic will only assign on average 10-50 accounts a year to collections, often there is not a timely workflow of accounts to the agency, and the agency has very little focus on dental collections.  There are thousands of dental service providers in Canada, and collectively this debt is significant.  An effective collection agency will pool all the dental and similar medical collections clients together to assign dedicated manpower and a single point of contact for the client.

Physiotherapy and Chiropractic Debt Collection

In this industry segment, often products are made specifically for the use of a specific patient and cannot be returned to mitigate the debt.  Patients should specifically read the terms of service agreed to when entering into an agreement with a medical service provider.
Confidential Medical Information

Under the laws involving consumer reporting and the credit bureau, as well as medical laws in the various provinces prohibit the disclosure to a third party the medical details of treatment, the patients state of physical or mental health.  An example of that would be Ontario`s Personal Health Information Protection Act, 2004 (PHIPA).  In most circumstances the collection agent will not be aware of what services have been provided – however, a date of service, and non-medical information will be available.

Medical Insurance and Collections

Many debtors are under the impression that they are not liable for debts incurred that should have been covered by insurance coverage.  However, the service agreement between the medical provider and the patient, and the patient and insurance provider are separate relationships and do not mitigate liability.

Patients should understand that failure for the insurance provider to remit payment should be followed up on, and proof of coverage and the invoiced service should be kept by the consumer to protect themselves.  As a collection agency may run into these circumstances often, they should be understanding of the patients circumstances, and allow them a reasonable period to follow up with their insurance provider to remit payment.

Consequences for Non-Payment

As any other private debt incurred by a consumer in Canada, it can be listed on the consumers credit bureau or litigation can be undertaken, if within the statute of limitation relevant to that province – several links are available in the article library below that discuss this in detail.

Provincial Health Coverage

Every province has its own regulations that govern Canada’s healthcare system. The provincial medical plan program under provincial guidelines administers coverage. Canadian citizens that are eligible for provincial coverage in their province of residency, pay for that coverage through income taxes and in some provinces by monthly premiums. When valid, provincial coverage will pay for some or all of many medical services, but not prescriptions, some medical procedures, and supplies.

Canadian citizens spending more than six months out of Canada may have their medical coverage cancelled automatically, and should plan for term certificate or extended coverage prior to leaving Canada.

Links to the various provincial health coverage pages are below:

British Columbia Medical Services Plan (MSP)
Saskatchewan Health Coverage
Alberta Health Care Insurance Plan (AHCIP)
Manitoba Health Coverage
Ontario Health Insurance Plan (OHIP)
Quebec Health Coverage
Newfoundland Medical Care Program (MCP)
Nova Scotia Health Plan (MSI)
New Brunswick Health
Health Prince Edward Island
Yukon Health & Social Services
Northwest Territories Health & Social Services
Nunavut Health & Social Services  


If you are a medical service provider and would like to discuss your rights as a creditor while respecting the rights and sensibilities of consumers, or you are a consumer who has had issues involving third party collections, I can be reached directly at my office at 226-444-5695.

Thanks kindly,

Blair DeMarco-Wettlaufer
Kingston Data and Credit –
Cambridge, ON


  1. Good post Blair - this is indeed a dicey issue that requires two things to succeed - empathy for the patient, and "political" will on the part of the institution to follow through with the collection activity. Canadians must come to realize health care is universal, it isn't free - and the patient may encounter monetary obligations during the course of their care. Failure to meet those obligations costs the health care system in this country millions every year.

  2. Thanks Dave. People who owe money often are emotional about the circumstance -- with medical debt, even moreso.

    However, with the right approach most people can have their stress diffused, and often feel morally obligated to repay their medical services accounts. Typically our office can arrange recovery with 80% of the consumers we are able to contact.

  3. This is a great post and topic . It is hard to believe that MOH with its staff of 10000 can permit this to happen . It is obvious that the system needs more visibility and be held accountable for the public trust money that it manages. ( Getting a 30 or 10% return is not a fair return on time or resources invested in care .

  4. I don't believe that this is a failure on the Ministry of Health's part ... this bad debt represents what is not covered by our health plans: private beds, cosmetic surgery, private dental services, expendable supplies, and so on. For example, in Ontario if you take an ambulance ride, there is a cost of $45 whereas if there was no coverage it would be closer to $450.

    What I was speaking about was a return on outstanding receivables. Ideally it should be 100%, but you would be surprised how many patients intentionally refuse to pay for private rooms or multiple ambulance rides, or simply vanish from their last known address without being accountable. This is a delicate balancing act with compassion on the creditor's part and the patient accepting responsibility.