We live in economically challenging times. It’s bad enough that, as insideARM.com recently noted, “truly educated, hard-working professional people, who three years ago were gainfully employed, making a respectable living, and had never missed a payment to their creditors, are now — through no fault of their own — unemployed and struggling to meet the basic needs of their family.”
If consumers can’t meet the basic needs of their family, they certainly can’t pay other debts. Even late payments take a toll on your business, as our recent blog article will attest. This situation places enormous pressure on businesses.
So, this question arises; should we expect these trends in the accounts receivable collections industry of overdue and unpaid debts to continue increasing?
It seems so. The Bureau of Labor Statistics (BLS) anticipates that between now and 2016, the debt collection industry will experience a 23% rate of growth, a much faster rate than the average for all industries. Much of the anticipated increase will come from doctor’s offices, hospitals and government agencies, including the IRS.
The rate of growth may be even higher over the next few years. Harry Strausser III, president of the Mid-Atlantic Collectors Association, noted in the Huffington Post, “Businesses nationwide placed $150 billion worth of debt with collection agencies (in 2010). Agencies were able to collect about $40 billion of that total. There are 4,100 debt collection agencies in the United States, employing nearly 450,000 people, and the industry expects to grow by as much as 26 percent over the next three years.”
One of the fastest-growing areas within the high growth of accounts receivable collections is in the medical industry. According to the Medical Group Management Association (MGMA), 26.3% of current accounts receivable are attributed to patients, with a trend of 30% of patients walking out without paying at all, and $40-60 billion of “bad” patient debt. If overall patient accounts receivable rises from its current level of approximately $300 billion to the anticipated $660 billion MGMA is predicting, the corresponding levels of overdue and unpaid debt can be expected to keep pace or increase.
As you can see from these numbers, even as the economic situation improves over time, the effects of overdue and unpaid debts will be felt at the consumer level and at the business level, especially the medical sector. The need for compassionate but effective accounts receivable collections, being carried out by our own Forgotten Patriots, can be expected to keep pace.