Author: Terry Glidden

Constant optimization of your account strategy is nothing new in ARM – testing new workflows, scores, data enrichment and other strategies is an ongoing process of adjusting and observing.

Innovative servicers to ARM recognize that work effort to return should drive data decisions and package up consumer data with not just a score, but with a strategy. It is safe to say that not all accounts are equal, and therefore should not be treated equally.

Here are three steps you can take now to start improving profitability in your ARM operation:

Step 1:  Identify Reasons Why You Might Be Working All Your Accounts

You might feel like you have valid reasons for trying to work all your inventory. Some of these reasons could include:

  • Feel that there is a profit in every account.
  • Have a client that requires you to work every account placed.
  • You worked hard to get the client.

However, this approach can result in the following:

  • Staffing needs: It requires more collectors to work every account. You could be missing out on an opportunity to leverage your staff and bringing on new clients.
  • Overworked accounts: You are putting the same effort into accounts that are going to pay and those that aren’t.
  • High costs on low yield inventory: Spending more to collect on an account than what the account will return can be a dangerous business model.

Step 2: Start Segmenting

One of the key components for driving effort is account segmentation – a logical separation of inventory for the purpose of applying unique collection treatments. Measuring your effort against the return is going to show you where your efforts need to be placed, not only where they need to be placed, but also how valuable those accounts are.

In most of our clients ARM operations, we see around 20% of accounts bring in more than 60% of revenue. An effective effort management strategy would create a schedule to optimize efforts on these 20% of accounts. This allows you to increase capacity, bring on new business without adding more staff, and to scale efficiently and effectively.  Expansion state companies need to focus their efforts not on a broad universe of accounts, but rather on a specific subset of accounts.

In our experience in working with clients, we’re keenly aware that collections is both an art and a science. One of our valued clients, Curt Jennings at Health Services Asset Management, LLC, recently told us,

“The Intelitech Group provided us with reports that outlined that the bottom third of our business at that time represented only three percent of our overall recovery. That was a very telling moment to me to say the least as we had experienced across our entire inventory, essentially the same strategies. We were dialing the same accounts, given the same work effort, same letters, same notices, again across our entire inventory, so when they did their data analysis and scrubbed our data and showed me that again, the bottom third of our business only represented 3% of our overall recoveries. It told me that we weren’t maximizing our opportunities, nor are we really leveraging our staff to maximize the dollars based on the inventory that we had. We were again throwing darts at the dartboard but weren’t trying to hit the bullseye. We were just repeating our efforts but really weren’t maximizing the results.”

Step 3: Apply Common Options for Segmenting Inventory

There is no one way to segment, and it really depends on the type of business you are working – but here is a list of the most common ways to segment effectively.

  • Route balance
  • Client IDs
  • Client class
  • Market type of business
  • List age of account
  • Internal work group or department

A couple of points to keep in mind when segmenting accounts:

  • Ensure minimum of 10,000 accounts and 3,000 payers per segment.
  • Combine like inventory, such as Hospitals – In & Out Patient, or Physicians – Office-Based, Clinic, and Hospitals.

Connect with a Consultant 

As always, if you are interested in gaining an outside perspective on how to improve your effort management strategy, reach out to us for a conversation. We’ll work with you and discuss how we can improve your account workflow by incorporating data intelligence, automation and account scoring and segmentation so you can get the greatest return from your efforts.

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