As the patient has become the third-largest payer in the country; balance after insurance has skyrocketed. Providers need to rethink their strategies to improve patient collections and save costs as receiving patient payments on time can be challenging.

Many providers have found outsourcing revenue cycle management (RCM) to be valuable in improving their patient collections and revenues. When outsourcing your RCM, you need to know the key differences between first- and third-party patient collection services.

Technically, first-party collections refer to in-house debt collection and third-party collections refer to outsourced collection agencies. First-party agencies are often subsidiaries of the provider where the debt is owed to; while third-party agencies are separate companies contracted by the provider to collect debts on their behalf.

However, when it comes to accounts receivable services, “first-party” and “third-party” may mean something somewhat different. It has less to do with who’s handling the process, and more to do with the stage of the process.

Hence, first-party patient collections can be handled by a separate company. End-to-end revenue cycle management companies like Mnet Health also handle both first-party and third-party collection services.

If your company is looking for a streamlined approach to patient collections, you can enlist the help of an end-to-end revenue cycle management company to handle both first-party and third-party receivables management.

Here are key differences between these stages in patient collections:

First-Party Collections (Early-Out / Early Stages)

Current first-party collections for healthcare revenue cycle management is often referred to as “early-out” as it happens early on in accounts receivable management. This early stage is for slightly past-due accounts that aren’t quite ready for full collection.

During this stage, providers send out reminders to patients about their balance due. They might also offer to enroll them in payment plans or offer financing.

First-party management is about trying to prevent a loss, so early intervention is crucial. Contacting self-pay patients at an early stage increases the likelihood that a patient can be informed of their financial options and start making payments on their balance.

At this stage, any first-party collection partner your facility engages with will act on your behalf, using your company name and working to uphold your relationship with your clients.

Here are key points in the first-party collections / early-out stage:

  • A range of activities are performed at this stage:
    • Billing
    • Insurance claim follow-up
    • Patient reminder calls or text
    • Contacting patients shortly after the due date
    • Dunning letters
    • Outbound and inbound calls
    • Payment plan monitoring
    • Facilities payment plans and financing
  • Any communication or reminder messages will be branded with the provider’s name and adhere to the provider’s communication standards. All communication with the customer appears to come directly from the provider, even if a separate company is handling it.
  • First-party collections work like an extension of your back-end operations or billing office.
  • First-party collections typically reach out to patients starting at the generation of the first bill or up to 90 days afterward.
  • Focused on customer service and agents are trained to be more engaging and sensitive to patients’ financial situations.

If patients have negative experiences with first-party early-out or collections vendors, it may influence not only their financial experiences, but it will shape their overall experience with providers, regardless of the quality of care received.

If patient balance remains unpaid despite all first-party collection efforts, they are escalated to the third-party collections stage.

Third-Party Collections (Late Stage)

Patient balances that remain unpaid are subject to being written off as bad debt. In order to collect accounts that are written off, providers enlist third-party collections or bad debt recovery services.

Third-party collections happen later in the debt collection process. Most often, dealing with patients which have gone cold. In these cases, patients may have skipped town or don’t answer calls, emails may bounce back, and paper reminders may be mailed back to you.

  • Once the account has moved to third-party accounts receivables services, the provider’s name will no longer be used. The third-party is still acting on behalf of the provider, but the communications are now coming directly from a separate company.
  • Third-party collections are subject to the FDCPA (Fair Debt Collection Practices Act) and are more regulated than first-party
  • Other tactics can now be used to locate the debtor and bring the account up-to-date, aiming to instill a sense of urgency in the debtor
  • Third-party collections are about liquidating the total balance written off
  • Doing well in third-party collections means recovering debt at the same time not losing patient loyalty

 End-to-End Revenue Cycle Management with Mnet Health

By offering end-to-end revenue cycle management (RCM), Mnet Health helps providers the whole way through from first-party to third-party collections. Mnet has a true end-to-end patient revenue cycle that elegantly transitions from first-party to third-party, seamlessly integrating both services to provide a comprehensive, customized program for your collections.

Working together with a partner offering both first-party and third-party collections can benefit both you and your patients. It allows Mnet to become familiar with the accounts in receivables right from the beginning and can customize approaches to give your patients an integrated experience, resulting in a higher percentage of accounts being settled during the early stages.

  • Increase your monthly patient collections by 40-100%
  • Dramatically reduce your bad debt write-offs
  • Get happier patients (better financial experience)
  • Never have to deal with patient collections again

You still decide which accounts go to bad debt. Once you decide, accounts move from the first-party call center to our bad debt collections service.

From first-party collections to third party recovery, Mnet’s revenue cycle management solutions help you increase your revenue, lower the days in your account receivable, and create outstanding patient financial experiences.


First Party

  • Calls are made/answered as provider’s billing office
  • Letters are in provider’s name
  • Payment processing
    • All payments accepted from patients are in the providers name
  • Online bill pay is provided to patients
  • No credit reporting

Third Party

  • Calls are made/answered as a debt collector attempting to collect a debt
  • Letters are from the collection agency representing the provider
  • All payments are processed through the collection agency
  • Online bill pay is through the collection agency website
  • Credit reporting is an option