No one can say that creating a workplace culture where love and appreciation are openly expressed doesn’t come with its own rewards and results. Especially in an industry that’s fallen into hard times and tough operating environments, like collections agencies, morale and motivation are big parts of what’s going to bring your company the success it needs. Brent Rice is the CEO of both Active Healthcare Receivables, LLC and Balanced Healthcare Receivables, LLC. Joining Steve Farber, Brent discusses how he turned the fortunes of both his companies in the collections industry space around by fostering a culture where people in the workplace know and feel loved by the company they work for. If your industry has fallen on hard times, it might be best to evaluate if your company is doing the work to ensure that your staff will be motivated to help the company.
—
Watch the episode here:
Listen to the podcast here:
Love And The Collections Agency With Brent Rice
Here are a few words you don’t typically hear in the same sentence, collection agency and love. How do those two things go together? I want to introduce you to an entrepreneur by the name of Brent Rice who is the owner of two agencies, AHR and BHR, Active Healthcare Receivables and Balanced Healthcare Receivables. They are in the collections business primarily in the healthcare industry. I asked Brent to present at an Extreme Leadership Experience and give us their story of how they combine these two seemingly incongruent practices, debt collection and love into a formula that makes for good business. I want to tell you a little bit about Brent.
They run call centers in the healthcare accounts receivable management space, AHR and BHR. AHR is a hospital customer care call center and BHR is a professional third-party debt collection firm. Brent is the CEO of both of those companies. He began his call center career as a mutual fund trader and call center representative for Fidelity way back in 1986. In ‘88, he began his career in the debt collections business as a sales rep and quickly moved to admin, finance and operations. In ‘91, he became an owner of Allied Creditors Services Incorporated out of Boston. In ‘96, he created Outsource Receivables Management. In the span of several years, Brent and his team built these two companies into a 350-plus employee management firm with clients all across the US. He sold the company in 2002 and then ran a couple of other organizations. Finally, in 2007, he went back into the business, created BHR and in 2018, AHR was born.
Brent is a professional collections guy and honestly, I’ve met a few over the years. You could infer what you want from that, but I’ll tell you outright, back in my younger days, I was on the receiving end, I think of 1 or 2 collection calls as far as I remember. I also had the chance to speak to a collections agency industry group a number of years ago. It was a surprising thing that the model for collections has changed over the years from aggression to cooperation to compassion. This is what they strive to embody at AHR and BHR with some impressive business results.
—
We are professional debt collection companies and we ask people to pay their bills. It’s quite an industry. Let me give you a backstory. I ran some companies from 1991 to 2002. I owned and ran them. I had a lot of help. I sold those at the tender age of 36, I took the money and I ran, and then I paid a price. I started working at 36 for some other people. I learned a couple of things. I didn’t like going to work when it was a knife fight. Nine people would enter the room and there would be eight knives. It was toxic from a management perspective. I had a five-year contract to run these companies and I lasted twenty months.
I discovered many things during this journey and two of them that hit home were I do not like dishonest, manipulative and inauthentic people. It created tension in my soul. Two, I like building, running and operating companies where our employees and our clients were treated well. Interestingly enough, in 2007, we put the band back together again. I called up some clients and said I was going to jump into business. They said, “We’re in.” I called some former employees. They said, “We’re in,” and we were up and running. Remember I’m in my early 40s and I’m still young. I’m 55. There’s this maturation thing that takes place. My original intent was self-serving. I just wanted to stay busy. It morphed along the way. Our intent in around 2012 was to become a company with a heart and serve our employees and our clients while turning the traditional collection agency experience on a tier.
On the phone, you only have a minute or two to create a connection of trust and safety. Click To TweetWe wanted to change that whole paradigm. We asked people to pay their bills and what better business to show love while you’re asking somebody to pay an $800 bill. We only have a minute to two minutes to create a connection of trust and safety while we’re on the phone with these people. We do this by being authentic, listening with compassion and assisting and resolution. We create in that 1, 2 or 3-minute phone call and once we get a connection, we’re creating a sense of awareness for the person on the other side of that phone call. From awareness comes options and from options comes a path to resolution.
That’s where our people are creative. I have proof of this, but in short, we’re helping people help themselves. We have millions of communications on a monthly basis. I jumped right to the proof because we have two companies. AHR is a customer care call center for hospitals. You may have received a hospital bill in the mail and you open it up and you’re like, “What is this?” You call the hospital up and they say, “ABC Hospital Patient Financial Services, how can I help you?” That’s AHR. That’s called first-party debt collections or answering the phone in the name of the hospital. There’s BHR, which is a professional bad debt collections company. We’re the collection agency.
We answer the phone, “Balanced Healthcare Receivables,” and we have to identify ourselves as that. We are getting ready for this proof. We have awards every month and these are from actual people. Remember, millions of communications a month. People have experience with our reps. They call us back and they tell us, “We had a great experience with your rep.” We’re asking these people to pay thousands of dollars. We’re getting it resolved and they’re calling us back to thank us. A couple of them are Sanya, “She’s great on helping to resolve my account and provided the best customer service I’ve ever had.” Shane, “She was helpful in sorting out all of my family accounts. I was happy to pay all of our balances at once.” I’m going to jump over to the bad debt side. When it gets there, it’s trouble.
Most people don’t pay their medical bills when it jumps off to the collection agency side. The first one is RG, “She’s sweet and helpful. She took her time and helped locate and explain my account balance. I had a great conversation with RG. She has excellent customer service skills.” I looked through 300 or 400 of these to pick out a couple of snippets. Also, Matt, “He’s helpful and patient when talking with me. I was pleased at the way Matt treated me compared to other agencies in the past and creating that connection. The last one hits home for me. It makes my heart swell, head to heart.” Eileen, “She helped me a great deal. I felt a connection and it boosted my confidence. I agreed to set up a payment plan after speaking with Eileen. I had no intention of paying this account previously.”
Not paying a bill is the norm when it gets over to us at Balanced Healthcare. Collections, think about it. It’s my business and I love it. In a not so distant past years ago, agencies did three things. They sent out notices. Have you ever received a collection letter from an agency? We made phone calls and we demanded payment in full. Have you ever received one of those robocalls? There was a shift. I’d mentioned in ‘07, we rebooted. In running companies, the senior management team had this caring approach and we thought that our philosophy would matriculate. It would seep into our staff and everyone would be loving and caring. It didn’t happen.
Collections Agencies: As far as AR goes, the lesson of the day is that the older an account gets, the less collectible it is.
In 2012 we’re saying, “This didn’t happen.” We did a reboot of their thereabouts and we decided to push that approach with a company-wide love initiative. Our people, our culture and our companies were hell-bent on changing the typical collection agency experience. What we’re doing is by engaging all of our people, our technology, and we’re doing it one phone call at a time. That’s our mantra and that’s what we do. I mentioned that I sold the companies and took the money and ran. We also realized that this is a profitable business, so you can do well by doing good. We do help a lot of people out of jams financially by educating them and helping them resolve their bills.
I’m going to give you some AR basics. This is the lesson of the day as far as AR goes. The older an account gets, the less collectible it is. It’s that simple. Has anybody ever had to run a P&L and look at their AR? This is a typical look at a hospital’s AR. When you take this snapshot of their self-pay population, it’s $100 million. What hospitals typically do is they send out their statements and then you get that and you call them back up and then you may send your check in. What a typical hospital would do is send out those 4 or 5 statements and receive your inbound calls. If they’re lucky, they might collect $25 million out of that $100 million.
Around 120 days, they have some rules and regulations where they have to write any uncollected receivables off to the bad debt collection agencies. That’s the BHR side. $100 million less $25 million means $75 million rolling over here. It goes to the collection agency and if they’re lucky, they’re going to collect 10% of that or $7.5 million. That means $67.5 million is uncollected. Guess who eats that? The hospital. If we can find ways to collect more money for them and increase their customer care and their customer service, wouldn’t that be beneficial? We do that. I’ve mentioned that AHR is a customer care call center for hospitals. Those statements are still going out every 30 days, like you get your Visa bill.
We receive inbound calls, but we’re also making courtesy outbound calls. How’s that? “Hello, Mr. Farber. Did you receive a bill from us? Yes, you do? We want $800. I want to explain it to you. Blue Cross Blue Shield paid $3,000. There was a $1,000 adjustment. The $800 that’s leftovers is patient responsibility. Can we help take care of that?” You’ll say, “I moved,” or “I have a different insurance company.” We’re taking down all this information and we’re collecting more money. By using the AHR side and love, caring and compassion we’re collecting, instead of that $25 million, it’s between $31 million and $35 million. Our clients see a 25% to 40% improvement by using us and our approach, the bad debt side. Remember, I said there’s a lot of stuff going on in this and when I speak at shows that are in our space, people get excited about it, but I do not see it here.
On the bad debt side, the agency might collect 10% of it. Let’s say we get $100 million every single month of bad debt placed with us. That comes to us in our client accounts and we have to write all these programs to get those electronic files and then we throw it into our system. We want to make sure that Steve Farber, he lives at 123 West Lincoln Street, his date of birth is, his Social Security is, and his telephone number is this. Is it a landline? Is it a cell line? If it’s a cell line, we have some other rules and regs, but long story short, we start our telephone campaigns right here, our outbound campaigns. We have massive amounts of campaigns because we’re trying to connect and talk to people.
By using BHR, instead of that $7.5 million at the hospitals that they get, they’re getting $8.6 million to $9.75 million. They see a 15% to a 30% increase in their liquidation. I talked about massive amounts of communications. We’re only about 125-person shop, maybe 130 people. Peter and I have run shops with about 1,200 people in them in 29 offices around the country. We’ve got a little experience in this, but we’ve chosen to work with people that we want to work with. We don’t have mandates from venture capital people to grow at 30%, 40% or 50% or whatever that is. These are some heady numbers for a company our size. We have about two million outbound communications, about 500,000 inbound communications every single month. That’s a lot of communication. Let’s add to the mix the bad actors that are out there, the robocalls.
It's a tough operating environment for collection agencies that operate over the phone. Click To TweetYou’ve seen the stories in the news about the agencies that run scams on the old people. We’ve got all that as a headwind against us. Because of those bad actors, we have over the top and onerous regulations from the feds and various states. It’s a tough operating environment that we work in. We have to comply with all of these rules and regs with each and every communication that we make inbound and outbound. Believe it or not, there are attorneys out there that are dying to sue us. We have a budget line item where we have to deal with settlements for lawsuits. We may have done nothing wrong, but I could fight it and spend $200,000 or $300,000 or I could settle it for $8,000 and ask Peter how he feels about settling at $8,000.
It’s a tough environment. We’re living it, we’re hell-bent on changing that collection agency experience and we’re doing it one interaction at a time. Why did we take the leap? Why did I become a leaper? There were two specific reasons. I’m going to need this. Self-serving. It was a tight labor market when we started thinking about the leap. Secondly, I’d mentioned about connecting with our team, our staff, all the way from the top to the frontline people. Everyone needed to understand our message, our authenticity and honesty. In January of 2019, I attended Steve’s event. It coincided with his birthday bash.
The event, the leap concepts, the stories I experienced connected a lot of dots for me. I came back from sunny San Diego. I go back to New Hampshire and I’m noodling over this, how do I get my senior management team into this love thing? I pitched the idea of bringing this to our senior management team. I do this as a cost and efficiency gain. As you might expect, several members of our senior management team were a little hesitant to say the least. Our team is a salty New England bunch, “Love? Are you kidding me?” This is what I’ve got. Irregardless that we’ve been preaching love at our town halls for the last several years, as we want our clients to love us, act with love and care.
These are things we were talking about since 2012 when we did our little reboot. I pointed out to the senior management team and our finance people that if we could cut our employee turnover rate, reduce our hiring costs and increase our employee retention, it might be worth given a whirl. On July of ’18, we brought Jenna in and some members of the tele team and we gave it a whirl. Her first visit was with our entire management team. We went on the org chart manager and above. They were 18 or 20 people there. Jenna pitched culture is the cornerstone. These 18 or 20 people walk into the room, we sit down in a big U-table and she does her thing for 90 minutes or 120 minutes.
As people are filing out of the room, I hear comments like, “That was good.” I heard, “I can see how this would work.” I heard, “I like it,” and I also heard, “Yes, but.” As far as I’m concerned, I had 90% of the audience and we were on our way. I talked about the tight labor market. These are some flabbergasting crazy statistics. In my business, the average turnover rate is 125% a year. That’s nuts. We were running in the 45-ish from 13 to 16 turnover percent range. The labor market tightened up at the 16, 17 and we popped up to 68%. That’s about the time we started. I had my experience. Jenna comes in and in 2018, we moved the markdown from 68% to 52%. That’s measurable progress as far as I’m concerned.
Collections Agencies: Cutting employee turnover rates, reducing hiring costs, and increasing employee retention are things that are worth giving a whirl.
There’s a cost to bringing on employees and we’re getting that down. Prior to ’18, we’d get a project and we had to hire 20 or 30 people. We went from hiring bodies to put fannies in the seats to make sure we had the right fit. We rejiggered our entire hiring and screening process. We’re in the process of completely doing our onboarding process, which we’re going to roll out. We see measurable progress. I’m going to stay with connecting to our staff, communicating our intent. I mentioned in ‘07, we started this and we thought that our approach would seep into our team and it didn’t happen. We tried it again in 2012 and what we found was the people that got it, but 35% of our staff got our message.
45% of them were fence-sitters, one foot in, one foot out. They’re going to wait, “We’re going to see what happens. We’re not quite sure.” We had the critics, crazies and the haters who are 20%. We’re only a few months into this where about 50% of the people get it. They understand from our heart what we’re trying to accomplish and it makes me feel good. We still have the fence-sitters, about 45% of them. They’re in half the time, they’re out half the time, but look at the haters down to 5%. I think it’s even lower than that. They’re working their way out of the company. They see all their other brethren energized and excited.
If it’s not the right fit, we don’t want them. The old way of us communicating with our staff, and this is why we loved, was we would tell our team how much we cared. We had our town halls and we said, “We’re covering more of your healthcare costs than the competitors.” “We’ve got a 401(k) and we were going to match it. Our competitors don’t have that. In fact, they’re doing away with their 401(k)s. We love you and we care for you. We’re creating better workspaces and better office spaces. We invested millions of dollars in technology to make their lives and jobs easier and more efficient. We fine-tuned compensation and team compositions. We created reward programs. In the end, we weren’t getting our complete message out there. Prior to taking the leap, those are the numbers and post leap, those are the numbers.
Our next step was to engage the entire company, not just that management component. Jenna did that. When you drop your drawers and everyone’s looking at you, it’s uncomfortable. We did this employee survey and we asked everyone to say, “What do you like? What do you dislike?” We got a lot of stuff that we had to work on and it was uncomfortable to read it and see it, but then once you get beyond that uncomfortable component, you realize there’s some gold in there. From that, we figured out our weaknesses and our perceived shortcomings. We created six culture teams and their energy innovation and solutions have been nothing short of fantastic. We’ve always preached authenticity and honesty. By combining that with leap at BHR, we’re learning how to run these companies together as a team.
It’s not just coming down from on high or from what the senior management thinks might work. These people are fully engaged by these teams. Our employee survey told us that we had crappy hiring and onboarding process and we did. We created a communications team for both internal and external communications, recognition and reward. Team excellence does a lot of policy stuff. They’d done some great job. We have a fun squad that comes up with events for all of our employees and their families to take part in. What stuck out was our training and Rachel, I’m going to explain that she’s the chicken woman when she raised her hand on the Popeye’s thing. She’s fantastic and her team. We had all this material and we thought that people were using it. She brought her altogether and we’re putting together a cohesive training package.
Once you get beyond the uncomfortable components, you realize there's something golden there. Click To TweetWith the love, the energy and their audacious goals. When I saw the culture team’s goals when they presented to the senior management team, I’m thinking, “They’re not going to get this stuff done. It’s going to take him 2 or 3 years. They’re trying to get something done in a quarter.” They did it. That’s the proof. These people are fully engaged and they’re changing our company. You saw the results that we get when people call us up after we asked them to pay their bill. What other proof do you need? We have the margins to prove it. We’re a profitable and well-run company. What that allows me to do as an owner, it allows me to select clients that I want to work with. That means I get to be judicious with whom I work and the amount of money that I charge them to do our job.
In our business, you saw the net returns, $9.75 million instead of $7.5 million, $31 million or $35 million instead of $25 million. Our results, not only do we pay for ourselves, but we’re well-connected with CFOs and CEOs all around the country. If somebody wants to check on us, Bob knows Sally and Sally knows Frankie and they can all talk and they can say we’re a hell of a company. I want to bring those people up. We have Lisa, RG, Iris, Rachel, Lucy, Peter, the salty New Englander, Justin, and Pedro. This is our future. RG, would you like to say something?
My name is RG Tavares and I work for the company AHR, BHR. I’m in the bad debt collections part. I deal with the tough part of the job. I am the team lead for the culture team hiring and onboarding. I have to say that I am grateful to work for this company. I’ve been there for several years. The managers, everything is unbelievable. The support system that we get not just as workers, it’s a family. There’s nothing better than working for a company that you feel that you’re going to work but you’re going to see the people that is your family. You work with them every day and you probably spend more time at work than at home. That’s who I represent. I love my job and Brent is awesome.
My name is Rachel. I am a data analysis for our data management program. I work between AHR and BHR communicating the data between the client system and our system and all that other fun stuff. I’m going to throw out a couple of quotes that I live my life by. One of them is from my favorite movie, Moulin Rouge, which is, “The greatest thing you will ever learn is to love and be loved in return.” The other one is from myself, which is, “Incredible things are done by normal people who choose to do them.” I think that’s something impactful and profound that we should live our life by. I love my job.
BHR is the third call center I’ve worked for, the second debt collection company I’ve worked for. It’s the first time I’ve felt valued as an employee. The first time I’ve felt like I’m part of a team, part of a family. There’s a lot of stuff out there about collection agencies and it’s not all true. There’s a lot of fun stuff that happens at BHR and it’s mostly due to the people who run. Brent is a complete crazy person and also the best boss I’ve ever worked for. I’m honored to be here and to be part of this company.
Collections Agencies: By letting your staff know that you love them and care for them, you’re creating better workspaces and office spaces.
Thank you, audience, for being here. In conclusion, this stuff works. Love and business is good business. It’s good business in the collections industry. I think it’s applicable to every component of your life, not just business. The energy works, the love works, and you can be profitable in whatever business you do it. It sounds California lovey-dovey and we got the salty New Englanders to back that up. Look at the proof a few months in, we’re killing it. Our people, I love them with all my heart.
—
I hope you enjoyed that episode from Brent Rice. I’m struck by the incongruity of it all, at least according to our conventional wisdom. I debated whether or not to leave the part where he brought some of his team members. When I looked at it again, I thought, “That’s the punchline in all of this,” With such incredible turnover of 125% industry-wide and to have employees that repeatedly say, “I love my job and I love my leadership,” is quite extraordinary. When would you ever imagine hearing somebody who collects bad debt say, “I love my job,” and not because they love tormenting people to get their money, but because they love helping people and they love the people that they work with? It’s an extraordinary thing. I hope you got some great nuggets out of that for your business and your life overall. I’m inspired every day by the number of people, no matter what kind of industry they’re in, who strive to operationalize love in the way that they do business, even in the most seemingly unlikely of places. Thanks for reading. I’m reminding you like Brent, to do what you love in the service of people who love what you do.
Important Links:
About Brent Rice
Brent Rice and his team run call centers in the healthcare accounts receivable management space. Their companies are Active Healthcare Receivables, LLC (AHR) and Balanced Healthcare Receivables, LLC (BHR). AHR is a Hospital customer care call center and BHR is a professional third party debt collection firm. Brent is the CEO of both companies.
Brent began his call center career as a mutual fund trader and call center representative for Fidelity Investments in 1986. In 1988, he began his career in the debt collections business as a sales representative and quickly moved to Administration/ Finance/ Operations. In 1991 he became an owner of Allied Creditor Service Incorporated (Allied) out of Boston MA. In 1996, he created Outsource Receivables Management, Inc. (ORM). In the span of 11 years, Brent and his team built these two companies into a 350+ employee management firm with clients across the US.
In 2002, Brent sold these companies (Allied and ORM) and ran the combined organization with 800 employees and 29 offices around the US.
In 2004, Brent joined the Hilco Trading Company out of Chicago, IL and helped pioneer the debt buying industry within the healthcare space. In 2006, Brent and his partners sold this company to Goldman Sachs.
After some deliberation and angst, Brent realized that he missed being an “operator”- as in running business operations. In 2007, he created BHR and in 2018, AHR was born.
Both AHR and BHR have the privilege of working with clients where there is a fit philosophically. This fit is based on honesty, authenticity and reasonableness. With 120 employees and over 100 clients across the United States, they have positioned themselves to “grow” where and when it makes sense. Most importantly, Brent and his senior management team embrace the concepts of accountability and “doing the right thing” for their companies and associates. Being privately held, AHR/BHR takes the long view for their employees and clients—–there are NO mandates to grow at a certain rate quarterly/annually OR cut costs for short-term financial goals. The AHR/BHR management invests heavily in its people, culture, clients and technology.
