The Real Cost of Collecting Patient Payments

No reliable published answer exists for what it costs to collect a patient payment, and this article begins by establishing that. The benchmarks in circulation trace to paywalled member products, hospital data from 2012, or a blog comment from 2010. What can actually be established is narrower than the category's marketing suggests, and it is enough: the direction of the money is clear, and four provider organizations can show the size of it.

Part 3 of this series compared the two operating models on the clock. This part compares them on cost, which requires first setting aside the numbers that do not survive checking.

Why the Common Benchmarks Rarely Hold Up

This series went looking for the standard figures in this category intending to use them. Three of the most quoted failed the trace.

"A paper statement costs $10 to $12, all in"

The figure originates in a practice-management blog post from September 2010 and its comment thread, where consultants traded estimates. The post's own author wrote that he had not seen real data supporting the claims. There is no methodology behind the figure and never was, and every version circulating today, sixteen years later, descends from that thread. Pediatric Inc., "How much does it really cost to send out a statement? Part deux," September 18, 2010.

"MGMA says the median practice runs 35 days in A/R" (or 36, or 47, depending on the source)

None of these could be traced to an MGMA publication. MGMA's observed medians live inside DataDive, its paid benchmarking product, and the free figures attributed to MGMA across the internet appear on billing-company websites rather than MGMA's own. They may be accurate. They may not. Nobody quoting them can know.

"Cost to collect runs 2% to 4% of net patient revenue"

This one has a real source, which is the difficulty. It comes from HFMA guidance published in 2012, describing a best-practice standard that had fallen from 3% to 2% over the preceding years, sourced to a hospital accounts-receivable analysis. It is a hospital figure, more than a decade old, and it is routinely applied to physician practices, post-acute providers, and senior-living operators as if the settings were interchangeable. HFMA's current guide to measuring cost to collect, published in 2025, contains a careful formula and a fifteen-category checklist of what to include, and no benchmark percentage at all. HFMA, "Cost to Collect," October 25, 2012. HFMA, Cost-to-Collect Better Practices, 2025.

A related pattern appeared often enough in the sourcing work to deserve its own warning. Much of the consumer survey data in this category is commissioned by companies selling billing technology, then republished by trade press with the sponsorship dropped, so a figure that began as a vendor's marketing asset circulates dressed as independent research. By the third retelling, nobody remembers who paid for the question. Before repeating a statistic from this industry, including any published by PatientPay, find out who commissioned it.

The practical consequence is plain. Financial arguments in this category have been made to provider organizations for years using numbers that come from vendors' own marketing, describe a different care setting, or cannot be traced to anyone who measured anything. A benchmark quoted in a sales conversation should be asked to show its origin, and a benchmark from one care setting should never be carried into another.

What Can Be Established?

Every figure below survived a direct look at its primary source.

How much of revenue is patient money

Milliman, the actuarial firm, calculated from its own claims database that the average actuarial value of in-network commercial benefits is about 80%, which puts patient responsibility at roughly 20% of provider fees. Disclosure the trade press usually omits: the paper containing that figure was commissioned by ECHO Health, a payments company. It is cited here because this particular number is a direct calculation from claims data rather than an estimate, and nothing better exists at any tier. One dollar in five of what a provider bills commercially is owed by a person rather than a payer. Milliman, A Different Approach to Collect Patient Deductibles and Coinsurance, January 2025.

What collecting on a visit costs, in the only rigorous study available

A study in JAMA from an academic health system measured billing- and insurance-related cost per encounter: about $20 to process the billing for a primary care visit, roughly 20% of the visit's revenue, rising to $215 for an inpatient surgical procedure. Two caveats travel with it. It is a single institution, and it measures the full cost of getting paid, which is dominated by payer interaction rather than patient statements. It is the cost of collecting on a visit, not the cost of mailing a bill. Tseng P, et al. "Administrative Costs Associated With Physician Billing and Insurance-Related Activities at an Academic Health Care System." JAMA. 2018.

The international comparison

Research in Health Affairs put the billing cost of a U.S. inpatient surgical bill at $215 against as little as $6 in Canada, adjusted for purchasing power. Richman BD, et al. Health Affairs. August 2022. A study in Annals of Internal Medicine, using 2017 data, put total U.S. administrative spending at $812 billion, 34.2% of national health expenditures, against 17% in Canada. A third of every healthcare dollar goes to the machinery of payment. Himmelstein DU, et al. "Health Care Administrative Costs in the United States and Canada, 2017." Annals of Internal Medicine. 2020.

Two numbers that are missing on purpose

A reader might expect this section to include the share of patient balances referred to collections and the typical contingency fee agencies charge. Both are absent because no neutral body publishes either one. The fee ranges circulating online come from collection agencies' own marketing, and the referral-rate figures could not be traced to anyone who measured them. When a category's most quoted numbers have no findable origin, the honest treatment is an empty slot, and this article has two.

What can be proved about paper specifically

From Part 1: postage is $0.82 per statement as of July 2026, before paper, printing, or a minute of staff time. USPS, Notice 123: Price List, effective July 12, 2026. No credible fully loaded figure exists, so this series claims the floor and states plainly that the floor understates.

Why Did Patient Balances Become Harder to Collect?

In a sentence: the thing being collected changed underneath the process. All of the following is current, public, and first-tier.

Enrollment in high-deductible plans with a savings option went from 13% of covered workers in 2010 to 24% in 2015 to 33% in 2025. The average single-coverage deductible now stands at $1,886, and at firms with 10 to 199 workers it is $2,631. Thirty-four percent of covered workers are in a plan with a single-coverage deductible of $2,000 or more. KFF, 2025 Employer Health Benefits Survey, Oct. 22, 2025. Out-of-pocket spending reached $1,632 per person in 2024, and for a family of four with employer coverage, annual cost sharing alone, deductibles and copays and coinsurance, ran $3,564 in the most recent Peterson-KFF analysis, before a single premium dollar. Peterson-KFF Health System Tracker, How has U.S. spending on healthcare changed over time? Peterson-KFF Health System Tracker, How much do people with employer plans spend out-of-pocket on cost-sharing?

The strain on the other side of the statement is measured too. In KFF's December 2025 tracking poll, 28% of adults reported problems paying for health care in the past year. KFF Health Tracking Poll, December 2025. Peterson-KFF's analysis of medical debt found 6% of adults, about 14 million people, owing more than $1,000, with aggregate medical debt of at least $220 billion. Those two figures measure different things, past-year payment problems and standing debt, and both point the same direction. Peterson-KFF Health System Tracker, The burden of medical debt in the United States.

The problem is not the patient. It is the share of the bill the patient now carries, which has grown for fifteen years while the collection process stayed where it was.

An organization that experienced this shift as "patients became worse about paying" diagnosed it backwards. Patients were handed a payer-sized share of the bill and a process built for copays, and the aging report recorded the collision.

What Four Provider Organizations Recovered

With no honest industry benchmark to compare against, the useful evidence is named organizations with published numbers. These are individual results, linked to their sources, and verifiable.

Lake Washington Physical Therapy, a nine-clinic outpatient group, cut accounts receivable 47% in the first month after switching and gained $2.50 in revenue per visit. Time to payment fell from 45 days to 20.

The 45-to-20 result deserves a closer look. It means most of the group's collection delay was calendar built into the process rather than patients being slow, and it left when the process did.

Alpine Physician Partners, a multi-state medical group serving senior populations, cut collection time by 43 days and doubled revenue and collections within three months, while inbound billing calls fell 95%. Forty-three days is more than a full statement cycle of float returned, which for a multi-state group means payroll and vendor obligations stop being timed against money that exists but has not arrived.

Encore Rehabilitation, an outpatient rehabilitation provider with more than 220 locations, cut bad debt 40%. Bad debt is the last stop on the line, the balance that survived every statement and call and aged out anyway, so cutting it 40% means far fewer balances completed that journey. Encore also recovered more than 3,800 staff hours annually. Part 4 kept those hours as hours; this is the article where they become dollars. At the Bureau of Labor Statistics mean wage for medical secretaries, $20.85 an hour in the May 2023 data, 3,800 hours is $79,230 a year in staff cost, before benefits, that had been going into envelopes and follow-up. That figure is arithmetic rather than a study, and both inputs are available to check. BLS, Occupational Employment and Wage Statistics, May 2023, SOC 43-6013.

IRG Physical & Hand Therapy, a 42-clinic outpatient therapy organization, lifted patient payments 25% in the first 30 days and sustained a doubling of cash collections.

What Does Faster Cash Buy?

The tidy answer is lower carrying cost and fewer write-offs. Every cycle a balance survives costs another statement in the mail, more of the follow-up work that Part 4 showed consuming staff time, and a worse chance of ever collecting, which is how repeat statements become a standing tax on the whole ledger. Collapse the cycle and the tax collapses with it.

The truer answer comes from what organizations do next.

IRG's improved cash flow funded four new clinics in a single year. That is the whole argument in one sentence. Collections modernization is usually filed as a cost-reduction project, and the organizations that have completed one describe it as a capacity project, because the money was never missing, only late and leaking.

Where PatientPay Fits

PatientPay is the system behind all four results above. Across its customer base, organizations average a 25% increase in collection rates and a 90% reduction in cost to collect. Given everything this article said about benchmarks, those claims should be held to the same standard: they are measurements from PatientPay's own book of business, stated as such, and every client named here is published and linkable.

See what the arithmetic looks like for a specific organization →

The Complete Digital Patient Billing Series

This article is part six of an eight-part series on digital billing and payments from PatientPay.

• Part 1: Why Healthcare RCM Struggles to Go Digital
• Part 2: Digital Patient Billing and Payments Explained
• Part 3: Paper vs. Digital Patient Billing and Payments
• Part 4: What Digital Payments Change for Billing Teams
• Part 5: What Happens When Paying Is Easy for Patients
• Part 6: The Real Cost of Collecting Patient Payments
• Part 7: How to Evaluate Digital Patient Billing and Payment Solutions
• Part 8: What Switching From Paper to Digital Billing and Payments Looks Like