For most of the last forty years, the decision to send a patient balance to a collection agency rested on one assumption: the agency has a lever the practice does not. The lever was the credit report. A patient who ignored three statements from the office would answer a letter that could follow them to their next car loan.
That lever is mostly gone. If your practice still hands 60-to-180-day balances to an agency by default, it is worth re-reading the math.
What changed in California
California's SB 1061 took effect January 1, 2025. Providers, billing vendors, and collection agencies may not furnish medical debt to a credit bureau. Bureaus may not report it. Lenders may not use it. A medical debt that is reported anyway becomes void and unenforceable. Since July 1, 2025, contracts for medical debt have had to disclose this to the patient.
For a California practice, the credit report is not a weak lever. It is an illegal one.
What changed everywhere else
The national picture is patchier but points the same direction.
In 2022 and 2023, Equifax, Experian, and TransUnion voluntarily changed how they handle medical collections. They removed paid medical debt from reports. They stopped reporting medical collections under $500. And they began waiting 365 days before any medical collection appears at all.
The CFPB went further in January 2025 with a rule that would have removed medical debt from credit reports entirely. A federal court in Texas vacated that rule in July 2025. The rule is gone; the bureaus' voluntary changes still stand. Separately, more than 15 states have passed their own bans on reporting medical debt.
Put those together for a typical practice balance, which is a few hundred dollars. Under $500, it is never reported. Over $500, it waits a year, by which point the account is deep-aged and the patient has long since decided whether to pay. In California, it cannot be reported at any amount.
What an agency has left
An agency working your 60-to-180-day balances today has letters and phone calls from a company the patient has never heard of. That is the whole toolkit. It charges 25 to 40 percent of whatever it recovers for the use of it.
What it recovers is not much. ACA International's benchmarking data, as reproduced in trade sources, puts agency recovery at roughly 17 to 21 percent of placed medical debt, and that is over the life of the placement, often a year or more. Net of a 25 to 40 percent contingency, the practice keeps about 10 to 16 cents per aged dollar placed.
Those figures predate the credit-reporting changes. There is no reason to expect them to improve now that the lever behind them is gone.
The math for the practice deciding
The old decision was: we cannot work these ourselves, and the agency has a lever we do not. The new decision is different. The agency does not have the lever either. What it has is a stranger's letterhead and a larger cut.
The practice, on the other hand, has things the agency never had: the patient's number, given at intake; the patient's memory of the visit, which is still fresh at day 60; and its own name on the message. The remaining leverage in patient collections is convenience and the relationship, and both belong to the practice.
At the founder's practice, an independent outpatient imaging practice in Southern California, first-party outreach on balances that were already 61 to 90 days old when the first message went out collected 62.8 percent of placed dollars within 90 days. On 91-to-120-day balances, 46.9 percent within 90 days. On 121-to-180-day balances, 30.8 percent within 180 days. On balances older than 180 days at first outreach, 10.5 percent within 180 days, which is below the agency benchmark and is the honest limit of the approach. The advantage concentrates in the 60-to-180-day window; deep-aged debt stays hard for everyone.
Those windows are also shorter than an agency's lifetime placement window, which makes the comparison conservative. Single site, founder-affiliated, observational, no control group.
What first-party outreach still has to comply with
Working balances in your own name changes who is speaking. It does not change the rules, and nothing here should be read as a claim that a provider is exempt from any of them.
Consent has to exist and be recorded. The TCPA regulates how a contact is made, not whose debt it is, and the FCC's 2015 order excludes billing and debt-collection content from its health-care exemption. Consent needs to be tracked per patient, per channel, with its source and date.
Stop requests have to work everywhere at once. A STOP by text, a request on a call, or a note to the front desk should revoke consent across every channel, with an audit trail. The FCC's consent-revocation rules, with the revoke-all provision taking effect in 2027, set the floor.
Hours and frequency should be held to collector standards regardless. California's Rosenthal Act applies collector conduct rules to creditors collecting their own accounts, and the 8 a.m. to 9 p.m. local-time window in federal debt-collection law is the sensible default anywhere.
AI voice needs explicit consent and disclosure. The FCC's February 2024 ruling treats AI-generated voices as artificial under the TCPA, and California requires disclosure. A voice agent should say what it is, verify identity before it says a balance, and never take a card.
Nothing goes to a credit bureau. In California that is the law. Everywhere else, it is what keeps the patient relationship intact, which is the only lever left.
None of this is legal advice. Which rules reach a practice depends on its state and on how its intake paperwork captures consent.
Sources
- California SB 1061 (Cal. Civ. Code §1785.27 et seq.), effective January 1, 2025
- Equifax, Experian, and TransUnion joint announcements on medical collections, 2022–2023
- CFPB Medical Debt Rule, 90 Fed. Reg. (January 2025), vacated in Cornerstone Credit Union League v. CFPB (E.D. Tex., July 11, 2025)
- National Consumer Law Center state-law tracker on medical debt credit reporting
- ACA International benchmarking data on agency recovery, as reproduced in industry trade references
- FCC 2015 TCPA Omnibus Order; FCC Declaratory Ruling on AI-generated voices (February 8, 2024); FCC consent-revocation rules (2024)
- Cal. Civ. Code §1788 et seq. (Rosenthal Fair Debt Collection Practices Act); Cal. AB 2905 (2025)
- DueWell analysis of the founder's practice ledger, Sept 2026