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Revenue cycleA lower contingency rate can still cost you money if recovery drops with it. Here's what early-out and bad-debt vendors charge, what published benchmarks say bad debt should recover, and how to compare vendors on what you net.
Price depends on placement timing, placement order, balances, volume and scope of work. RCR Hub, a vendor directory, quotes early-out at 8% to 15% contingency or a fee per account, and bad debt at 15% to 35%, higher for older and secondary placements (2026, vendor-quoted). Judge recovery by placement month, after fees.
On recovery, published benchmarks are few and old. A 2012 HFMA Ask the Expert answer said a reasonable expectation is that a bad-debt agency collects no more than 5% to 7% of the dollars early-out passes on.
The rules you follow shape scope too. If you're a tax-exempt hospital, 26 CFR 1.501(r)-6 lists extraordinary collection actions, including reporting to credit bureaus, most sales of patient debt and actions that need a legal or judicial process. Before starting them, a hospital has to make reasonable efforts to find out whether the patient qualifies for financial assistance, which includes waiting at least 120 days from the first post-discharge billing statement.
Where the rule stands
State medical debt laws can add limits of their own, so check the states where your patients live.
| Item | Early-out | Bad debt |
|---|---|---|
| When accounts go | Before write-off, typically 30 to 90 days after service | After write-off, typically 120 to 180 days or later |
| Whose name patients see | Often the provider's; the vendor works as an extension of the billing office | The agency's, as a third-party collector |
| How it's priced | A fee per account, or 8% to 15% contingency | 15% to 35% contingency, higher for older accounts and secondary or tertiary placements |
| What to measure | Balances resolved before write-off, cost per account, patient complaints | Liquidation of dollars placed, by placement month, before and after fees |
Source for timing and fees: RCR Hub, a vendor directory (May 2026, vendor-quoted). TSI runs both as separate services, early-out self-pay follow-up and patient bad debt recovery. For how the two programs differ in practice, see EBO, early-out and bad debt: the difference.
In a 2012 HFMA Ask the Expert answer (updated in 2022), two consultants said a bad-debt agency "should not collect more than 5 to 7 percent of dollars turned over from the early out program." They also recommended using a different agency for bad debt than for early-out, so each has reason to collect as much as it can. That's expert opinion from 2012, so treat it as a rough check.
Your own history is the benchmark that counts. Measure every vendor the same way:
Group accounts by the month they were placed.
Track gross collections on each month's placements at 12 and 24 months.
Divide by dollars placed, net of adjustments and recalls, to get liquidation.
Subtract fees to get net-back per dollar placed.
Compare vendors only on placements of the same age and type.
A lower fee comes out ahead only when recovery holds up. In an illustration, Vendor A charges 25% and liquidates 6% of dollars placed, which nets you 4.5 cents per dollar. Vendor B charges 20% and liquidates 5%, which nets 4.0 cents.
B would need to liquidate 5.63% to match A (4.5 ÷ 0.80, a TSI calculation). At 5.7%, B nets 4.56 cents and comes out ahead.
Results vary by payer mix and client program.
Some patient balances reach early-out because an insurance claim was denied and the balance moved to the patient. Working the denial first can change what the patient owes and who pays it. See what a denied claim costs to work for the break-even math, and screening self-pay for coverage and charity care before placement.
Running a vendor search? See what an early-out and bad-debt vendor RFP should ask, and ask each vendor whether it charges interest, reports to bureaus or sues patients.
Whether a collection fee can be passed on to the account holder depends on the agreement that created the debt and on the law that applies, and state laws differ. For consumer debts, the FDCPA bars a debt collector from collecting any amount, including a fee, unless the agreement creating the debt expressly authorizes it or the law permits it (15 U.S.C. 1692f(1)). What an agency charges you is a separate question from what the account holder can be asked to pay.
Fee ranges come from RCR Hub, a vendor directory that sells advertising to vendors, so they're labeled vendor-quoted. The recovery rule of thumb is HFMA expert opinion from 2012. The RCR Hub page also gives recovery rates with no source, so this page doesn't use them. Figures were checked against their sources on Sep 28, 2026, and get checked again by Mar 28, 2027.
TSI (Transworld Systems Inc.) publishes it. TSI provides Accounts Receivable Management (ARM), Healthcare Revenue Cycle Management (RCM), CXBPO and Loan Servicing (via UAS). DebtNext, a TSI company, makes recovery management software for creditors. Some options this page describes compete with services TSI sells. Each figure names its publisher and date so you can check it yourself.
The agency net-back calculator compares up to 4 vendors from dollars placed, liquidation, fees and other costs. Open the agency net-back calculator. It runs in your browser, and nothing you enter is stored or sent.
General information, current as of Nov 5, 2026. It isn't legal advice. Rules change and differ by state, so check the sources linked here and talk to your own counsel before you act on it.
The Denials Economics Sprint takes one payer, one denial class and defined claim-value bands, sets a baseline, and reports overturn, paid yield, cash, time, human effort, cost per claim, the economic threshold and the expansion case.
