More Regulations Coming for Financial Services Companies

More Regulations Coming for Financial Services Companies as a Result of the Senate’s “Nuclear Option” Rules Change

Financial Services and Energy Sectors Likely to See Additional Regulations in 2014

Harry Reid, (D) Nevada and the Democratic Senate, facing an almost certain backlash from voters just 12 months from now over the dismal rollout and broken promises of Obamacare, took the drastic and historic step recently to invoke the so called “Nuclear Option” and change the rules of the Senate relating to the filibuster, further reducing the power of the minority party.  In justification of this move, the majority leader, made statements to the fact that Republicans were holding up judicial nominations, when a quick review of the number of approved and blocked judicial nominations by the Senate during the Obama administration seems to clearly belie the Senator’s objections.

While the argument seems to be about judicial appointments in general, upon closer inspection, it appears to merely relate to three specific judicial appointments to the US Court of Appeals for the District of Columbia Circuit.  This little known DC circuit court is one of the most powerful courts in the nation, and has been the court that has heard cases relating to President Obama’s use of recess appointments like that of CFPB Director Richard Cordray, EPA Regulations and numerous issues relating to the Affordable Care Act.  With the President facing a crisis of trust and confidence, his monumental healthcare law on life support, and the prospect of losing control of the upper house of congress next year, Democrats seem to be taking a “Scorched Earth” approach to preserving a legacy for President Obama by stacking the DC Circuit Court of Appeals with some of the most radical, left leaning judges possible in hopes of defending the President’s policies from the mounting judicial challenges looming on the horizon.

The President has made no effort to conceal the fact that if he can’t get his legislative agenda passed by a gridlocked congress through normal order, he is just as happy to make an end run around the legislative branch to ram it down the throats of the republicans and the American people through the use of such controversial executive actions as recess appointments (when the Senate is actually not in recess) and executive orders in order to implement sweeping regulations.  With the DC circuit court of appeals soon to be tightly packed with liberal judges sympathetic to President Obama, the Democrats and the President have set up a backstop against any challenges to Obamacare, his past or future executive orders and his agency and judicial appointments.

Now, with congress effectively muzzled and that pesky constitution out of the way, he is free to enact regulations by executive order and appoint the most radical agency personnel to carry out his agenda.  So what does this mean for the financial services and energy sectors in the coming three years?  Yes…remember, Obama is in power until January 2017.  So if you thought the past three years of CFPB rule making, implementation and enforcement actions have taken a toll on the ARM industry, well, you ain’t seen nothin’ yet!  With the DC Circuit court now firmly in the President’s pocket, you can expect much more of the same in the coming years.  Hang On!
Lighthouse Consulting has been providing solutions to operational compliance challenges for ARM companies for over a decade. Contact Phillip Duff, CEO of Lighthouse Consulting today and let us help you navigate the compliance landscape.

Phillip Duff, CEO | | | (904) 687-1687

Sell your Law Firm, Keep Your Job and Reduce the Stress!

Become a Law Firm Partner to Prosper in 2014 and Beyond

Sell your law firm and become part of a larger more profitable firm and reduce the stress.

Lighthouse Consulting is representing a major law firm who is looking for other firms to purchase.

We are looking for several law firms that will provide value to the buyer by providing opportunities to move into new verticals and expand on current client opportunities. If you are feeling the stress of the changes in the industry, client requirements and compliance costs while your volumes and profit margins drop like a waterfall then this may be your answer. Imagine just worrying about the legal work you went to school for and handing off the other issues like technology, pre suit collections, accounting and skip tracing.

The firm we are representing is an innovator in the industry and has the reputation and positioning to continue to be one of the biggest firms in the US involved in creditors rights. Any merging firm will be proud to be part of this prestigious firm.


  1. Firms with significant business with Issuers ( CapOne, Citi, BoA, Wells Fargo, GE, Amex)
  2. Firms that have a substantial presence in other verticals (Student loans, Auto Finance, Subrogation, Utilities, Commercial)
  3. Firms with more than 25k judgments under management
  4. More than $2MM in annual revenue
  5. Added interest in firms that fit these criteria in NY, FL, NJ, OH, or CA

If you are interested in being considered for a merger contact me ASAP.

Thanks for the opportunity,
Phillip W. Duff

Maximizing the Sale Price of Your Law Firm Avoiding the Common Mistakes Sellers Make That Reduce Valuation at the Time of Sale

Avoiding the Common Mistakes Sellers Make That Reduce Valuation at the Time of Sale

There are many reasons that a potential buyer of your law firm or collection agency will pay you less than your firm is worth. The biggest reason will be your decline of revenue. During the merger process, the mountain of documents and information requested by the potential buyer overwhelms many owners. During this period of time, the managing partner or owner is distracted from their daily affairs and often this person is the “rainmaker” for the firm. When this happens, revenue begins to decline and the potential buyer begins to reduce his or her offer

There are other reasons for the decline of revenue within a firm that is going through or considering a merger. Many of those are directly related to the staff’s knowledge of or rumors of the potential sale of the business. As the documents are gathered for the potential buyer to review it becomes more and more likely that current staff will be involved and will begin to ask questions and start sale rumors.

As a business owner you should continue to focus on the daily affairs of your business while a team works to provide the potential buyer with the due diligence documents required. This can be done in two ways; the first is to create an environment of open information by informing your staff of the potential merger or acquisition and asking for their buy-in to the process. There are many problems with this potential process as many employees will see this as a negative event and begin to focus on finding another job. Many others will just be distracted by the unknowns and be far less effective. Only a very strong business culture can withstand this without decline in revenue and productivity.

Another way to handle this need is to hire an outside consultant to work with the potential buyer on your behalf. Using a third-party to polish up the firm is the direction most smart business owners will choose. Hiring a professional who is familiar with the process, needed documents and the possibly the potential buyer, will allow the owner and staff to focus on daily affairs and continue to increase the level of revenue within the company.

If you are thinking about merging or selling I would suggest that you be proactive in the process by creating your own due diligence team and putting together a due diligence package for any and all potential buyers, prior to receiving their requirements. By being proactive in creating a due diligence package you will not only locate the areas with opportunities for improvement, you will look much more professional in the face of the potential buyer. If you will take the time to polish up your business just like it was a car you were trying to sell, it will look like it is worth more money to the potential buyer.

If you are looking for a third-party to help you polish up your law firm or collection agency Lighthouse Consulting is your choice.

Remember the Days When Clients Wanted you to Collect Money?

Those were the days! The days when all you had to do to get and keep a client would show them a batch track of similar work and what your liquidation rates were. The client was interested in making money…PERIOD! Unfortunately, the days when clients judged you based upon your production have gone by the wayside and been replaced by compliance audits, standard operating procedure manuals, enhanced technology burdens to meet compliance and countless other ways to reduce our profits.

Remember the days of championship challenges when the winner received the majority of the markets share of the placements? Now placements equal 20% of what they were in 2007 so even the winner of the lion’s share of these placements is a loser. Remember when you didn’t have to record calls, when you didn’t have a compliance department, when YOU made the decisions about how you would run your business instead of the client? Once again those days are gone!

Well it was good remembering how it used to be, but what we have to except is how it is today. Issuer’s and large debt buyers are requiring agencies to be highly compliant, highly transparent, to spend tens of thousands on nonproductive employees, and to work the portfolio as the issuer or debt buyer demands.
The problem is that all of these factors are reducing the collection agency’s and law firm’s ability to make a profit and survive in the marketplace. As the industry consolidates, so will the industry profit margins.

I estimate profit margins will drop to 5% to 8% in 2014 and remain there for the next 48 months. At the end of that time there will be 50% fewer nationally licensed collection agencies and 70% fewer collection law firms. The industry will have consolidated like many other industries before; resulting in reduced profit margins and larger companies.

Are you prepared to survive the next 48 months? Will you be one of the companies that still exist 48 months from now? This is all up to you. The companies that come out the other side of this consolidation will own the marketplace but they will have to make many sacrifices to get to that position in the industry. Lighthouse Consulting has been helping its clients overcome the perilous seas of our industry since 2003 and can help you to survive into 2017 and beyond.

The #1 Reason a Merger or Acquisition Fails

What Kills Most Mergers or Acquisitions? Deal Fatigue!

Many merger deals end in a pile of paperwork and countless, endless emails with seemingly pointless questions. This is what I call “deal fatigue”; when one are more parties involved in a merger or acquisition throw their hands up at the amount of information required to make the deal happen. In most cases one party feels overwhelmed and financially disadvantaged by the deal process and decides it is easier to just give up. In most cases, deal fatigue works itself out and the deal gets done; it just creates very long delays and both parties to the transaction become extremely irritated. If you are the one being acquired it may also reduce the amount you ultimately receive.

With the changes taking place in the collection industry today, consolidation is a new reality for most sectors of the industry. As these mergers and acquisitions begin their process there will be many obstacles for the parties involved.

How Do I Avoid Deal Fatigue?

In order to expedite the merger process you need to be proactive and prepare well in advance of the diligence process. By compiling a diligence manual or package that a potential buyer can review, you will shorten the diligence process and expedite the time to closing the transaction. The diligence manual provides detail information on your firm, collection strategy or legal process, staff members, technology assets, audited financials, the principles detailed bios, resumes and background checks along with many other supporting and financial documents you will ultimately have to provide or produce prior to closing a transaction. By being proactive, you will look prepared, organized, and confident and be miles ahead of the competition when it comes time to negotiate.

Most of the law firms in the collection industry were built as lifestyle businesses and therefore will need some polishing to look appealing to an potential suitors. Since many of the law firms and collection agencies that will be consolidated have never experienced a merger or previously been acquired, they will require assistance preparing a due diligence package that is both comprehensive and promotes the company in the most favorable manner.

Copies of equipment lease agreements, credit card statements for 3 years, building leases, vendor agreements, client contracts, compliance audits and certifications and much more will be required to sell your law firm of agency. Lighthouse Consulting has been evaluating law firms and collection agencies for over a decade and we can help you navigate these transactions and help prepare your firm to be competitive in the consolidated marketplace.

Putting the Lipstick on the Pig

That’s not to say that your business is a pig, but to an outsider without the emotional attachments to your business, perceptions can quickly turn into realities. The time to prepare for a potential merger or acquisition is LONG before the discussions and negotiations get started. Start now to create this package and then get a professional to put the lipstick on it. Chances are you have been busy building your collection company and have not been spending your time to make sure it looked good to someone else. As we build our own company we worry much more about it surviving and much less about how it looks to a potential acquirer, but as you begin to market your business for sale you may need to put some “lipstick on that pig.”

It’s important to hire a professional like Lighthouse Consulting to provide the guidance and knowledge to help you polish up your business before it is put up for sale. If you would like to discuss how Lighthouse Consulting can help you to merge, be acquired or purchase other companies call us today at 904-687-1687.

The Next Generation ARM Industry Policies and Procedures for 2014 – The Crossroads of Security and Compliance

The Crossroads of Security and Compliance

No doubt a significant amount of any collection agency, debt buyer or law firm’s time over the past two years has been consumed with gathering new requirements implemented by regulators, distilling and understanding the impact of the new regulations on their business practices and scoping the effort, cost and time required to implement these new regulatory requirements.

Mandatory audits of financial services companies that meet the larger market participant definition have created an immediate need for all operators in the financial services space, as well as their service providers, to step up their game with respect to security and compliance.  While this subject has been covered extensively, it is my opinion that the dots have yet to be fully connected on the subject.

The Requirement for Broader Policies and Procedures

Security audits and certifications can be provided by any number of competent third party firms including CPA’s, QSA’s, and other recognized third party security auditors to provide independence and audit compliance as it relates to any number of security certifications such as PCI-DSS, SSAE16 (SOC1 or SOC2), HIPAA, FISMA, ISO 27000, GLBA and numerous state certifications relating to plastic card acts in individual states. While these certifications are mandatory for any company operating in the financial services arena today who handles private consumer data, there is an additional requirement for a new set of policies and procedures that companies will need to have in order to demonstrate compliance with the rules outlined by the CFPB and FTC.

This set of policies and procedures are the merger of the security policies and procedures for the regulated entity as well as the operational policies and procedures outlined by the company.  A close inspection of the CFPB’s audit and supervision manual will quickly reveal the blurred lines between these two disciplines in the organization.

The Emerging Need for Hybrid Policies and Procedures

But the development of this set of hybrid policies and procedure is no small undertaking, and subtle nuances exist by industry specialization such as debt buying, collections, legal collections as well as for the service providers supporting these industries.  A one size fits all solution simply will not suffice for all industries, and furthermore, the effective demonstration of the implementation of these policies and supporting documentary evidence of compliance will not be a uniform exercise across all collection agencies or debt buyers.

Creating the body of work that will come to be a set of holistic policies and procedures, melding the practices of information security and compliance across an organization, is also only scratching the surface when it comes to defending one’s firm or agency in a civil investigative demand proceeding by the FTC or CFPB.  Rather, this hybrid policies and procedures manual merely provides the roadmap a company must follow in order to demonstrate the effective implementation of operational practices, monitoring and oversight and, most importantly, the documentation of ongoing adjustments to business practices required by the regulators.

Be on Offense…NOT Defense!

In short, any company operating in the new regulatory landscape will have only one chance to get it right BEFORE being forced to go on defense against a regulatory agency bringing a civil investigation demand proceeding against it.  It is imperative that you prepare now, select a trusted and competent advisor to assist your company in developing these new policies and procedures and have that advisor provide the third party independence to evaluate and monitor how your company is complying with their own policies.  While the effort will be significant, and the cost not insignificant, the burden and costs to defend your company AFTER a civil investigation demand notice arrives will be exponentially more expensive and most probably a death warrant for most small to medium sized companies.

Cruise lines don’t perform evacuation drills as the water is coming over the rails and airlines don’t play the safety briefing videos as the cabin is filling with smoke.  So why are you waiting for the day that the CID notice arrives and Federal agents demand boxes of documents and computer hard drives?  Get your house in order today.  It’s cheaper and a LOT less stressful in the long run.

Which State Law Firms Are at Risk of Losing Their Practices?

See where your state falls on the risk quotient.

It is my belief that some single state law firms are more at risk of being consumed or losing their client base than others may be based on the volume of accounts worked in those States. As large credit grantors work to consolidate their vendor networks, so shall vendors consolidate. Many collection agencies and law firms will be forced to consider either expanding greatly or merging to demonstrate value to their clients and create retention.

The regulatory environment and increased demands from issuers and large debt buyers will dramatically affect all market segments in the collection industry. Collection law firms will be impacted especially hard as issuers look to engage firms with a multistate focus. This will mean that many firms will be consolidating and these mergers will leave some firms without any clients.

For example if you are a single state law firm in the state of Maine it is very likely that one of two scenarios will determine your future. The first would be for you to merge with other firms to create a multistate firm and use the new client base to expand into other states. The second possibility is that you will not merge with another firm and continue operating in a single State, while other larger, consolidated firms absorb your client base as credit grantors move towards consolidated legal networks.

In order to gain market share in 2014 a law firm must be multistate, highly compliant, using an enterprise software platform and provide a value proposition to the large credit grantors and debt purchasers.

It is my opinion that in 24 months the number of collection law firms that will continue to operate will be reduced by 50% or more. These firms will be much larger and will work all the multistate volume from their clients.

If you are a single state law firm today and you are looking for advice and strategic planning for the future Lighthouse Consulting has your solutions. If you are looking to acquire single state law firms in 2014 Lighthouse Consulting has your solution as well.

Here is a list of states by risk priority with 10 being the highest risk and one being the lowest.


List of State and Priority of Risk







North Dakota


District of Columbia


























North Carolina




South Carolina






















New Hampshire




New Mexico


New Jersey










Rhode Island




South Dakota








West Virginia










New York



Lighthouse Consulting has been providing solutions to operational compliance challenges for ARM companies for over a decade. Contact Phillip Duff, CEO of Lighthouse Consulting today and let us help you navigate the compliance landscape.

Phillip Duff, CEO | | | (904) 687-1687

Auditing and Monitoring Third Party Service Providers

Ensuring compliance of entities that provide “material support” to ARM industry operators

The chief role of the CFPB as stated in Bulletin 2012-03 simply entitled Service Providers is to, “protect the interests of consumers and avoid consumer harm.”   The memo goes on to say that, “The CFPB’s exercise of its supervisory and enforcement authority will closely reflect this orientation and emphasis.”   While the CFPB’s final rule will directly affect the larger market participants, those ARM companies with operating revenues below this threshold are not immune from the enforcement authority of the agency, nor are service providers who directly or indirectly serve the companies under the supervisory and enforcement authority of the bureau.

While the bulletin specifically speaks to supervised banks and non-banks definitionally, the bureau maintains enforcement authority of Federal Consumer Financial Law as defined in section 1002(14) of the Dodd Frank Act for all companies and service providers subject to the statute.  It is also important to note, that a service provider is defined in section 1002(26) of the Dodd Frank Act as “any person that provides a material service to a covered person of a consumer financial product or service” and may or may not be affiliated with the person to which it provides services.  The bureau specifically defines a service providers by the perceived value they deliver a person or company and NOT by a contractual relationship or by receiving specific monetary compensation.  By this definition, the tentacles of the CFPB now extend down from supervised banks, to non supervised financial service providers and finally the entire ARM Industry vendor community servicing all aspects of the industry.

Finally, the CFPB ties legal responsibility for the actions of service providers back to the bank or non-bank entity that engaged the service provider in certain circumstances.  The bulletin states, “ The CFPB expects supervised banks and non-banks to have an effective process for managing the risks of service provider relationships.  The CFPB will apply these expectations consistently, regardless of whether it is a supervised bank or non-bank that has the relationship with a service provider.”  Translation???  You may not be a tier 1 card issuer, but you better be auditing your service providers just like the supervised banks are auditing your business for compliance.

In the bulletin, The CFPB provides a good outline of the foundation of your service provider compliance audit process, outlining five key areas companies should focus on when determining the compliance level of their service providers.  Companies should be:

  • Conducting thorough due diligence to verify that the service provider understands and is capable of complying with Federal consumer financial law;
  • Requesting and reviewing the service provider’s policies, procedures, internal controls, and training materials to ensure that the service provider conducts appropriate training and oversight of employees or agents that have consumer contact or compliance responsibilities;
  • Including in the contract with the service provider clear expectations about compliance, as well as appropriate and enforceable consequences for violating any compliance-related responsibilities, including engaging in unfair, deceptive, or abusive acts or practices;
  • Establishing internal controls and on-going monitoring to determine whether the service provider is complying with Federal consumer financial law; and
  • Taking prompt action to address fully any problems identified through the monitoring process, including terminating the relationship where appropriate.

In these five recommendations, the bureau is making specific, actionable recommendations for ARM companies to create a detailed compliance audit program for all service providers to an organization, requiring them to develop internal policies, procedures and schedules to monitor the ongoing compliance of a service provider and to take immediate action to remediate or assist in remediating any areas of non-compliance that may be uncovered as a result of the ongoing monitoring process or recertification audit schedule.

Remember, the burden of ensuring that your service providers both understand Federal consumer financial law AND are capable of complying with these laws rests with you.  Therefore, if you have not already developed a detailed service provider compliance audit strategy, do so immediately.

Suggested Reading:

1)      The CFPB’s Supervision and Examination Manual: Compliance Management Review and Unfair, Deceptive and Abusive Acts or Practices

2)      CFPB Bulletin 2012-03  |  Service Providers
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Lighthouse Consulting has been providing solutions to operational compliance challenges for ARM companies for over a decade. Contact Phillip Duff, CEO of Lighthouse Consulting today and let us help you navigate the compliance landscape.

Phillip Duff, CEO | | | (904) 687-1687

Does Your Website Make You Look Irrelevant?

Is your website a positive and effective reflection of your business and operational practices, or is it screaming you have become irrelevant?


So you bought a domain name and built a website…Check!  Maybe you added some robustly vague content about delivering efficiencies and increasing ROI and maybe you even still have that glamor shot from 1958 on your bio or team page.  Or even worse, you built a cool flash website with a twirling logo and star-burst effect…that won’t display on any current IOS device today.   When was the last time you even thought about your website or what it might be saying about your business and your attention to the details of running that business?

Your website says more about your business than you may think.  What agency, buyer or collection law firm today would allow the exterior of their business or their reception lobby to become so dilapidated that the furniture was held together with duct tape, the carpet had a traffic path worn through to the padding, and the paint was so old it was flaking off the walls?  You would never let that happen!

Yet every day, I visit website after website of collection agencies, debt buyers and law firms that are so outdated that they are either entirely ineffective, or worse, they create an initial negative perception of the business for the visitor.  Many utilize such antiquated technologies that they can’t be viewed easily on mobile devices and tablets or displayed on some operating systems altogether.

More Than a Digital Business Card

The website of the 21st century ARM Company has to be more than a digital business card.  Your website is usually the first point of contact a potential client has with your business.  It speaks volumes about the quality of service you deliver, the operational efficiency of your business and your attention to details.  Simply having a copyright notice at the bottom of your site that has not been updated in the last five years (I see it all the time), tells a potential client you don’t pay attention, you aren’t interested in tending to the details of your business, or you are just to incompetent, or worse, too cheap to take the time to address your own website or hire a professional to manage this function for you.  If you have ANY doubt about what I am saying here, just look at how the perception of the new healthcare law has been impacted by the performance of the website.  The new narrative in Washington has become, “The website was supposed to be the easy part.  If they can’t get that right, what chance to do they have to get the rest of the law right”.  The same applies to your business.

Responsive Design, Effective Communication

Any corporate website online in the year 2014 should be built on a responsive mobile platform, with a backend Content Management System (CMS) that allows the site owner to easily manage and update website content.  The website should perform functions like blogging, vlogging (video blogging) and effectively managing such ARM Industry functions as online payment systems and an online complaints management portal.   According to a recent Advertising Age study published in August of 2013, over 50% of the US population is projected to own a smartphone in 2014 and 44.9% of the US population is projected to own a tablet.  So it is not a stretch to assume that fully one half of visitors coming to your website will be using a deviceother than a personal computer to consume content on your site.   If your site is not designed to dynamically adjust and display the site’s content for the visitor based on the specific screen size and resolution of their device, the experience will be less than effective or altogether negative and frustrating.  This is not the desired experience you seek to provide potential clients who want to provide you with placements or consumers who may just want to pay an outstanding debt.

Using Your Site to Demonstrate Compliance

Have you ever thought that your website might be costing you new business opportunities…before you were even aware that a potential client might be considering your agency or law firm for placements?  It’s probably happening more than you think.  Your website can tell a potential client a lot about your business; before they ever pick the phone and speak to you.  The absence of a payment portal for consumers to make online payments might demonstrate you’re not doing everything you could to collect on behalf of the client.  The lack of a complaint management system or consumer education resources could demonstrate that you either don’t understand the new regulatory requirements outlined by the CFPB, or worse, you just don’t care to implement them.

Regardless of the reality, perceptions usually drive decision making processes and your website could be creating some pretty negative perceptions as the first impression of your business to potential clients.  Furthermore, if they rule out your agency or law firm for consideration and you never knew you were even in the running, there is not much you can do to recover.  In an era of consolidation in the ARM industry, there will be fewer and fewer clients to serve in the coming years.  You don’t want to make that list even shorter by shooting yourself in the foot because your website does not show your company in the best light.

Get Noticed

So, now you have a new website and it’s built on a dynamic responsive mobile platform, you’ve updated your bio photo and even added a contact form so potential clients can actually contact you online.  You’re ready for the world to begin beating a path to your online door.  Well…it’s just not that easy.  How do you stand out on the internet in a world of millions of online offerings?  How do you make your website come up on the first page of Google when people are searching?  How do you make your listing stand out from the other nine listings on the first page of Google and how in the world do you manage all the negative online reputation issues?  Maybe by now you are thinking that you should just scrap this whole “Website Strategy” and just wait to see if the internet idea really catches on.

Building an effective website is like integrating any other piece of technology into your business.  The collection agency of 2014 doesn’t utilize a 3 x 5 card file system to track collection accounts and they don’t use rotary dialed telephones to make outbound collection calls.  ARM operators have made significant investments in technology, training, integration and maintenance because these technologies deliver value, increase efficiency and drive more revenue to the bottom line.  Your website should be creating the same value for your company…if it is engineered correctly and the proper strategy is applied to the technology.  Properly defining meta data, titles, descriptions, image tags, file names, post tags and categories, SEO, SEM, content marketing are all part of an effective web strategy.  If you don’t possess these skills and can’t manage this part of your marketing and compliance strategy effectively, outsource it to a trained professional.

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Lighthouse Consulting has been providing solutions to operational compliance challenges for ARM companies for over a decade. Contact Phillip Duff, CEO of Lighthouse Consulting today and let us help you navigate the compliance landscape.

Phillip Duff, CEO | | | (904) 687-1687

Could Obamacare Create a Windfall for Healthcare Collections

With premiums increasing and deductibles rising, consumer will take on additional costs relating to healthcare in the coming year.

Did President Obama just hand the collections industry and early Christmas present?  If you believe the stories being reported by thousands of Americans who liked their healthcare insurance, and thought they were going to be able to keep their insurance, it would appear so.

Depending on which political analyst or agency you listen to these days, it looks like somewhere between eight millions policies at the low end, and as many as 52 million policies at the high end could be cancelled as a result of the fine print behind the now nuanced promise by president Obama.  Already today, 4.2 million policies have been cancelled effective their renewal dates and these consumers, along with an estimated 80% of the individual marketplace will find themselves ultimately having to select a policy that could have much higher premiums and significantly higher deductibles.

This additional financial pressure on the consumer will ultimately generate higher receivables in the healthcare sector.  The front end loading of costs for the consumer will mean that in addition to the increased cost of mandated premiums, consumer will now be faced with more limited choices and in many cases be left with few options other than high-deductible plans, forcing them to pay the first $5,000, $7,000 or even as much as $10,000 per calendar year in out of pocket expenses.  Gone are the days of $20 office visits and co pays for those who once purchased their policies in the individual markets.  These consumers will now face the reality of a significant household budget impact relating to healthcare premiums and out-of-pocket expenses.

You can debate the politics of it until you are blue in the face, but what doesn’t change is that a larger portion of the consumer’s wallet share is going to be absorbed by the mandated healthcare costs their household will have to cover, or else the government fines (taxes) the individual, affecting wallet share in a different area.  Either way, it’s like the commercial says, “You can pay me now, or you can pay me later.”  In an economy that has been hovering just above a comatose state for the last five years, many households simply don’t have the reserves or the current income to absorb these costs and many will not adjust their lifestyles accordingly to live in the reality of the new norm.

So how is your agency or law firm preparing for this potential wave of new healthcare placements?  Are your agents trained to effectively collect healthcare accounts?  Does your technology support the specific needs of healthcare collections?  Do you have the required HIPAA compliance certifications in place to accept these placements and work these accounts?  Do you have the right sales and business development team in place to seek out these new healthcare collection opportunities?  The time to be thinking about all of these questions is now.  In an industry that continues to consolidate and downsize, those firms and agencies that identify opportunities well in advance and position their companies to take advantage of these opportunities will be better suited to survive and thrive in the ARM Industry of tomorrow.


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Lighthouse Consulting has been providing solutions to operational compliance challenges for ARM companies for over a decade. Contact Phillip Duff, CEO of Lighthouse Consulting today and let us help you navigate the compliance landscape.

Phillip Duff, CEO | | | (904) 687-1687