Watch What You Bill

By Peter DeHaan, Ph.D.

Peter DeHaan, Publisher and Editor of AnswerStatOne of the common outcries emanating from the healthcare debate is the charges for services rendered. Seemingly, everyone has a story about an outrageous bill covering what he or she perceived as a relatively minor procedure, test, or visit. Although those generating the bills know the imperative need to capture every penny of billable services, those receiving the bills often feel duped, powerless, and victimized.

Although on a much less critical level, a parallel scenario exists with telephone answering services. Squeezed on every side, answering services seek to bill for every service interaction in order to generate enough revenue to pay their staff and stay in business. For those receiving these bills, the majority response is a shrug of the shoulders and a reluctant payment, but a growing minority vocally clamors for change.

Over the years, I’ve heard many a discussion by telephone answering service managers on a plethora of creative ways – some of which border on the nefarious – to bill for services rendered. The prevailing goal of each consideration is to maximize billing. Since the requirement of any enterprise, including non-profits, is to make money, this is an admirable objective. However, the deliberations I’ve witnessed take an unhealthy pro-business perspective, ignoring a more holistic customer-centric imperative.

Consider the billing of telephone service, something call centers are painfully familiar with. From my local service provider, the rate for a business line is a fraction of the total bill, a mere 52 percent. Added to the basic business line fee are the subscriber line charge, a federal excise tax, a state tax, emergency telephone, a 911 operational charge, and a federal universal fee, plus fees for touch-tone and call forwarding. If I were to ask the cost of a business line, I would be given one number, but the actual bill would be almost double.

Next, take traditional long distance, which is generally quoted as a cost per minute. Unfortunately, what we are told is not what we pay. My long-distance service is stated to be five cents a minute. However, ancillary items more than double the bill. These include a telecom restructuring fee, state tax, a FCC Common Carrier regulatory fee, a Federal Universal Service Fund charge, and a network access fee. The result is that my effective cost per minute exceeds 10 cents.

Even my cell phone provider has been sucked into this deplorable practice, tacking on regulatory and administrative fees, state and local 911 fees, an E911 carrier recovery fee, a Federal USF charge, and a state tax. The upshot is that another 20 percent is added to the quoted rate.

Does the billing practice of these providers garner any respect? No. However, it does earn them the derision of their customers. The truth is that there is an appalling disparity between marketing and billing; the accuracy of charges is doubted, and their brand is disparaged each time a bill is received. It is no wonder that customer churn is a concern.

So what happens when a person gets a bill that is 20 percent, 52 percent, or 100 percent higher than what they expected? They complain. They tell everyone they know.  They post something online, sharing their ire with the world. They denigrate and besmirch the name that these organizations have worked to build, promote, and grow. Some will switch providers; others will remain customers, albeit unhappily. Sometimes the cost to switch – either in terms of time and money – is simply too high. Often there is merely a resigned acceptance, because “they all do it.”

However, just because everyone does it doesn’t make it right. It certainly isn’t good business practice to mislead customers or to charge more than expected. That is one reason why innovative approaches that offer fixed rate packages are winning business away from the entrenched providers who prolong these practices.

For an alternate consideration, contemplate gasoline stations. Yes, prices are high, but at least what is posted is what we pay. Did you know that about 62 cents paid for every gallon of gas goes to taxes? Most people don’t, because stations are required to display the total cost per gallon, including all taxes and surcharges.

Suppose this wasn’t a requirement. One station, desiring to list a more attractive price, would opt to not include sales tax, which is common practice in most retail situations. So, instead of listing $2.89, their sign might display $2.73. Not to be outdone, the outlet across the street elects to back out the federal gasoline tax of 18.4 percent as well, thereby allowing them to advertise an attractive $2.54 per gallon. The station down the street responds by removing all taxes and ancillary charges, resulting in an astounding $2.27 a gallon. Imagine filling up your car for $2.27 a gallon – and being charged $2.89. To avoid this misleading practice, laws were enacted to enforce uniformity and protect consumers from misleading marketing.

You may think these examples have nothing to do with telephone answering service billing (or for that manner, medical billing), but they do. I have heard of all manner of creative techniques being implemented that serve to increase billing. I’m not talking about fraudulent practices, but rather add-on charges, ancillary services, and generous usage calculations that result in a higher bill than what the client was expecting.

These techniques are viewed as “common business practice” and accepted as normal. However, when attempting to adopt a customer-centric perspective, there is much in need of correction.

Granted, answering service billing is more complicated than selling gas by the gallon (and much less complicated than billing for a medical procedure). Regardless, there is a need for a comprehensive billing schema that effectively bills for all work. In addition, there is invariably answering service work that includes unbilled activity; this effort needs to be subsidized by what can be billed.

However, to be ethical, all chargeable items need to be easily explainable and clearly communicated. Don’t bury charges in a minutia of fine print. The means and methods of billing need to be comprehendible to the average person. A sure indication that your billing calculations are too complex is when you find yourself repeatedly explaining them to your staff. The final step is to present information in an understandable manner on the invoice. Don’t bury charges in pages of confusing dribble, but instead use a few lines of understandable itemization.

All answering services and outsourcing call centers boast about their quality and most make mention of their pricing – be it low pricing or competitive rates. A third item needs to enter into the picture, a fair representation of charges.

Peter DeHaan is the publisher and editor-in-chief of AnswerStat magazine and a passionate wordsmith. Connect with him on his personal blogs, social media sites, and newsletter, all accessible from peterdehaan.com.

[From the February/March 2010 issue of AnswerStat magazine]