Today’s larger deductibles and out-of-pocket costs may cause many of your patients to put off recommended treatment. By creating a comprehensive financial policy that includes a third-party patient financing program, you can ease patient cost concerns and help them move forward with the care they want and need.
Here’s how to ensure that you select the best program for you:
Today, many patients are facing economic and financial obstacles that are causing them to delay or decline the care they need and want. Many factors, from the slow economic recovery to changes in insurance coverage and benefits, continue to play a major role in whether patients choose to move forward with recommended treatment.
Studies show that the average American has only $300 in available credit on their consumer cards and find it difficult to write a check for more than $500 out of their monthly budget1. If a patient is in need of treatment that has an outof- pocket cost beyond $500, it can often be a real financial strain on their budget. What can you do to help more of today’s patients address cost concerns and get the care that they want and need? It all starts with your financial policy.
Creating a Comprehensive Financial Policy
A comprehensive financial policy ensures that patients know what forms of payment are accepted at your practice and when payment is expected. Your financial policy should
be written and specific, leaving little room for interpretation or misunderstanding.
Your financial policy should include a variety of payment options for patients to take advantage of – including patient financing. Most practices have a financial policy that requests payment at the time of treatment by cash, check, or major cards such as VI SA or MasterCard. Some practices try to help patients manage deductibles and out-of-pocket cost not covered by insurance by billing patients in-house. Unfortunately, when a practice takes on the responsibility of billing, it also incurs the cost and risk associated with that as well — including late payments, bad debt and uncollected accounts. A better solution that has proven more effective for practices and their patients is to offer financing through a third-party financing program.
Adding a Third-Party Financing Program
Patients truly appreciate and have even come to expect some level of assistance from the practice when it comes to managing the cost of care. In a study conducted by Inquire Market Research, 32 percent of patients stated that without an obvious payment solution, they would ask their healthcare provider to function in the role of a financing company by billing them.
While nearly every healthcare provider has some degree of accounts receivable, when you take on the responsibility of billing patients, it can have a significant impact on your bottom line. Consider that the average cost (including materials, labor, and postage) of sending a statement to a patient is approximately $8 to $10 per account per month. If a practice sends an average of 200 statements per month, the cost can easily add up to over $21,000 annually.
Add to that the investment in time and resources to process payments, track down late payments, and make collection calls. The cost that a practice incurs to provide this value-added service in-house can be considerable.
Extending credit to patients in-house can also be expensive to your practice in terms of reduced cash flow. A recent survey conducted by Inquire Market Research showed that nearly one-third of all annual billings for practices were represented by accounts receivable.3
A Better Solution for Your Practice and Patients
Instead of billing patients and dealing with the risks and expense of accounts receivable, a better way to help patients manage deductibles and out-of-pocket costs not covered by insurance is to add a third-party financing program to your practice’s financial policy. Third-party financing is similar to a department store credit card and is actually quite common in fields such as dentistry, ophthalmology, cosmetic surgery, and audiology. Using a third-party financing program is simple and easy. For a small processing fee to practices, patients apply for financing. Once they are approved, the patient can immediately access their credit to pay for treatment over time with convenient monthly payments. Because it’s easier to fit the cost of care into their monthly budget, many patients prefer this option and are more likely to take advantage of it in order to move forward with recommended treatment.
Choosing the Right Program for You
There are typically two types of financing available through a third-party financing company — No Interest (If Paid in Full) Payment Plans and Low Interest Plans.
No Interest Payment Plans tend to be very popular because they give patients the ability to pay for treatment over time without incurring any interest charges as long as the promotional balance is paid off within the specified time period.
The second type of payment option is the Low Interest Plan. More like a car loan, this type of financing is a term loan designed for patients who prefer a longer time to pay and lower monthly payments. It is ideal for patients with larger self-pay portions or higher out-of-pocket costs not covered by insurance. The loan is for a specified period, usually 2-5 years and features competitive interest rates and fixed monthly payments that include interest.
Making Patients Aware of Their Options
Once you have added a patient financing program to your financial policy, be sure to review it with your team so that everyone understands the terms and options. It’s often helpful if team members practice with scripts and do a little role playing so that they are comfortable explaining your financing program in a consistent manner to all patients. Practices should also have a visible copy of their financial policy displayed in the reception area so that patients can review it when they walk into the practice. You should also include a copy of your policy as part of every new patient’s paperwork. Have patients sign a copy of the financial policy and place it in their file as a record of their acknowledgement and understanding of your practice’s policies.
In addition to providing patients with a convenient way to pay for treatment, offering third-party financing can also help your practice increase referrals and patient loyalty. When patients are given an opportunity to pay over time with no interest (if paid in full) financing, it helps to create a positive experience and motivate more referrals. Programs that feature a revolving line of credit allow you to provide patients with an on-going financial resource that they can use whenever they need additional care, helping you to increase patient retention.
Most pundits agree that the economic recovery will be slow and years in the making. While today’s patients may be more cost-conscious than before, there are ways that you can help ease concerns and help patients get the procedures they need and want. Adding a third-party patient financing program to your financial policy will help you increase treatment acceptance, reduce A/R, and improve cash flow, while making it easier for more patients to fit recommended treatment into their budget and lifestyle.
by Rob Morris