Adding Patient Financing to Your Financial Policy

by Rob Morris

In 2013, patient out-of-pocket healthcare expenditures are projected to increase 3.4% over the previous year. Experts attribute the gain to increased consumption of medical care driven by faster growth in disposable personal income. While this projected growth could be another indication of our slow but steady economic recovery, patients may still hesitate to move forward with a recommended treatment plan because of cost concerns. That’s why now more than ever vascular/venous practices should consider adding patient financing to ensure that they have a comprehensive range of payment options in place to help patients get the care they need, when they need it.

Some practices try to help by billing patients in house, but when you take on the responsibility of extending credit to patients, you also incur the cost and risk associated with it—including late payments, bad debt, and uncollected accounts. What many practices are discovering is that choosing a third-party patient financing program is a better solution that allows them to help more patients get the treatment they need while maintaining a financially healthy practice. The “Real Cost” of In-House Financing 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% 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, the responsibility of billing patients can have a significant impact on your bottom line. In fact, when you consider the investment in time and resources
to process payments, tracking down late payments, and making collection calls, the cost a practice incurs to provide this value-added service in house can be considerable.

In addition, research shows that once an account goes uncollected beyond 90 days, the chances of it being paid are significantly lowered. While every attempt should be made to receive payment, even if that means handing the patient over to a collection agency, when efforts fail, uncollected fees become a bad debt write-off that can further impact your practice financially.

A Better Solution to Manage Out-of-Pocket Costs

Instead of dealing with the risks and expense of billing patients, a better way to help manage costs is to add a third party, or outside patient financing program, to your practice’s financial policy. Third-party patient financing is actually quite common in many healthcare fields including dentistry, ophthalmology, cosmetic surgery, audiology, and even veterinary medicine. Using a third-party financing program is usually pretty simple. For a small processing fee to practices, patients apply for financing; once they are approved, they can immediately access their credit to pay for treatments over time with convenient monthly payments. Because it’s easier to fit the cost of care into their monthly budget, more patients can move forward with recommended treatment.

The benefits of offering a third-party patient financing program include increased treatment acceptance and retention, as well as reduced accounts receivable and increased cash flow. Lending institutions charge consumers interest for the opportunity to make payments over time, but when you bill patients, your practice makes no interest on the money sitting on your books. In the meantime, your overhead costs including payroll, rent, supplies, and equipment continue to add up, while fees wait to be collected. This can create a cash flow crunch, with more money tied up in accounts receivable than there is coming into the practice. Turning patient financing over to financial professionals allows your practice to step out of the financial relationship and gives your staff more time to focus on practice building activities like delivering superior customer service.

The Right Program for You

Because financial needs differ from patient to patient, you want to select a patient financing program that provides flexibility and meets the needs of today’s patient. Programs that provide special financing offers, such as 12 months deferred interest—where the patient pays no interest charges, as long as the balance is paid by the end of the promotional period—are very attractive and popular with patients. Programs that feature a revolving line of credit can help increase patient retention by providing an ongoing financial resource patients can use whenever they need additional care.

When selecting a plan, consider the initial costs to patients. Plans that feature no upfront costs, annual fees or prepayment penalties will always be more attractive than those that don’t. Programs offering a simple and quick application process, immediate credit decisions, and multiple processing options (online or by phone) can make integrating third-party financing into your daily routine even easier.

Another thing to consider when selecting a program is when your practice will be paid. One of the biggest benefits of offering financing through a third-party is that you get paid for your services up front. But not all programs are the same—some can take as long as 14 days to pay the practice, while others take as little as two days—so be sure you understand the program’s policy. Also consider when the payment will be delivered. Some programs offer direct deposit into an authorized account while others simply mail a check to the practice, increasing the amount of time before payment is credited to your account. Ideally, the less time you have to deal with documentation and paperwork to get compensated, the better.

Getting the Most From Your Program

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 a little role-playing so that they are comfortable explaining your financing program in a consistent manner and providing patients with the same information. Here is an example of how you can easily incorporate payment options into a discussion about your financial policy:

“Ms. Jones, the cost for the treatment we’ve discussed is going to be $2350. As you’ll notice here on our financial policy, we require payment prior to treatment. Weanticipate your insurance benefits will cover $1500, leaving you with an out-of-pocket expense of $850.

“We have several convenient payment options to help you get the care you need…let me go over them with you. Of course we accept cash and checks, as well as Visa, MasterCard and American Express. We also offer special financing, which many of our patients really appreciate. Let’s take a look and see what your monthly payments would be with one of our special financing options.”

Another advantage to third-party financing that is often overlooked is the fact that it can also be used as a marketing tool for your practice.

If patients know that you provide special financing options, they are probably more likely to seek care at your practice than at another practice that does not. Most patient financing companies provide free marketing materials including patient brochures and counter displays. Be sure to take advantage of these materials and display in them in your waiting area and consultation rooms. You can also promote the benefit of financing in your new patient materials as well as marketing and advertising activities.

Adding third-party patient financing to your financial policy makes it easy to offer patients a payment solution that fits both their budget and lifestyle and allows them to move forward with treatment. Increased treatment acceptance and patient satisfaction, along with reduced A/R and improved cash flow, are benefits that can help your practice and patients get—and stay—healthy and happy.