Chip Hunziker
It’s a sobering situation. As the number of Americans with high-deductible insurance plans continues to grow, more families across the country strain under the burden of health-care expenses. A new Kaiser Family Foundation/New York Times comprehensive survey finds that among those with health insurance, one in five (20%) working-age Americans report having problems paying medical bills in the past year, and that these problems often cause serious financial challenges and changes in employment and lifestyle.1 This is placing a growing burden on dental providers as bad debt and collection costs skyrocket.1 Add in declining case acceptance rates—as 62% of people with medical bills report postponing needed dental care1—and to survive and thrive in the years to come, dentists must embrace a “retail” payments mentality.
Additionally, 69% of patients cite lack of financing as the reason they delay or decline care.2 At the same time, patients may be declined by third-party financing companies. When asked, 37% of patients who did not pay their health-care bills cited a provider’s lack of financing as the reason.3
Yet, dental providers’ reluctance to provide financing is well-founded. Dental offices often struggle to collect from patients, spending valuable time and resources to manage the problem. Moreover, they expose themselves to regulatory risk when acting as a “bank.” These regulations include the Fair Credit Reporting Act, Fair Debt Collection Practices Act, Truth in Lending Act, Equal Credit Opportunity Act, Gramm-Leach-Bliley Act, Driver’s Privacy Protection Act, and others.
What is the solution and how can dentists increase access to care without putting themselves at risk? Let’s look at features of a modern consumer payment plan and how this type of plan can (and should) work for health-care practices, including dental practices.
Predictive analytics drive patient case acceptance AND consumer payments
The solution starts with data and predictive analytics. In health care, one size does not fit all. As a dentist, you are trained to treat each patient’s case individually. You take the time to evaluate each patient before you recommend a treatment plan. Your financial staff members should apply the same principle to consumer finance and patient payments. You would never think of prescribing the same treatment to every patient, so why would you handle every patient’s financial situation the same?
Access to consumer finance data and analytics allows providers to customize payment solutions based on a patient’s account balance and demographics. Providing custom payment plans that fit within patients’ budgets can dramatically increase case conversion rates and practice revenue.
Today, patients demand price transparency. The right data analytics platform should calculate a patient’s out-of-pocket expense and answer the question, “How much is this going to cost?” Your practice should offer real-time benefits eligibility verification and patient responsibility calculations, confirming a patient’s benefits and estimating what the patient owes prior to the delivery of service.
Once a payment amount is estimated and a patient grants consent, providers should conduct a soft credit inquiry analyzing a patient’s credit history and propensity to pay. A soft credit inquiry will not impact a patient’s credit rating and will provide you with insight and recommendations for financial arrangements that will work for your practice and the patient.
Individualized and targeted payment plans drive behavior
Based on a patient’s expected balance and propensity to pay, each patient is offered a payment plan targeted to fit within that patient’s budget, which enables the patient to receive and pay for care. This targeted payment plan is preapproved by you and meets your preference for risk and impact on cash flow.
A patient is incentivized for paying off a balance as soon as possible. Payment arrangements can include
- pre-pay or prompt-pay discounts;
- no interest, short-term payment plans; and
- long-term plans with various degrees of interest.
A patient is given favorable options that also align with the interests of the provider. For example, a patient who chooses to pre-pay or pay within 48 hours of statement receipt might receive a 10% discount, while a patient who requires 12 months to pay might be charged 10% interest (or up to the state legal limit).
enhancement OF CASH FLOW—receivables factoring
While patients are demanding payment plans, many dentists struggle with the impact these in-house payment plans have on administrative costs and cash flow. For providers interested in outsourcing payment plan administration, there are third-party companies that can provide these services, and several offer a real-time receivable factoring program that turns these patient receivables into cash. At the provider’s discretion, patient receivables and patient payment plans can be transferred on a nonrecourse basis and with the dentist receiving a lump-sum payment.
Patient engagement and custom communication campaigns
Some dental offices are hiring additional staff members or sending outstanding bills to collection agencies to increase collection effectiveness. Many providers have given up altogether and do not even bill patients with small balances because it is too costly. In lieu of relying on costly paper statements and live-agent support, dentists should look to solutions that automate the communication and collection functions by leveraging payments through email, text message, and interactive voice response (IVR).
Today’s health-care consumers expect clear and transparent communications delivered by their preferred communication method. For example, sending paper statements to a Gen Y (ages 21 to 36) is a waste of time and money.
Manage patient care, not collections
The bottom line is that navigating the world of dental treatment, financing, and collections is no cakewalk. Fortunately, solutions that offer individualized patient payment plans, data analytics, and real-time receivables factoring programs can streamline the process, increase cash flow, reduce compliance risks, and mitigate administrative headaches associated with patient financing. It’s a sophisticated yet user-friendly way to help dental practitioners get back to what they do best—treating patients.
References
1. New Kaiser/New York Times Survey Finds One in Five Working-Age Americans With Health Insurance Report Problems Paying Medical Bills. The Henry J. Kaiser Family Foundation website. https://www.kff.org/health-costs/press-release/new-kaisernew-york-times-survey-finds-one-in-five-working-age-americans-with-health-insurance-report-problems-paying-medical-bills/. Published January 5, 2016. Accessed February 1, 2018.
2. Center for Studying Healthsystem Change, 2007.
3. Weathering Volatility: Big Data on the Financial Ups and Downs of U.S. Individuals. JP Morgan Chase & Co. website. https://www.jpmorganchase.com/corporate/institute/document/54918-jpmc-institute-report-2015-aw5.pdf. Published May 2015. Accessed February 1, 2018.
Chip Hunziker is the CEO, founder, and principal architect of ClearGage LLC, a leading financial services and technology company. He has more than 30 years of experience in leadership positions in the health care, financial services, technology and employee benefits industries. ClearGage currently serves thousands of dentists and their patients in all 50 states. For more information, contact [email protected], visit cleargage.com, or call (888) 227-5932, ext. 2.
