by Roger Levin, DDS, MBA, FACD
In today's tough economic climate, patients may place a low priority on dental services. Giving them an array of financing options ensures case acceptance and treatment follow-through.
In 1985, there were very few financial options available for patients. In fact, even credit cards were rarely accepted by dental practices. The reason dentists could offer any array of services was because many were willing to finance patients at no interest using payment plans.
Payment plans allowed patients to accept treatment and pay it off over time. Doctors believed that payment plans were necessary to maintain positive relationships. However, the outcome was that dentists became bill collectors.
Unfortunately, the commitment and responsibility of the American consumer has changed. Debt levels in the United States are at an all-time high, with 90 percent of all Americans currently within 90 percent of their credit card limits. America has become a debt-hungry society that regularly over-commits itself and has significant problems paying off bills. This scenario is even more severe for dental practices because for most patients, the first priority is to pay mortgages, car payments, credit cards, and other debts. Many consumers are aware that dental practices will not press too hard to collect money due to public relations concerns. And consumers frequently look upon dentistry as an unacceptable service for which they should not have to pay.
This attitude has left a number of practices with two significant problems. The first is uncollectable debt. The second is that many patients turn down treatment because they can't afford it.
A new philosophy toward financial options
Many patients are no longer as well off as they were five years ago. The recession and stock market upheavals have left many people with less disposable income and a greater concern over how they spend their income. Consequently, they are less likely to give services like dentistry a high priority. This uncertain economic climate makes giving patients an array of financing options even more important.
Four financial options exist for patients:
•5 percent off for cash up front - Dentists should offer every patient the opportunity for a 5 percent discount in exchange for payment before treatment commences. This is a fantastic opportunity because it eliminates the need for collections or administration of the financial account.
Most individuals with disposable income will be pleased to take advantage of the savings. You should set a preliminary base amount for this option of approximately $350. Keep in mind that it costs a practice approximately 3 percent of the fee to administer and collect the financial portion of an account.
•Credit cards - Credit cards are the norm today and most dental practices should accept them. Most people prefer to charge large-dollar purchases. It simply is easier, more convenient, and hassle-free.
•Half upfront/half before the end - What this means is that no case should ever be started without half of the payment in advance. Short of this commitment, you are very likely to have a collection problem on your hands. When the patient pays half at the beginning, it instigates a commitment to treatment and also covers most of your basic costs.
Requiring half before completing treatment is necessary to ensure patient follow-through. It is amazing how many patients simply do not honor their obligation to pay for services despite knowledge in advance. One way to solve this problem is to have patients pay the office prior to going back to the clinical area for case completion. Here's an example of a script to handle this:
"Mr. Smith, I know you'll want to get going at the end of your appointment, so to make it more convenient for you, why don't we take care of your remaining balance of $700 now?"
Only a patient who has no intention of paying you will refuse. If the patient "forgot" to come financially prepared for the appointment, you have to make a tough decision. We recommend that you do not treat the patient that day and reschedule the appointment. A patient who does not honor the obligation as agreed likely will be a collection problem down the road. (Some people worry about abandonment. While dentists are not allowed to abandon a patient midtreatment, there is no law that states you must complete the case that day. What we are suggesting is that you apply leverage so that the patient will return for the next appointment with the understanding that payment must be made. In the long run, you will have to complete the case.) Most of the time, patients honor their obligations once they understand that not paying is not an option.
•Patient financing - Patient financing is an option that should be offered to every patient. However, patient financing should not come from the dental practice. Instead, inform patients about third-party, dental-oriented financing companies. For example, CareCredit - (800)300-3046 - is a leading patient-financing firm that gives an instant line of credit. They can actually approve financing in minutes, via phone or fax, while the patient waits in your office. Approval is even faster when patients apply online.
Many dental practices today have third-party patient financing as an option, but often fail to tell patients that it is available. Some dentists hesitate to give up a portion of their fee as part of the financing arrangement. This is a mistake!
The small amount that the patient-financing company retains is minor compared with the return to your practice. Most patients who do not have cash will not be able to accept recommended care unless financing is available. Individuals who simply cannot access funds will reject treatment and ultimately suffer increased dental problems.
This is not a matter of receiving 100 percent of your fee as opposed to receiving 95 percent of your fee. This is a matter of receiving 95 percent of your fee vs. nothing, since the patient will be unable to pay for the case. One of the great benefits of patient financing is that it allows practices to treat significantly productive cases that would otherwise not be accepted.
Patient financing is fast and easy. Your office simply calls a toll-free number and gives the financing company some basic information about the patient. In minutes, your patients will be approved for a certain line of credit. Any patient that is rejected as a bad credit risk is also not a candidate for your services.
Another benefit of third-party patient financing is that it removes all responsibility for patient financial arrangements from your practice. Once the line of credit is put into place, the patient is obligated to the lender - not to your dental practice. The entire collection process is now out of your hands. This alone makes patient financing an outstanding option.
When looking for a patient-financing company, be sure to check the rates the company offers and whether they have any dental endorsements. For example, CareCredit is endorsed by the American Dental Association, the Academy of General Dentistry, the American Association of Oral and Maxillofacial Surgeons, and numerous state dental associations.
Collecting overdue accounts
It is absolutely essential to review accounts receivable management. In this tough economy, overdue accounts are increasing. One client of mine had approximately 40 percent of accounts receivable in the "over 90 days" category.
Accounts that are 90 days overdue have a less than 50 percent chance of collection. Furthermore, collection agencies are fairly useless for dental practices because they typically are unwilling to go to court over smaller accounts. All they seem to do is harass patients, causing extreme poor will and hurting a practice's reputation in the community.
Using these financial options gives dentists a great opportunity to streamline their practices and gain financial control. Should you have accounts that are significantly overdue, you should initiate a full and immediate collection program.
You can also call patients and let them know that they can clear their account by accepting a longer-term line of credit that may even be interest-free. Patients prefer restructuring their debt by simply accessing additional financing, and are relieved to bypass the collections nightmare.
These days, it is essential to offer all patients avenues a means to afford the services that can improve their smiles and their lives. Emphasize the payment options available to your patients, especially financing companies. Otherwise, patients will remain unaware of how affordable dental services can be and will refuse your carefully tailored treatment plans.
It is amazing how many patients will take advantage of treatment if they can follow their normal pattern of spending and financing. By offering these effective financial options, you will ensure a rise in case acceptance and give every patient the opportunity to take advantage of optimal dental care.