Give patients Options
Increasing out-of-pocket costs for dental care and patients with less disposable income creates a need for financial options.
by Roger P. Levin, DDS, MBA
Many experts have created systems which help patients focus on case acceptance. While many of these systems are effective, they usually have one major weakness. These "expert" systems do not always fully take into account one of the greatest obstacles to case acceptance - the almost inevitable reaction by the patient to the fee. While successful case presentation incorporates many factors such as verbal skills, customer service, and patient motivation, accepting treatment hinges on the patient's ability to manage payment for the recommended services.
As more and more practices opt out of insurance networks for various reasons, offering a variety of financial options becomes even more important to help patients pay for treatment - especially high-end procedures. At the same time, insurance companies are reducing benefit payments for procedures and increasing co-pays and other patient fees. These two factors combined are creating more financial barriers which must be overcome during case presentation. In addition, more practices are offering aesthetic services, such as whitening and dental implants, which are not covered by dental insurance. Such a trend cannot be ignored.
Dental insurance is changing
While more than 50 percent of patients carry some form of dental insurance, out-of-pocket costs are increasing for most patients. In an attempt to control rising health-care costs, insurance companies are raising deductibles and reducing coverage for many dental procedures essential for good oral health. Patients who previously relied on insurance to cover most of the treatment costs now must reach into their own pockets if they decide to go ahead with many procedures. Without insurance, many patients will have to delay or put off indefinitely recommended treatment unless other payment options are available.
On a positive note, today's consumers are more image-conscious than previous generations. The dental patient of the 21st century is more interested in aesthetic treatment - services which can brighten a smile and create a more attractive appearance. The popularity of "extreme makeover" TV shows also has helped fuel a growing interest in aesthetic treatment. Unlike many traditional "needs-based services," most aesthetic procedures are not dependent on dental insurance.
Some practices make the mistake of assuming patients with no insurance or reduced insurance benefits will be able to absorb out-of-pocket costs. The average patient treatment plan, other than hygiene, costs around $1,200. Unfortunately, the average American has only $300 to $400 of available credit on his or her Visa or MasterCard. Moreover, 77 percent of adults cannot write a check for $500 out of their monthly cash flow.
Reasonable and customary charges covered by dental insurance plans often do not accurately reflect the fees charged by dental practices. In the West, for example, the average charge for a crown is $800, but insurance reimbursement is typically only $400, leaving a gap of $400 for the patient to cover. Insurance companies leverage their large customer bases to negotiate reduced fees for many services. Due to continued rising health-care costs and other economic factors, many of these companies are further reducing their already low reasonable and customary benefit payments. That means more costs must be borne by dental patients.
Due to lower payouts by insurance companies - as well as the complexity of eligibility requirements - Levin Group is finding that more dentists than ever are electing to opt out of insurance networks. Handling insurance claims is time-consuming and a labor-intensive experience for dental staff members. Many practices - even those which have built strong relationships with insurance companies - are dropping out of the insurance game due to the complex rules and regulations which change from year to year. Levin Group recommends practices examine all of the financial ramifications and key statistics before making a decision to add or eliminate insurance coverage.
As business owners, dentists need to do what is best for their practices and their patients. In this era of dwindling insurance reimbursements, that means offering patients a range of financial options which will help make treatment affordable.
Responding to the change
In today's economy, it is more important than ever before to have systemized financial controls in your practice. In the last 24 months, the accounts receivable of many dental practices have been increasing, with some reaching extremely dangerous levels. To maximize case acceptance and minimize accounts receivable, we recommend offering four financial options (see Table 1) that will allow dental practices to achieve a 98.5 percent collection rate and ensure all accounts receivable are collected within 60 days. Any money owed to the practice after 60 days is increasingly difficult to collect, and frequently must be written off. As I often explain in the seminars I present, "If patients owe you money, you need to change your financial management systems if you want to turn it around."
Individuals who do not have adequate insurance coverage or cannot write a check for several hundred dollars will reject treatment and ultimately suffer increased dental problems. By offering patient financing from companies such as CareCredit, dentists limit their financial liability, in the event that a patient defaults on payment during the course of treatment. Once the patient is approved and accepts the financing option, he or she is no longer financially obligated to your dental practice. The entire collection process is now out of your hands. This alone makes patient financing an outstanding option.
Present all four options
All four financial options need to be offered to every patient. Prepare a specially written script to be used by the financial coordinator. An example of such a script might be:
"Mrs. Jones, let me review all four of our wonderful financial options with you. Then, we can decide which one would work best for you."
By letting patients know you are going to present four different financial options, they then take an increased interest in the case presentation. Without this vital information, patients might "tune out" too early in your explanation about treatment possibilities, thinking they could not possibly fit the treatment cost in their budget.
Presenting financial options is the last step in all successful case presentations. Regardless of how charismatic and charming the doctor or staff may be, the patient has to deal with the financial realities of accepting treatment. Offering an array of financial options to each patient - and then working with the patient to identify the most convenient option - will significantly increase case-acceptance rates.
1) Discount for payment in full. Offering 5 percent off for cash or check payment up front is a smart financial strategy. This discount does not include payment by credit card, but allows a patient to take advantage of a courtesy. Patients who are financially comfortable are enticed by these options. This permits the practice to collect all fees in advance with no further collection activities or expenditures. Levin Group data indicates that in today's economy, less than 5 percent of patients will be able to take advantage of this option.
2) Credit cards. Visa and MasterCard are the two most prominent credit cards used by patients in our credit-oriented society. Many dentists do not realize how important it is for patients to be presented with a credit card option, because this is how they pay for almost everything. More consumers than ever before are carrying a high level of credit card debt - on average more than $6,000 a month. Some patients probably will not be able to exercise fully this financial option due to maxed out limits on their credit cards.
3) Half up front, half before completion. An additional option is to collect half of the case fee before treatment begins and the other half prior to completion. It is important to collect the full amount before the final case is delivered. If this is not done, a practice runs the risk of patients accepting final treatment, but then leaving without paying because they "forgot their checkbook." This scenario happens all too frequently and usually turns into a major collection headache. Often, the situation is exacerbated further when patients think they will be in a better position to pay the following month. Of course, they usually have more "pressing" bills to pay first, and the dentist does not receive the promised check for months, if at all. This is how accounts receivable can snowball into a major financial problem, leading to loss of productive administrative time, collection issues, and increased overhead.
4) Patient financing. The fourth option, essential in today's economic environment, is a quality patient financing program. Many patients do not even think to ask a dental practice whether financing is available. They may ask about practice payment plans, but they rarely think to ask if the practice provides any type of financing, especially a no-interest option. What is an automatic assumption when purchasing other consumer products and services is often not even thought about in the dental office environment.
Although many dental practices do offer patient financing, they frequently fail to inform a patient that this option is available. Case acceptance depends on patients being adequately informed of all available financial options. Patient financing is critical because many patients cannot afford paying for treatment "out of pocket," given their current cash flow. This is especially true in the areas of elective dentistry and for more costly treatment. Offering patients financial options can make the difference between acceptance and rejection of treatment.