When it comes to selecting the right patient financing company for your practice, taking a little extra time to read the fine print can save you a substantial amount of lost revenue. Most practices in the process of evaluating patient financing companies ask only the most obvious question: What rate or service fee will the company charge the practice? Although, in the short term, this information indeed may be one of the most important pieces of the patient financing puzzle, you should pose an entire host of questions to every financing company with which you are considering partnering.
GETTING THE FACTS
When it comes to fees, many patient financing companies charge the same approximate rates. If you ask these companies about their approval rates, most will state theirs is among the highest in the industry. This question is a little like asking surgeons who performed the first LASIK procedure in their region or who has the most experience: the answers vary according to whom you ask.
To help increase the font size of the fine print in the patient financing industry, I interviewed several patient financing companies regarding the best methods for selecting the appropriate partner for your practice's patient financing needs. Here are their top 10 questions and answers:
1. Does the company offer flexible programs for both extended payment and same-as-cash (no-interest) options? Most patient financing companies offer flexible or fixed-term programs, as well as the popular no-interest financing. The difference between these programs is in the approval rates for patients who apply. Some companies approve every patient who is eligible for financing, while others approve patients based upon their credit scores. Also, practices must beware of financing companies that promote low fixed-term rates and no-interest plans, because they will often switch patients to higher-interest fixed-terms plans based on their credit rating. This bait-and-switch tactic could negatively affect future patient referrals for the practice.
Also, realize that different payment options appeal to different customers, and the more options your practice offers for payment, the more likely your patients will find one that fits their budgets. Another marketing secret is that patients with good credit usually seek no-interest plans, while those with satisfactory credit look for low monthly payment plans. Therefore, you should offer both types of payment options. Giving your patients the power to choose their terms should lead to increased approvals.
2. What is the number of repayment months for no-interest financing? Generally, financing companies offer 3-, 6-, 12-, and 18-month no-interest plans, and some companies have extended this to 24 months and beyond. The goal of no-interest financing has always been to increase surgical volumes and profitability for practices. Be aware, however, that the longer the payment period you offer your patients, the greater the percentage you will pay to the financing company. The most popular plan to date is the 12-month, no-interest plan that has become a staple of the retail industry. Also offering a same-as-cash plan, however, may attract more patients by differentiating your options from those of other practices in your area. Seek a financing company that will offer you a reasonable rate for both types of plans and also inquire about longer no-interest plans; which may be an even better option for your practice.
3. Is the company's line of credit revolving or fixed? Some major financing companies offer a revolving line of credit due in part to consumer popularity and paperless decision-making. Fixed or term loans are less attractive because their interest must be divulged in the applicant's paperwork.
4. What is the company's rate and range of approvals? Although any financing company will boast the highest approval ratings in the industry, this is an extremely difficult piece of information to verify. The best way to distinguish between “promotion” and “performance” with a financing company is to learn its level of experience. As in most industries, experience breeds success. Financing more patients improves a company's risk models and results in higher approval ratings. Typically, larger, more established financing companies have the most experience in consumer credit and healthcare financing, which translates directly into higher approval ratings and lower costs for providers.
Regardless of what type of credit a financing company extends, know its range of approvals. Remember, no financing company approves all patients, and some do not approve those with prior bankruptcies or only a few years of credit history. Because financing is a nonrecourse loan, it is in your best interest to choose the company that approves the broadest range of candidates.
5. What is the source of capital for the financing company in consideration? Many patient financing companies broker lines of credit for a bank. Knowing the source of a company's capital is important for gauging its stability and understanding the credit decisions it makes.
6. Does the company offer online credit decision-making, and how fast are its response times? Technology in the patient financing industry is evolving as quickly as it has in the computer industry. In the patient-care arena, technology helps practices streamline and organize patient records and track revenue. Progressive financing companies are following the trend by integrating patient financing into physicians' offices. Some of the new, value-added services offered by financing companies today include instant credit decisions via the Internet, software interfaces for patients' applications, Web site applications links, and patient tracking reports. How about response times? Some companies accept or reject a patient's application in as little as 4 seconds … or in about the same amount of time it takes to say, “Congratulations, you've been approved!”
A word on technology: be careful not to let it depersonalize your customer service delivery. Rather than ask patients to return home to submit their application over the phone or Internet, your staff should offer to take this step for them. Capitalize on every opportunity to improve the patient's experience.
7. Will the financing company disclose credit decisions (both approvals and denials) directly to your practice or to the patient via the Internet, phone, fax, or mail? The transmission of the information regarding patients' approval status depends upon where they apply. If the patient applies for financing in your office, the financing company should enable your staff and the patient to know immediately whether he has been approved or denied. If your patients apply for financing at home, seek a company that will e-mail your staff daily with the names of the patients who have been approved or denied. Be aware, however, that HIPPA and federal privacy laws prohibit financing companies from informing practices of patients' denials when they apply from home over the phone or Internet unless the patient grants this permission on his application.
8. What form of reporting and tracking does the company offer: daily, weekly or monthly? By what method does it provide this information? Two means by which your financing company can supply reporting and patient-tracking information are an automated phone or the Internet through a secure site. These options can provide the information 24 hours per day, whenever your staff members need it. For those of you who want more than an automated voice when you need assistance, check with the financing company about access to a customer service representative. Ask how you can contact that individual if you have a credit decision question or a funding issue. Also, does the company have a dedicated call center, and for how many hours per day does it offer customer support?
9. What is the process for your practice to receive payment on those patients who are approved? Verify how much time is required to complete the paperwork process. Ask the financing company about the speed of its payment record with other practices. Work with a company that makes the process simple, efficient, and timely. Avoid those that require documents to be mailed; faxing and electronic filing are much easier for your staff. Ask the company how quickly it processes paperwork, as well as whether it can directly deposit the payment into your account and how quickly it can verify the payment has been made.
10. How much training will the financing company offer for your staff so they may effectively integrate the service into your practice? Onsite training for your staff can be invaluable in establishing patient financing in your practice, and the company should offer it at no additional charge. Some financing companies assign practice development managers to assist practices with ongoing training, updates, and reporting. Experience with ophthalmic practices—not just financing expertise—would be an added benefit with these managers.
AN INCREASING VALUE
Patient financing has provided a tremendous boost to the refractive surgery industry during one of the most dramatic economic downturns in recent history. Affordable financing has given consumers the incentive they needed to move forward with their decision to undergo LASIK and other refractive procedures. Further, as procedural fees begin to rise with the advent of customized LASIK ablations and procedures such as IntraLASIK (IntraLase Corporation, Irvine, CA), your patients' interest in affordable financing will continue to grow. Offering this service will also help you avoid price erosion.
PLAY THE FIELD
In my opinion, no practice should be without a patient financing partner, especially in these strained economic times, and it's okay to use more than one company. Many practices feel loyal to a particular company because they have an established relationship with it or its representative. Nonetheless, if you can find increased value for your patients by partnering with a second or third financing company, then you have the right to do so. Some companies offer cash-back rebates based on quarterly financing revenue, while others provide more added value in the form of marketing materials, advertising campaigns, technology, or paid assistance from industry experts.
FINANCING GOES HIGH-TECH
The latest development in the world of patient financing is called the preapproval process. In the near future, look for financing companies to start offering the benefit of knowing whether a patient financially qualifies for LASIK … before he steps foot in your practice! This technology will be a tremendous selling tool for your counselors, who will be able to sit down with prospective patients and tell them that they have already been approved for LASIK financing. The capability will also save your staff time with patients who have no financial means to pay for the procedure.
LOOK BEFORE YOU LEAP
Patient financing is one area in which learning all you can about a company before partnering with it can make all the difference to your practice and patients. Services vary greatly between different providers, and you must consider what arrangement you favor. Take your time, do your homework, and select the company that will best fit your practice's financing needs and help grow your overall LASIK volumes.
The author would like to thank CareCredit and Unicorn Financial Services for their input with this article. The companies may be reached at (800) 300-3046 and (888) 388-7633, respectively.
