Finance: The Benefits of a Written Financial Policy & Offering a Healthcare Credit Program

by Cathy Jameson, PhD.

One of the most important systems in the dental practice is the financial system. There are many benefits, to both the patient and practice, to having a firm, written financial policy. For the practice, a written policy allows you to gain control of the financial system. You are able to offer, in concise terms, financial options and solutions for the patient, minimizing possible confusion. And, with a firm financial policy, you are going to be more likely to receive payment at the time of service, which is certainly a benefit in terms of cash flow. For the team, there will be a lot less time and money spent on collections or going after past due accounts, allow team members to focus on practice building, patient relationships and other positive aspects of running the dental practice.

For the patient, by offering all of their financial options upfront, it makes it easier for them to fit dental services into their family budgets. Practices need to be firm, yet provide flexible options.

With good financial options, there will be a high case acceptance. The number one reason people don’t proceed with recommended treatment or don’t come to the dentist is lack of education or no perceived need. But, the second reason is people fear the cost of treatment. They are not saying ‘I don’t want dentistry.’ They’re saying ‘I need a way to pay for it.’ If the doctor and team do a beautiful job diagnosing and presenting the dentistry, the only barrier there is likely to be, is financing. When we can handle the financial barrier, case acceptance will accelerate significantly.

What should the financial policy include?

Of course, it is always most advantageous to get payment at the time treatment is delivered. Practices may want to consider providing patients with a financial incentive to encourage payment in full before treatment is rendered.

Practices should also offer bank and debit card options, such as MasterCard, Visa, Discover and American Express. Make sure you contact these programs and take advantage of any promotional or support materials they provide to help patients understand these options. And finally, practices should also offer a healthcare financing program, which functions similarly to a bank card. Patients complete a credit application at your office, and once the application has been submitted and considered by the bank, the patient is extended a line of credit. They can move forward with treatment and make small monthly payments, which typically fit comfortably in their family’s budget.

What are the benefits of offering a healthcare financing program?

A healthcare financing program is a great option to provide patients, especially for those patients with higher treatment fees. The primary reasons to offer this type of program are to increase production and receive payment at time of treatment. Patients are reluctant to finance their dental care on their consumer credit cards, making these cards unavailable for other family needs, so they may decline or delay treatment. We want to keep productivity in the practice, and a healthcare financing program is one of the ways to make it happen. If the doctor recommends a crown for a tooth that needs restoration, and we are able to say “Mrs. Jones, if we were to tell you that for $35 a month, you could receive the treatment the doctor recommends, would that make it possible for us to proceed?” And patient, after patient, after patient, says “yes.” Having a financing program specifically for their dental needs allows families to budget their dental care into their specific situation, and it doesn’t become financially burdensome. Ultimately, the practice receives payment immediately, and doesn’t have to bill or carry large account receivables.

The ideal healthcare financing program to look for should offer several payment options, including No Interest payment plans. This is where the patient receives a line of credit for a certain amount of time, either three, six, or 12 months. Payments can be spread out during that designated time period, and if the balance is paid in full by the end of the term, the patient is charged ‘no interest.’ This is very easy to present to the patient, and very highly accepted. They can get the dental care they need and want. One company, CareCredit, offers three, six and 12 month ‘no interest’ payment options.

Many practices ask, ‘if we offer a healthcare financing program, and they can’t get approved, should I bill the patient directly?’ Remember, if the patient has applied and has not been extended a line of credit because of their credit history, they are really a financial risk. The world of financing lists 36 payables that a family takes care of when they get their income cheque every month. First is paying for their house or apartment, second is utilities, third is their car payment and fourth is their consumer credit cards. Paying for dental care already received is way down on this list!

So, from a practice’s viewpoint, running a banking business within the practice is not financially wise. Cost of credit, as it applies to dentistry, is quite significant. First, the amount of earned revenue not collected can significantly affect a practice’s bottom line. In addition, it costs the practice quite a bit in billing and collections, including materials, envelopes, statements, time, and stamps. Plus, for each month an account sits on the books uncollected, doing nothing for the practice, it loses 1% of its value. This is not maximizing your revenue, because these earned, yet uncollected, dollars could have been invested and working for the practice.

So, when you consider all of these factors, the real loss of uncollected accounts, the cost of billing and collections, and the receivables management cost or loss of the dollar, they add up to about a 40% investment that the doctor is making by choosing to bill patients and offer credit through the practice. By offering a healthcare financing program, the practice gets paid typically in two business days, with no responsibility to the practice if the patient delays payments or defaults. And, the patients have a convenient and comfortable way to pay for their dentistry. We don’t ever want to do more dentistry than the patient can afford and we don’t want to stress the patient financially, so a healthcare financing program satisfies the requirement for most families. When a patient doesn’t have the fear of coming to the practice and writing a large check for dentistry, that they know financing is already in place or is available to them, they are going to be less likely to cancel the appointment or not show up at all.

How to effectively implement a healthcare financing program in your practice

Effectively communicating the financial arrangements makes all the difference in the world. The bottom line of success in any system within the practice is communication. Making a financial arrangement is a very private part of a person’s life, and therefore needs very careful and loving attention. All financial arrangements must be made before treatment is rendered. A recent survey of patients revealed that the one thing they like least about dentistry is not knowing how much something costs before it’s done. The second biggest gripe is the waiting time. This is exciting because we can handle both of these issues very easily. We can let the patient know their financial responsibility prior to treatment, and we can certainly do our best to stay on schedule.

We need to make financial options very, very, very available to the patients. Clearly display your financial policy and financial options in your office, practice brochures and other patient materials. Offering financial arrangements through a healthcare financing program is not something to be feared, but should be viewed as a service you are providing to the patient. Ideally, one or two people on the dental team should be given the responsibility of administering financial arrangements. There needs to be a time and a place specifically designated for a consultation about financing. Because the oral
cavity is an intimate zone of the body, and so is the pocketbook, these discussions need to be done in private. The person making the financial arrangements needs to have a confident personality, needs to be able to communicate effectively, be a good listener, and be comfortable quoting total treatment plan fees. She also needs to understand all the financial options completely, and be able to present all options in a very positive manner. Her primary responsibility is to find a financial solution for a patient, no matter what the patient’s situation might be. Consideration should be given to appearance, and remember, that when we communicate, about 60% of a message is delivered through body language, and 30% is tone of voice!

Also, it is helpful to use visual aids during the presentation, as 83% of a person’s learning takes place visually. If you can support the presentation with visuals, you can do a much better job of presenting and achieve a better success rate. Healthcare financing programs have not been around in Canada for very long, and therefore people have not thought about the dentist making financing available right in the practice. So the team needs to understand that they are educators, educating their patients about this new financial option.

Ultimately, if you’re concerned about the financing of good, quality, dental care, then get a firm, written, financial program in your practice that makes the patient comfortable financially, but also gets them healthy. Our responsibility as dentists is to get people healthy, keep them healthy, and help them finance that as conveniently and comfortably as possible. When your team totally and enthusiastically supports your new financial policy and understands the patients’ options, including healthcare financing programs, the practice wins, the team wins and the patient wins.

Cathy Jameson is president of Jameson Management, Inc., an international dental lecture and consulting firm. She holds a Ph.D. in organizational psychology.