Consumer debt is at an all time high and with many patients putting of routine work and treatments simply because they can’t afford it, it’s easy to worry about what you can do and if you can help. Patient financing is a viable option to improve your medical practice’s cash flow and operations as well as ease the burden of medical debt for patients, but is it good for your medical practice? The answer: it depends.
Patient Financing: What is it? What does it do?
Patient financing allows medical practices to create various payment plans and payment options to offer to patients based on their individual needs and risk factors. Patients are able to access their account information online or through an app to see their payment plan and make payments on a pre-determined schedule for a pre-determine length of time. Payments and plans are managed by a third-party financing company that either provides the complete cost of the treatment up front or over time, as patients pay, based on your selection.
Types of Patient Financing
Patient financing typically comes in two forms: recourse and non-recourse. Recourse lending leaves the risk of default with the medical practice while non-recourse lending absolves the medical practice from any kind of financial risk.
Under recourse financing, eligibility for funding is based on the medical practice and funding is provided at the expense of said medical practice. In the event that patient does not make timely payments or doesn’t repay at all, the medical practice is responsible for paying off the balance. Under non-recourse financing, eligibility is based on the individual patient. Patients will undergo a screening process — credit history, income, debt ratios — and are approved based on the lender’s criteria. In the event that the patient defaults on the lended amount, the lender is then responsible for the balance.
Benefits of Patient Financing
For your patients, patient financing allows them to receive the medical treatments that they need when they need it. It also helps your patients meet their deductible limits in a way that they can afford it.
As a medical practice, offering patient financing improves your cash flow as well as your staff operations. When offering payment solutions in-house, office staff manages all of the accounts meaning they call patients when they don’t pay or putting them into collections. Offering patient financing transfers this task to a third-party giving your staff the time to focus on other administrative or office tasks.
Patient financing lowers your risk of incurring bad debt by transferring the risk to a third-party and improves cash flow by providing you access to the funds immediately which allows you to pay suppliers, vendors or make payroll as necessary.
Adding patient financing to your medical practice is a great way to build long-term relationships with your patients as well as provide marketable perks for future patients. Be sure to compare rates and think through how offering financing will affect your patients and if you’re unsure of if it’s something they’d be interested in, you could ask them.
To learn more about how patient financing can benefit your practice, contact BT84 Commercial Capital & Business Solutions.