In-office financing is becoming a thing of the past, as it should. The fact is, it should never have been “a thing” in the first place. This philosophy of carrying balances has been promulgated mostly by well-intentioned, big-hearted dentists who felt they were doing patients a favor by letting them make payments on services like orthodontics as a benevolent or humanitarian act. But is it really kind? Allowing patients to get in over their heads financing balances for services they cannot afford creates all sorts of problems for the dentist-patient relationship, the staff, the dental practice, and the patient.
Common patient behavior
When the patient fails to meet their financial obligation, how do they deal with the situation? Typically, a patient who owes the practice money will react in one of three ways: avoiding the practice, devaluing the service, or criticizing the work.
Related reading:
- Dear Patient: Affordable dental care may be within reach
- The plain truth: Cash is what really matters
Are your ortho patients missing appointments because they are behind on their monthly payments? That’s textbook avoidance.
“All he did was straighten my front teeth; I could have done it myself with Smile Direct for half that much money!” This patient is devaluing the service.
How many patients leave the practice, transferring to another office with a story of mistreatment? This counts as criticizing the dentist.
None of these situations are beneficial and can cripple the dentist and the practice.
It has often been suggested that dentists slow down an orthodontic case until the account balance is paid. But is this a good strategy? Just “changing the donuts” until the bill is paid? Remember, every delay is wasted chair time and that equates to money. Every wasted appointment could have been filled by patients deferred, waiting on that chair time, more lost revenue. Is it ethical or even legal? It should be obvious that it isn’t humanitarian, benevolent, or even smart to extend credit to people unable to bare the financial responsibility.
Keep payment options simple
All of this can be easily solved by making firm financial arrangements before treatment is scheduled!
Following orthodontic consultation, a treatment plan should be created. It should then be presented to the patient by the treatment or financial coordinator. One simple question can open the financial discussion. “Mrs. Berry, is there anything keeping you from scheduling the treatment Dr. Williams has recommended today?” The answer to this question will reveal the patient’s major concerns and obstacles. This will direct the financial coordinator to the path needed for resolving any issues. There are basically three concerns that keep a patient from starting treatment: time, pain, and money. However, handling the cost of treatment is the most common issue confronting the treatment coordinator. Therefore, financial arrangements must be finalized before the treatment is scheduled.
Financial options for patients should be kept simple: cash or check, credit card, or third-party financing.
Certainly, the first option the financial coordinator should present is the option that is most beneficial to the practice, paying in full by cash or check at the beginning of treatment. Offering a 5% discount (presented as a bookkeeping courtesy) can often entice the patient to select this option. (Greater than 5% has been shown to make little difference in the patient’s election and is discouraged.)
The records that are taken before the beginning of treatment, used for diagnostic purposes, should be paid separately at the time of the appointment as the case may need to be referred to an orthodontist if the dentist finds the case to be too difficult to treat in a GP office. This makes transferring the case much easier on the bookkeeper. The banding and bracketing appointment fee should then be collected in full when the appointment is set or when the patient arrives for the appointment.
If the patient is unable to pay by cash or check, suggest that they use their credit card. Credit card companies may permit the patient to increase their line of credit with just a phone call, if needed. This allows the patient to make their payments on their own terms. The obvious disadvantage to this is the transaction fee and the high interest rates that credit cards impose.
The last and most popular option is third-party financing. CareCredit and Green Sky are great examples of third-party financial institutions. The third-party option guarantees full payment for the treatment which eliminates collection tasks and delinquent account issues that affect accounts receivable. Third-party financial companies allow the practice to select the specific programs offered to their patients. A 12-month, 0% option is the most popular with patients. Offering 24- and 36-month plans that include interest will give the patient a less expensive monthly payment option. The merchant fees charged for using these programs are definitely worth the cost!
Just say "no" to carrying accounts in-house
In closing, a dental practice that offers in-house financing typically will not run credit checks before offering to carry a patient’s account. In contrast, a bank never loans money without a credit check, and if a customer’s credit score is low, their loan application is declined. If a patient is unable to obtain third-party financing, many dentists will offer to carry the account in house. These patients will not pay! When a soft-hearted dentist makes this kind offer, a question must be posed immediately: “Are you willing to pull out your checkbook and write a check on the patient’s behalf and expect the patient to pay you back?” When covering financial policy, this is a great question to use in staff training. Would any of the staff be willing to write a check to the practice on behalf of a patient and expect the patient to repay them?
Finally, some practices are comfortable offering in-house financing options because they keep a credit card on file and charge it monthly or set up an ACH. Once again, this is loaning money. Is a credit check being run before offering this option? When running a card monthly, problems occur, such as declined transactions, canceled cards, or closed bank accounts. These issues create headaches for the staff and are a financial drain for the practice. Just say no.
A firm practice policy of not carrying accounts for orthodontics or any dental treatment protects and respects the patient and creates a healthy practice environment.
