Best financial arrangement options for your dental practice in 2015

Cleaning up your finances and patients financing go hand in hand. Dental practices should offer some financing options, and there are a few good ones to choose from.

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At the close of each year we have all of our offices perform an audit of their performance for the previous year. They usually start to “clean up their books” at the end of November. We want offices to have as much of their accounts receivables collected so we can start the year with a clean slate. The internal audit is very eye opening, and prompts us to discuss changes to improve the coming year.

When we “clean up the books” we become aware of what accounts need collections. Most of these collection situations occur because many offices don’t offer enough financing options for patients. Patients don’t know their portion of the cost of treatment when they receive an EOB from their insurance company, and they’re left with a larger bill than they anticipated. This can become a barrier to future treatment, and with insurance companies cutting back it’s more critical than ever to provide good financing programs. These need to be options that your front desk staff can easily explain and use, and (most importantly) get patients qualified for the programs.

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Dental Patient FinancingTo learn more about the best financing options for 2015, we consulted Alexander Chrysostom, an MBA who helped run his father’s dental practice. The practice saw an average of 200 new patients each month. We put together some of the best financing options for 2015.

Dental procedures can be costly, which is why it’s imperative to offer affordable plans to patients. Each financing company has its advantages, and some of the major companies that offer reasonable payment plans are CareCredit, Wells Fargo, and iCare Financial.

There are many benefits to CareCredit. Patients are familiar with it, and many have CareCredit cards from other medical offices they can use in the dental office. CareCredit also has an easy system for signing up online, and many offices no longer need a terminal for CareCredit and can perform almost all transactions online.

Another growing company on the horizon is Springstone. Springstone’s average financing amount is higher than CareCredit’s, which makes it a better option for offices handling financial arrangements over $5,000. Because they deal in large amounts regularly, the’re better equipped to handle large procedures (read here: large dollar amounts). They also deal in longer termed loans (up to 84 months) and lower fixed rates. The interest rate depends on a patient and his or her credit score, which is good, but the difficulty is that you cannot estimate this for a patient when you suggest this option. Springstone has overcome this barrier by creating an easy-to-use web portal to sign up patients and input their information to see what they qualify for. The best benefit for practices is that Springstone charges a lower interest rate – 7.9% to CareCredit’s 9.75%.

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While these options are great, many offices struggle when they have patients who need financing but cannot get approved. iCare Financial has a program that does not require a credit check and approves patients instantly. There is no cost to a practice to run a patient through iCare (they have start-up fees but they don’t charge an interest percentage on each transaction), and patients receive 0% interest. You’ll need to determine the terms of the loan to your practice, but this gives you a good option for patients having a tough time getting approved. We have used all three providers in some capacity, and we found iCare Financial to be the best choice for both the office and patient.

A fourth and final option is to set up an internal “benefit program” in your practice. This cuts out the middleman (insurance company) and can improve a practice’s patient retention. Patients benefit because there are no yearly maximums, no deductibles, no claim forms, no preauthorization requirements, no pre-existing condition limitations, and no waiting periods. Your practice benefits because you can receive all payments up front without long waits from insurance companies. This program gives patients an incentive to do what they can when they can; there is no need for patients to address all their dental issues at one time with this plan. With proper implementation, it drastically cuts down your accounts receivables, making your end-of-year “cleaning up the books” much easier.

Many offices don’t know where to start with implementing a program. When creating your internal benefits program you must develop your own systems. Here are a few pitfalls to avoid:

• You must distinguish between a benefits program and an insurance program, and you must be careful not to call it an insurance plan.
• You must determine how this can be used alongside other benefits that a patient has, and if you want to use it with other outside financing programs.
• You must determine a price point for this program. You’ll want to determine how you will price a package for a single person or a family.
• You must determine what your package will include. Cleanings? How many each year? X-rays and exams? What type of discount will you offer to patients who are members of this program? 10%? 15%?
• You must determine how and when to present this to staff and patients. You will also want to establish a plan for how you will renew this plan for patients each year.

There are a lot of moving parts with any financing options. However, when implemented properly, they can provide huge dividends for your practice and become another selling point when placing a practice for sale. They are a way to bring patients into your practice, and they can be marketed to local businesses as an option to provide low cost health care to their employees.

Whichever type of financing options you offer in 2015, make sure you’re using those that are beneficial to your patients. It’s always easier to collect upfront, throughout the year, than to try to collect everything at the end of the year. Cleaning up accounts receivables and putting in systems to prevent it from growing is a fast way to boost profitability!

How to evaluate what system is best for you:
1. Evaluate what patients want. Talk to your staff about what patients are saying regarding why or are or are not accepting treatment.
2. Evaluate how many patients in your practice don’t have dental insurance and whether they come in regularly for cleanings and appointments.
3. Find out how many patients you financed in 2014 and what your average financing amount was. Compare this to previous years to find out if it failed or succeeded. Find out if people were forgoing financing or if they were not getting approved.
4. Evaluate each account that is 60 days past due to find out why it is still past due.

If you’re not sure whether an in-office financing program is a viable option for your practice, you may want to do an audit of your non-insurance patients to learn their habits. Not sure how to start with this audit or what the numbers tell you? Email DASPLLC@gmail.com to get your FREE guide and learn whether this practice builder will work for your office.

Sasha Burau, MBA, is a practice consultant who has worked with Excellence in Dentistry’s Dr. Woody Oakes, Shatkin F.I.R.S.T.’s Dr. Todd Shatkin, and Ralph Laurie of Practice Works and Casey. She currently coaches offices about systems and implementation with her company, PEAK Practice Coaching & Implementation, Inc. She can be reached at sasha.burau@me.com. Feel free to email her with any questions.

Alex Chrysostom, MBA, is an entrepreneur who worked for Pure Fishing after graduating from college in 2007. His father, Dr. Deno Chrysostom, asked him to help manage his dental practice in 2010 after he earned his MBA. Alex now helps operate two businesses. He can be reached at AlexChrysostom@gmail.com if you have any questions for him.

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