Patient financing has a growing role. Do it the right way.

All loan terms must be fully understood by the patient.

By Jerry Helzner, Senior Editor

A rapidly changing health-care landscape is making patient financing an increasingly important tool in driving volume to your practice. But offering financing does have its hazards. A recent consent decree shows the need for spelling out the exact terms of the loan to patients so they fully understand their obligations and the penalties for not complying with loan terms.

Clearly, the concept of offering loans to patients to finance elective medical procedures is not new. In ophthalmology, the most prominent example of the positive role patient financing can play is with refractive laser surgery, where a no-interest loan of $4,000 or more can spell the difference between a patient having the procedure or walking away.

But a new and important source for loan demand is the patient who now requires financing for a covered procedure such as routine cataract surgery, where the trend toward higher co-pays and deductibles is driving patient out-of-pocket costs into the thousands of dollars.

Spelling out the terms

Because loan terms can be misunderstood, loan counselors should be thoroughly trained — and then monitored — in providing clear and consistent information to patients who are interested in obtaining financing. Doing this in cooperation with your financial partner will eliminate the biggest negative associated with this type of loan — complaints from patients who were given misleading loan terms or who didn’t fully understand those terms.

Recently, after some patients filed complaints about receiving misleading loan terms, Care Credit (a unit of GE Capital) signed a consent decree with the Consumer Financial Protection Bureau in which it agreed to provide more training for practice loan counselors and have Care Credit representatives become directly involved with patients who want to obtain loans above a certain dollar amount.

“In 17 years, I had two patients come to me who were hit with noncompliance penalties,” says Nikki Curtis, refractive counselor at Buckley Chang Eye Institute in Colorado Springs. “These people were crying. It really affected me. Several years ago, I put all the exact terms of the loan on paper and had the applicant read it and sign it. Since then, we have never had another problem with patients understanding the terms of their loan. I believe in being proactive and that was the solution I found that works.”

FINANCING DRIVES VOLUME

To whom should you offer financing?

When managed properly, a patient financing program will benefit both a practice and its patients.

“We offer financing to all patients,” says Amy Kennedy, director of marketing for Eye Center South, a multi-location practice based in Dothan, Ala. “We want to make it possible for all of our patients to proceed with any medically necessary procedures and any elective procedures that could improve their vision and their lives.”

Besides refractive procedures, Eye Center South also can provide financing for the cosmetic procedures and hearing services the practice offers. Insured patients with higher co-pays and deductibles are now also choosing the financing option.

Joan Wahlman, marketing director for Mann Eye Institute and Laser Center in Austin, Texas, explains it even more succinctly. “We present the financing option to all patients incurring significant out-of-pocket expenses,” she says.

A fee for the practice, but with benefits

Financing, including the popular interest-free, 18- or 24-month loan, makes it easier for patients to go ahead with a procedure they want. The practice gives a percentage of its fee to the financing company.

The percentage varies with the length of the loan but practice financing counselors say 9% is about average for a 24-month interest-free loan. This may seem like a lot to give up, but the practice gets all of its money for the procedure within days, while the financing company takes care of the approval process and all other details.

“We pay a lower fee to the financing company if the patient takes a shorter-term loan,” Ms. Curtis says. “But the 24-month interest-free loan gives the patient more time with lower monthly payments than a 12- or 18-month loan.”

MAKING PATIENTS AWARE

Brochures, websites, advertising

To make patients aware financing is available, Mann Eye Institute hands out brochures for all procedures that require out-of-pocket payments. The practice also mentions financing on its website, on any first call to its call center, places brochures in the lobby and counselor offices, and promotes financing in all its advertising.

“Financing is key to maintaining and accelerating a strong cash business and helping to cover expenses for premium options,” says Ms. Wahlman. “About 25% to 30% of our refractive patients choose to finance their procedure and our conversion rates for refractive surgery and premium cataract services are well above the industry average.”

A personalized approach

Angela Beerup, executive director for sales and marketing at Durrie Vision in Overland Park, Kan., says her practice has a different approach to presenting financing. The practice policy is to wait until the patient meets with a counselor to discuss the financing option.

“For our practice, we feel it is best for financing to be reviewed at a time when we are available to guide patients and answer any questions they may have,” Ms. Beerup says. “We feel this approach creates a more personalized patient experience.”

Other patient incentives

Buckley Chang Eye Institute additionally offers a $50-an-eye discount on refractive procedures paid for up front in cash, Ms. Curtis says. Mann Eye Institute does not offer cash discounts but occasionally will have a special LASIK promotion — but not for other premium services.

The appeal of interest-free financing

Ms. Curtis says that even patients who can afford to pay the full fee in cash will often choose to finance their procedure.

“Not many businesses will give you an interest-free loan,” says Ms. Curtis. “Many patients decide that they prefer to finance and keep their own money in a place where it can draw interest.

CHOOSING A FINANCING COMPANY

Keep it simple

Though many companies approach ophthalmology practices to pitch their financing plans, the practices contacted for this article do not use multiple financing companies. That’s because offering multiple plans from different companies with different terms and approval criteria could create confusion among patients and staff members.

“We have found that the best way to approach financing is to first mention the monthly payment range available to the patient, based on our surgical fees and the no-interest loan, and to not immediately quote the entire cost of the surgery,” says Ms. Curtis, “It is much easier for patients to picture fitting a monthly payment into their budget than the procedure’s full cost.”

An affordable improvement in quality of life

Practice financial counselors make two major points in discussing the financing option with patients. One, the no-interest loan paid back monthly makes procedures more affordable. Two, the procedure will make a significant improvement in vision that will enrich the patient’s quality of life for decades to come.

“Financing allows patients to make a lifetime investment in good vision,” Ms. Kennedy adds. OM