Helping Patients Pay for Dental Treatment.
In the November 2018 issue of Aesthetic Dentistry magazine, Tawana Coleman, the Total Team Training instructor for more than 20 years, wrote Part 1 of this article. Below, Hernan Varas, M.B.A., the current Total Team Training instructor, continues on the subject that Tawana started, and offers additional advice for doctors and team members.
Dr. Dick Barnes has always said, “People don’t have money, they have access to money.” To explain what he means, let me share a personal story with you. A few years ago, it was time to get a new car and I knew what I wanted. I wanted a Mercedes because I liked the way it made me feel. Truth be told, I didn’t have the money to buy it, but a salesperson showed me how to get it anyway.
At first, he counseled with me about how I could fit the car payments into my budget. Next, he gave me information about a third-party financing company, and they approved my loan on the spot.
I drove that car out of the parking lot with a big smile on my face, looking and feeling great. I didn’t have all the money needed for that car, but as Dr. Barnes said, “I had access to the money.” Today, I am still happy with my purchase.
This service is very similar to what a financial coordinator in a dental practice can provide. If he or she understands the value of the treatment for patients—how much they want it, and how important it is for them to get the work done—he or she will find the money because it changes patients’ lives. Patients will be healthy and keep their teeth for a lifetime.
New Patient Interview
Financial coordinators can’t help patients if they don’t know anything about the patient’s financial circumstances. To gain an understanding about a patient’s finances, a team member must conduct a new patient interview. This interview helps team members build relationships of trust with patients. Another famous Dr. Barnes quote is, “Patients will do business with people they like and trust.”
Building relationships of trust is critical, and it all starts with the new patient interview. To learn how to conduct a new patient interview, see Tawana Coleman’s article, “Create an Uncommon Practice,” from the November 2015 issue of Aesthetic Dentistry magazine.
In the article, Tawana writes that financial coordinators should give all patients a message of reassurance. They should say, “In our practice, we don’t believe in surprises. You will always know about everything before we ever do anything. We have ways to help patients fit treatment into their budgets.”
A Case Study
Recently, I was visiting a practice and I conducted a new patient interview to show the team members how it is done. When I asked the patient, “Are you concerned about the finances required to return your teeth to excellent dental health?” the young woman said, “Yes, I’m concerned, because I’m employed part-time and I’m very concerned about how much money I have to come up with.”
She continued, “I’m pregnant and I want to make sure that my baby is healthy. I have no dental insurance. I’m broke. I don’t know where I’m going to get the money from.”
During her exam, the dentist discovered that she needed a crown and had some decay and periodontal disease. The treatment was a little over $2,000.
When we met again after the exam to discuss finances, I said, “I know things are a little tight financially for you, but if anybody can help you, this practice can. I know you want your baby to be healthy and this is a procedure that needs to be taken care of. Do you know anyone in your family or do you have friends who could help you?”
She looked at me and said, “Actually, I think my grandfather can help me.” I responded, “Would you like me to give him a call?” She replied, “No, I’ll call him.” She called her grandfather from the office and he agreed to help. We scheduled the treatment and she was able to get it done.
If I hadn’t built a relationship with the patient from the beginning, I probably would have said, “Well let’s try some of these financial-service companies and see if we can find ways to fit this into your budget. It’s worth at least giving it a try.” But after the interview I learned that she probably wouldn’t be approved, so I guided her in a direction that saved her from potential embarrassment and provided her with the funds she needed.
Keep in mind that patients always ask, “What is my insurance going to cover?” Please be sure that all insurance benefits are already researched in advance for each patient with insurance, to maximize their benefits for them.
When it comes to using third-party lending institutions, it’s important to know the details about the different financing options. Financial coordinators must ensure that each company offers a win-win proposition for the patient and for the practice. The financial coordinator is an advocate for both.
If patients don’t understand the terms of a financial agreement, they will likely blame the practice if something goes awry, because the practice advised them to use the financing. It is important to be clear and concise about what patients are getting, and details must be transparent.
Several financial institutions are available to help patients. The top three that I recommend are CareCredit®, LendingClub®, and Wells Fargo Dental Patient Financing. These companies have experienced trainers that can help guide financial coordinators on how to utilize the different resources they offer.
Financing Ground Rules
All dental practices should establish some basic rules when engaging third-party financing for patients. Note: If you offer printed brochures about such plans in your office, always include a disclaimer that reads, “Not all plans are available in all offices.”
1. Understand the differences between plans. Here are some of the most common plans, defined:
• Deferred-interest plans. Patients must pay off the full balance by the end of the deferred-interest period or they owe all the interest back to the original date of charge. Only offer 12-month plans because it costs the practice more after that time. For treatments under $1,000, offer a same-as-cash plan.
• Same-as-cash deferred-interest plans. Plans are 90-days or 6-months, and can be segmented into three or six payments.
• Fixed-interest, long term, or extended payment plans. The interest rate does not fluctuate during the fixed rate period of the loan. The discount rate tends to be less for practices and they are usually available as 24- to 60-month plans.
Currently, CareCredit® offers 24- to 60-month plans at fixed-interest rates from 14.9–17.9 percent. LendingClub® offers similar plans, with up to a $50,000 loan value, but it is contingent on what is approved for the individual patient and what their interest rate is based on a credit check. Interest rates are higher with this type of a plan, but it extends payment options out so the patient can work this treatment into their monthly budget. Again, be the patient advocate by going over the plan’s default rules.
2. Stay away from companies that offer universal approval. In general, it isn’t a good business decision to approve all patients for financing because the practice will take the risk on a patient who may not have the ability to pay. Don’t make it a hardship for your patient.
3. Don’t offer deferred-interest plans for treatments that are under $1,000. Why not? Because it ends up costing the practice too much. Again, look for a win-win situation.
It is possible, however, to offer same-as-cash deferred interest plans for 90 days or 6 months, and most patients can work them into their budgets.
4. Be a patient advocate by reviewing default rules on all plans with your patients. I call it “reviewing the small print.” Some plans will apply interest to the origination of the loan at a high interest rate if a default occurs. Others may apply interest at the month in which the default occurred. Make sure the patient understands all the details.
5. Consider cosigner or “In Behalf Of” loans for your patients. According to MoneyCrashers.com, these are loans in which “a person agrees to pay a borrower’s debt if he or she defaults on a loan.” This is a great alternative for patients with less-than-stellar credit, or for patients who can’t get approved on their own.
LendingClub® shines with their “In Behalf Of” loans, because the person named as the “In Behalf Of” receives the monthly statement and is responsible for payment. The patient is responsible to pay the “In Behalf Of” directly. So there is less risk of default that can ruin the credit of the person named as the “In Behalf Of,” and he or she can monitor if the loan is getting paid.
CareCredit® offers cosigning loans but the bill is between the patient and CareCredit® (the cosigner is not directly involved in payments). If the patient defaults, it can ruin the cosigner’s credit.
6. It’s important to understand the terms recourse and non-recourse. According to the Internal Revenue Service, a recourse loan holds the borrower personally liable. All other debt is considered non-recourse.
In terms of dental practices, with a recourse loan, if the patient defaults on the payment or doesn’t pay at all, the practice has to return the funds to the lending institution.
However, with a non-recourse loan, the practice still gets the funds for treatment because the loan is strictly between the patient and the financing institution. Most offers of universal approval end up being recourse loans.
13 Questions to Ask
There are several questions to ask each financial institution that you are considering for financing options.
1. What is it going to cost the practice to enroll? What is the financial responsibility of the practice?
2. Are there online support services? CareCredit®, LendingClub®, and Wells Fargo offer online support.
3. Is there an application fee for the patient or the practice?
4. Is there an in-office application option? Never send a patient away with information to fill out at home. Always fill out forms in the practice, because otherwise the patient might not do it.
5. Does the financial institution offer a “soft” credit check that doesn’t affect the patient’s credit score?
6. What is the discount rate for each time period?
7. What is the patient-approval rate? (Remember, don’t use a plan that approves everybody, because there’s usually recourse involved). Follow this question up with, “How does that work?” Asking this helps the practice to understand the terms of the loan. Sometimes dental practices won’t collect money for treatment until the patient pays off the loan.
8. Once the patient is approved, do they get to choose which plan they will use? For example, CareCredit® will approve a loan amount and offer patients a choice of deferred-interest plans or fixed-interest plans.
9. Is there an interest-free option? If so, what does that cost for 6, 12, 18, and 24 months?
10. Is the credit line ever increased from the original amount approved? CareCredit® sometimes allows for credit increases if the practice calls to advocate for the patient.
11. What happens if a patient defaults on payment? Will there be financial penalties starting from the month of default, or from when the loan originated? Are there any late fees?
12. Make sure there is no pre-payment penalty (CareCredit®, LendingClub®, and Wells Fargo do not charge for pre-payments).
13. How soon does the practice receive payment? Within 24 to 48 hours?
After ruling out the obvious payment options of cash, credit cards, and maximizing insurance benefits, here are the best financing options to explore:
• Health Savings Accounts (HSA) or Flexible Spending Accounts (FSA)
• Outside financing from third-party institutions
• Local banks or credit unions
• Life insurance policies (cash value)
• Home equity loans (last resort)
In general, financial coordinators must be thoroughly pre-pared with several financing options to help patients find money for treatment if they need it. Be careful not to schedule the patient until after the financial arrangements are made.
A solid financial plan closes the deal and enables patients to proceed with the recommended treatment. Patients who are confident with the financing arrangements say, “Let’s get it scheduled!” It’s music to any financial coordinator’s ears.
Always Give Hope
If the above options fail, all is not lost. As you can see, dental practices have numerous options to help patients find money for treatment. In some instances none of the options work, and it’s impossible to find the funds. As Tawana Coleman suggested in Finding the Money, Part 1, it’s important to leave all patients with a sense of hope, even when circumstances seem bleak.
Everyone should continue to feel welcome in the practice, regardless of their current situation. Before sending a patient home, tell the patient, “We’ll get there. It may be slower because of your circumstances; however, you never know when your circumstances will change. All is not lost.” When patients feel welcome and respected, they will be loyal to your practice and will become your patients for a lifetime.