practice advisors

Patient Finance Plans

Allan Barker, OD, and Greg Stockbridge, OD, MBA

Q What is your opinion on utilizing finance company programs to help increase patient purchases?

Like many options available today, this can be an asset if handled properly. Let’s first look at how the plans basically work.

Most of these patient finance plans charge the eyecare practitioner an administrative fee based on a percentage of what the patient purchases. There should be no recourse to the practitioner. That means that if the patient does not pay the finance company, you still get your money.

There will usually be a floor amount that the finance company lets that patient charge on his plan, and, under that floor, the patient will be handled in a different manner. Usually this involves a higher finance charge to the patient, coupled with a shorter time to pay, but without a large interest amount being assessed.

Above the floor amount, there is usually an extended period for the patient to pay without finance charges that is usually longer than a credit card company provides.

WHY…

Other service providers offer healthcare financing for patients, so why should you be different? Why should the financing options patients receive from medical and dental providers not be available from other eyecare professionals such as optometrists and opticians?

Considering that the ECP pays a percentage based on purchases, the higher the amount, the better from a pure business perspective. Though there are variations among vendors, we suggest being wary of policies that differ too much from those described below. Make sure of the following:

■ There is no recourse to the plan provider.

■ The fee you are charged is not significantly higher than what a credit card charges.

■ The patient receives a longer time period to pay his or her bill than the time allotted by a credit card company.

■ The patient fully understands the program interest rate for purchases below the floor amount, as these are usually higher than most credit card interest rates.

PATIENT CONTROL

Every time a patient seeks care or products elsewhere, you diminish the chances of that patient returning to your office. A contact lens patient, for example, should not have to go elsewhere for a backup pair of glasses. Having access to credit can assist you in limiting this process of patient migration.

Also, don’t overlook the potential of credit to allow patients to purchase premium products. Credit may bridge the gap.

As eyecare professionals, we are fortunate to be able to enjoy a field where we get to help people on a daily basis. If access to credit is what separates a youngster from polycarbonate lenses, for example, then we need to consider doing what we can to facilitate the patient’s ability to access what benefits him or her.

Patients can also be assisted by financing services for needed therapy. They may not have budgeted for such things as special contact lenses, dry eye therapy, and low vision devices, for example.

INCREASED REVENUE

Financing options can increase average revenues per patient. In fact, some studies show as much as a 30 percent increase.

Consider the cost of a lost sale compared with the cost of offering a finance program. If your practice averages $500 on a sale of glasses, for example, and your cost of goods is 45 percent—plus a credit card fee of two percent—that means your average profit is approximately $265. If you are paying three percent more, or $15 additional for the finance program, then your profit would be reduced to $250.

Even though you lost $15 per sale, you profited $250 that you may not have otherwise realized. The profit from just one additional sale would make up the difference of more than 16 transaction fees.

The best time to let patients know this option is available is at the beginning of the visit at check-in. It should be positioned as available to everyone and not presented as an embarrassing afterthought.

STAFF PARTICIPATION

Also, make sure your staff is aware of the program. If you’re going to offer patients the option of a healthcare credit, your staff should be properly trained in the plan’s administration and be able to confidently present it to patients.

Your staff needs to be aware of the nuances and bullet points of the financing program you select. They need to know the terms, minimum purchase floors, and the rules regarding combining purchases made in your office with transactions with other providers that participate with your financing vendor. Patients need to be informed and made comfortable regarding this financing option you offer by staff members who know what they are doing.

ECPs offering patients a financing option makes sense. Interest rates are generally in line with what most providers pay to credit card companies. There is no recourse. It allows patients to select options that often can translate into better care. As long as you let patients know about the program up front, have an informed staff, and handle this option correctly, it can be a win-win for you and your patients. EB

Send Us Your Question
	In this new Eyecare Business column, Drs. Barker and Stockbridge will answer your questions about practice growth, business management, and other practice issues. Please email your questions and concerns to eyecarebizeditor@pentavisionmedia.com.