Patient Financing and Its Impact on Dental Practice

The patient-financing industry is changing incredibly quickly, and patient-financing industry providers generally have had a very difficult time dealing with consumer loan repayment in their portfolios. According to Keith Drayer, vice president of Henry Schein Financial Services, the industry as a whole has substantially tightened its lending requirements for patients. As a result, a practice that had a 70% approval rate a few years ago—which led to optimal treatment acceptance, as well as a substantial amount of elective and cosmetic procedures—is finding themselves with one patient-financing provider and a lower than 50% approval rate, he observes.

Regardless, Roger Levin, DDS, points out that it’s essential for dental practices to have a patient-financing option, and to use it properly. Every patient in the practice should be educated regarding financing that’s available.

“What we are seeing is that many patients who cannot afford treatment don’t tell the practice. They just make some excuse, and then they go away and never have the treatment done because they don’t realize that financing is available because it’s not offered to them,” Levin says.

According to Dr. Charles Blair, making patients aware of readily available third-party financing calls for a higher level of communication skills among well-trained staff. Its availability, however, will dramatically cut the number of broken appointments, because patients will be able to make payments for the treatments they need, rather than pay cash up front, he elaborates.

Levin says patient financing is part of building practices faster and better. Every patient should be offered financing and allowed to make a choice as to whether or not they’d like to take advantage of it.

“Patient financing in a practice is now a necessity,” believes Joseph Jordan, Esq. “What we don’t like to see is dentists extending credit to the patient base and becoming bankers in their practice.”

However, as with any financial agreement, Robert Graham, CFM, notes that it’s important for dentists to understand the terms when using a third-party financing company. Third-party financing companies charge a fee. Therefore, doctors receive a slightly lower fee for treatment when patients choose third-party financing. The benefit to the doctor is that they receive their fee quickly and up front, rather than having to personally finance it on behalf of the patient, he says. This helps the revenue stream, but dentists have to be comfortable with that reduction in fee. Graham also cautions about potential recourse against the dentist if the patient doesn’t repay the loan.

“Dentists need to think realistically about having to give up a small part of their fee. I always ask the question, do you want to have 100% of your fee or 93%? Everybody says 100%,” Levin comments. “However, the real question is, would you rather have 93% or 0%, and then everybody says 93%.”

Despite lower patient-financing approvals, Drayer says dentists can still achieve higher approval rates by changing the way they offer patient financing and considering a multiple patient-financing provider platform. Most patient-financing providers are part of large financial institutions, and a patient’s experience with a different part of that firm may be the reason they were denied, he points out.

“A dentist that offers a “two-party” platform may be able to query a different patient-financing firm. Thankfully, the merchant discount rates to dentists vary, so a prudent dentist will go to the firm that charges him or her lower fees first,” Drayer says. “While this still won’t get every patient approved, there will be incremental patients approved, which will lead to more patients getting the procedures they need, and leave the practice more fiscally fit.”