How easy it is for patients to access dental treatment through financing, can be instrumental in the overall financial health of a dental practice.
With the current economic climate, it’s essential that patients are offered flexible financing that not only aligns with their needs, but also with the services you provide, and the goals of your business.
While seeking guidance from dental practice accountants when structuring patient financing is highly recommended, it pays to be familiar with some of the key considerations yourself, too:
The regulatory landscape
There are a number of different regulations surrounding lending and consumer credit that dentists and practice owners need to be aware of before they put a financing program in place for patients:
- Truth in Lending Act (TILA)
Compliance with this act may be required if credit is extended directly to patients through in-house financing. TILA mandates that interest rates, fees and payment terms be clearly, transparently disclosed.
- Fair Credit Reporting Act (FCRA)
If the credit reports of patients are reviewed in the financing model you’ve chosen for your practice, you’ll need to refer to this law governing how you use that information.
- State Laws
For any dental practice offering credit to its patients, they may need to conform to certain disclosure or licensing requirements according to the state they’re in.
It’s worth remembering that even if you choose to partner with a third-party for lending and they become responsible for adhering to regulations, you still have a responsibility to familiarise yourself with the workings of the programs.
Understanding the importance of patient financing
Cost is a primary barrier to dental care for many, so if you can break that barrier, you’re likely to see an uptick in patient numbers. Here’s why patient financing is so important:
- Improved case acceptance
Those practices offering patient financing tend to experience acceptance rates for treatment plans of more than $1,500, that are up to 30% higher.
- Enhanced loyalty
Patients accessing financing for treatments are more likely to be loyal and return to the same practice for further treatment and follow-ups.
- Stability of cashflow
Because a practice that offers third-party financing is usually paid upfront, they can say goodbye to time-consuming and stressful payment-chasing.
Ultimately, financing gives patients the opportunity to get the care they need without delay.
Matching plans to patients
If your practice offers patients a number of different financing options, you’ll be less likely to exclude certain members of your patient base:
- Prime borrowers
These patients may qualify for promotional terms that are interest-free through certain companies such as LendingClub or CareCredit.
- Subprime borrowers
A plan with soft credit checks and high rates of approval such as Sunbit, might be of benefit to some patients.
- Patients that are younger, or focused on cosmetic dentistry
Platforms like Cherry that are Buy Now, Pay Later, may be preferable for this particular clientele.
Remember that being able to offer patients financing that matches their demographic, the average size of the case, and they type of dentistry being performed, is important.
To discuss patient financing in more detail, schedule a consultation with specialist accountants for dental practices, who can help you structure an option in-house that’s compliant and friendly towards your cashflow.
As a strategic lever for positively impacting production and collections, as well as patient satisfaction and practice profitability, the power of effective dental patient financing should never be underestimated.