Cash or Credit – or Both?
One of the biggest challenges any practice faces has been going on for decades, and it comes down to the simple equation of whether to allow credit or demand cash-only payments.
Cash has obvious advantages. When patients pay up-front, a practice does not have to allot staff time to tracking down non-payers by mail, phone or email. Furthermore, a collection agency is never required to capture laggards who have not paid up.
Still, the system has many flaws. Practices with cash-only payment structures rely heavily on insured patients that require contracts with HMOs and PPOs. Inevitably, this results in discounted rates. Moreover, cash-only dentists suffer from more cancellations from patients when they don’t have money available to pay at the time of their appointments.
Add to that a simple fact: with the Affordable Care Act, the number of patients who will have dental insurance will plunge at least 50 percent, if not more, according to industry trade sources.
Dental practices miss out on too many opportunities by going with cash-only payment approaches. An alternative way is to allow payment plans, even zero-down options, for financially stable patients. High-risk patients should be required to pay cash up-front, while those in between the extremes could be offered a cash/credit mix for a payment option.
The key to this strategy requires dentists to hire a financial consultant or have a well-versed revenue cycle staffer who can look at the several variables of a patient, among them:
- The patient’s job, age, time at job, location of home and time at current address.
- History of payment to the practice. Have they paid on time in the past?
- Review credit reports. What is their credit rating?
By simply reviewing a small portion of patients’ financial records, a practice can get a sense of who they can trust with payment plans and who should have to pay in advance. The patients who fall in the middle might be asked for a partial payment prior to treatment.
The patients themselves may see the fairness in these differing methods. Patients in financial trouble will likely clearly understand they are a credit risk. A dentist can work with them to allow enough time, if possible, for them to receive more extensive dental work after first saving for procedures.
Patients who have previously paid up-front could be given the option of payment plans for more expensive procedures. Dentists could also simply wait for requests before offering plans, too.
The same is true for patients who occasionally struggle to pay. If a dentist senses money is an issue, then they can suggest a payment plan. A delayed payment, after all, is better than no business at all.
Productive practices with good revenue flow will work with all patients to ensure they receive great care and that they can afford to pay for it.