People find a way to afford the things they truly value. That is an indisputable truth about consumer behavior, as you can tell by the number of people you see - including the patients who come through your practice - who are buying new cars, doing extensive home renovations, and booking dream vacations that you may still be just dreaming about yourself.
That’s why I am always saying that dentistry today has to be as much about creating value as it is about clinical excellence. When you’re presenting comprehensive, transformative dental treatment, you’re not competing with other dentists, you’re competing with all those other big-ticket items on a patient's wish list, so you have to get them to the point where they really want it.
The other reality that comes along with this is that nobody saves in advance for dental care. That means that in order to really compete for discretionary dollars, you have to be able to offer the patient something those other providers of high-value items do: a manageable way to pay for it.
Here are three ways you can do that:
The ideal scenario, of course, is that a patient accepts treatment and then finances the cost using their own economic resources. But sometimes they need a little help from you in accommodating their payment schedule. This is the most common way a dental practice offers support to a patient to help them pay - by helping the patient spread things out over the course of treatment, for example by offering equal payments, starting with the first appointment and finishing with the last (or even starting at the time of acceptance, with a down payment). This is not really financing, strictly speaking - it's providing a payment structure - but it can go a long way in making a treatment plan more economically attractive to a patient who has the resources but would like to break up the total cost visit by visit.
Another version of assisted self-financing is to offer an in-house dental savings plan. For instance, if you are proposing a complex treatment plan, you could offer to begin the treatment following their next hygiene visit several months from now. In the meantime, they can start making equal monthly payments leading up to that time, continuing during the course of treatment, so that when they are finished having the dentistry, they are finished making the payments.
One reason that dentists give for resisting external financing arrangements is the cost, as financing companies typically take a percentage of the treatment fee - usually between 5 percent and 15 percent. It’s easy to see why a dentist would be resistant to this. But when you consider that almost 30 percent of patients in a recent survey done by a financing company said they would rather decline treatment or go somewhere else if they couldn’t get financing, that it is a fee well worth paying in most cases. Obviously, taking in 85 percent to 95 percent of the total fee on a comprehensive case is a pretty attractive option if the alternative is to collect no fee, have open time in the schedule, and maybe even lose the patient to another practice.
That 85 percent to 95 percent of the fee becomes even more attractive when there are no fee adjustments to an insurance company’s schedule to take into consideration. For that reason, you may want to start by exploring financing options with patients who don’t have insurance, as your net revenue on these cases can end up about the same.
Naturally, we always prefer when patients can make their own arrangements for paying or work with an outside lender if necessary. But what about the patients who don’t have the means to self-finance? What about the ones who aren’t interested in applying for external financing, or who may not be able to qualify, but are still honestly interested in moving forward with the care you propose?
That's where you might want to consider offering an internal financing solution.
I know dentists are often reluctant to consider this option, and that reluctance is not entirely without reason. You’ve probably been told many times by many people that you should never become a banker to your patients, and there’s no denying there are risks involved in lending money to patients to help them pay for treatment. Too often, we worry about risk in terms of “what if nobody pays?” when the truth is almost everybody does.
And there are ways to reduce your risk - for instance, by doing a combination of the layaway “savings plan” plan mentioned above, followed by monthly payments over six or 12 months. Just make sure that the first payment you receive on a comprehensive case is enough to cover your out of pocket expenses for labs and supplies for that case. Once you have that in the bank, it just becomes a matter of balancing reward-versus-risk on your time for the remainder owing. It’s up to you to decide how much of that risk you are comfortable with, on a case by case basis.
There are other opportunity benefits too. For instance, oftentimes when there is extensive dentistry needed, such as multiple crowns, the tendency is to do the work one tooth at a time, over a series of appointments. When you think about it, that approach is not ideal for the patient, and it’s ineffective for the practice.
But if you tell that same patient that you can do all of the work in one or two visits with a simple financing plan, they tend to be motivated to action because it saves them the inconvenience of multiple visits. And naturally this enhances your value of time significantly, so everybody wins.
So who should you look at as candidates for your lending services? There are cases that stand out as opportunities for you and the patient. In terms of value, I would look at cases that are over $2000, where many patients fill the pinch of self-financing options, but below $5000, where the risk becomes greater.
To be clear, these are not options you want to offer to every patient, for every significant treatment you propose; once again, the ideal is always to have patients make their own arrangements when they can. But it makes sense to have these options on hand for those who are just a workable payment plan away from saying yes.