Is Patient Funding Right For Your Healthcare Practice?

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The advantages and challenges of partnering with an external finance company to facilitate patient care.

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June 11, 2021

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In these times of post-pandemic financial uncertainty, additional return on investment for medical providers is more welcome than ever. Patient financing – which, for the purposes of this article, means partnering with an external lender to provide services and procedural payments – can not only produce stable income for a practice, but help ensure that patients do not ‘will not have to postpone the proceedings or, even worse. , abandon them completely. For example, Toronto Plastic Surgeons offers this facility to its patients through Medicard patient funding. There are also veterinary pet financing services available through Medicard Patient Financing. What are the reasons that practitioners may have used to decide on this option?

No more delays

Unfortunately, there are economic disparities in access to health services. Too often, high incomes and the privileged have more access to health resources than middle and low income populations. Funding for patients can help reduce this imbalance, as the simple and disheartening truth is that many medical issues go unreported and it is often impossible to plan for the associated expenses. With funding, patients don’t have to wait until their accounts are in order before opting for procedures – the result is, ideally, quick and less stressful treatment.

Related: Fintech Fuels Growth in Healthcare Financial Sector

Increased patient satisfaction

Since customers can often manage their expenses better through patient financing, they tend to be more satisfied overall. Part of the reason is that they are not stressed out and burdened with sudden financial decisions associated with urgent medical procedures. Best of all, they’re more likely to stick with a practice if they don’t have to worry so much. Compared to other practices that don’t offer this option, they are more likely to go the former, which can mean more business through word of mouth.

Reduced collection costs

When you partner with a patient funder, you receive payments on time. It also means your team won’t spend unnecessary hours and energy trying to collect payments.

Stable cash flow and less bad debt

By setting up a conventional payment plan for a patient, your team takes responsibility for keeping an eye on payments and collecting them on time. Essentially, it involves giving a loan to a patient, usually without any interest. However, expenses such as bills, payroll, and lease / rent continue as usual. This can lead to money tied up in accounts receivable which will have an easy and quick impact on a budget. But when you choose a partnership with a patient finance company, the latter takes care of the collection costs, including the possibility of being paid up front.

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Better marketing

Partnering with a finance company with its own marketing arm can help promote a business, making your clinic stand out from the crowd.

Which one to choose ?

In terms of funding models, three predominate. In the first, self-financing, you, as the care provider, are responsible for the receivables. From creating a payment schedule to fundraising and patient follow-up, your team does it all. In the recourse loan model, you work with a patient financier / lender, who will approve a patient’s loan once the business / practice has met the eligibility criteria. If the patient does not pay, the lender / finance company will recoup the losses from you. Among the disadvantages here is that the practice will have to bear the losses and the costs of the lender. Finally, there is the non-recourse loan model. Similar to the second, you are working with a loan company. The main differences are that it is the patient who must meet the underwriting criteria (if the lender does not approve the patient, no funding is provided by them) and the losses are borne by the lender. A downside to this method is that lenders charge interest to patients; when rates are high, patients may not be interested. Additionally, patients with poor credit histories might be rejected when assessing pricing.

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