Amy and her mother sign up for a seminar after hearing about LASIK. They listen as you explain the procedure and seem very interested until you reach the slide on surgery fees.

It seems they can’t afford the procedure.

Tom has been active in sports for almost as long as he’s been wearing corrective lenses. The summer before heading off to college, he reads an article on refractive surgery in his favorite sporting magazine. He pulls up to your surgery center on the Web and sees the price. "Maybe when I turn pro," he thinks.

Ruth is doing well after cataract surgery. During a follow-up exam, you ask if she’s ever thought about oculoplastic surgery for her sagging eyelids. She laughs and says that would be nice — if she ever had the money for it.

"Maybe next year," she says.

Like many people, Amy, Tom and Ruth would benefit from modern elective procedures. But none have the ready cash or credit necessary to undergo the procedures now.

Refractive surgery has enjoyed tremendous growth in the last few years, and oculoplastic surgery is being offered in more practices every day. However, many more patients would be interested in available procedures, if the fees fit into their budgets. The way to tap this market is by offering patient financing with monthly payments.

Before diving into a patient financing program, however, you should understand how these programs work. In this article, I’ll discuss patient financing and how to shop for a program. Next month, another expert will discuss how to make a program work in your practice.

The major patient finance companies in the ophthalmic market include The Hillside Group, Health Capital Financial Group, MEDCASH Health Systems and Unicorn Financial Services. The company you choose and the way you manage its program will have a big impact on your results. Keep these considerations in mind when evaluating financing plans.

• Seize the opportunity
. Consumers want affordable financing for large purchases, including elective surgery. As these procedures go mainstream, more consumers will seek payment plans. Lenders are offering good solutions. High competition in this market means that it will be easier than ever for you to find a program that’s attractive to you and your patients.
• Know thyself
. Before you look for a financing partner, assess your current practice, gather data and do some analysis. These statistics will serve as benchmarks to track the changes financing will bring to your practice. You will want to know:
-the revenue and costs associated with each procedure (independent of the type of payment)
-the current surgery volume and growth of your practice
-the reimbursement from each form of payment you currently accept
-the average reimbursement based on your current mix of cash, checks, credit cards, etc.

To work out these calculations as easily as possible, you or your administrator can download a spreadsheet at www.eyefinancing.freeservers.com. As you work the numbers, pay special attention to the growth of your surgery volume and your average reimbursement. If your elective surgery program is working, you’ll typically see a small decline in the reimbursement per procedure as your surgery volume increases at an accelerated rate.

Also, it’s a good idea to familiarize yourself with competitors in the market. What procedures do they offer and at what prices? Find out about their financing programs before you start shopping for yours. Ideally, you’ll want to offer financing that is both competitive and distinctive.

Most of us are familiar with financing as a consumer service, having used credit cards, made mortgage payments and so forth.

When it comes to patient financing programs, you can analyze them two different ways. One way is to break them down into revolving credit type and installment credit type plans. The other way is to look at them as non-recourse type and recourse type plans. Next month, in part two of this series, the author will explain revolving credit type and installment credit type plans. Here, I’ll focus on non-recourse and recourse types. Consider these factors:

• Non-recourse:
This is the "safe" form of financing, when the lender takes the risk. You’re paid whether or not the patient repays the loan for an elective procedure. With most of these programs, you receive a payment that’s reduced by a discount reflecting the credit risk of the patient within 24 hours to a few days. Of course, the lenders decide who is eligible for financing and how much to lend patients.
• Recourse:
Using recourse financing, you’re taking some or all of the risk if the patient doesn’t repay. If you have ever billed a patient for services, you have participated in this type of program. If you use this type of program for elective procedures, I recommend you require cash up front to cover your hard costs. Three problems could arise:
-The patient won’t be able to make the down payment.
-The patient will give you cash down and won’t pay the balance of the account.
-The patient will give you cash down and partially repay the account.

With these possibilities in mind, you should at least cover your hard costs. You’ll need to decide if this approach is worth it — if you’re willing to surrender some profit margin to increase volume, for example. Another important point is that you can use recourse or non-recourse with finance charges or no finance charges. Analyze what the vendors offer while keeping the following factors in mind:

• Accounts with finance charges.
The patient borrows money from a lender, makes payments and is charged interest for the period in which the loan is outstanding. The reimbursement may be recourse or non-recourse. Typically, the lower the interest rate is for the patient, the more expensive the program will be for your office. Interest rates may also be lowered because of a patient’s good credit rating.
Another consideration is that the patient may or may not be required to pay a fee to apply. While this may be acceptable to some patients, be aware that it may discourage applications from patients who can’t or don’t want to pay such a fee.
• Same as cash, no interest.
These programs are very popular and can immediately increase the number of surgeries you perform. But there is a price. In a no-interest, or same-as-cash program, the lender receives no income from the patient.
Because the lender still has to cover losses, cost of funds and overhead, the finance partner has to charge you more. You, in turn, need to make certain the increase in procedures justifies the extra cost. You also can offer same-as-cash programs selectively, such as during promotions limited to certain time periods, or when you need to close a difficult sale. Offering no-interest plans is a wonderful way to drive your business. Just make sure they drive it in the right direction.
One potential negative outcome of using this plan is that your competitors might match it.
Despite short-term gains in increased patient volume that you may achieve by offering this option initially, you may feel pressured to maintain it without continuing to increase volume if patients in your market come to expect it as a service that will be available everywhere.

For a side-by-side comparison of recourse and non-recourse programs — with and without finance charges — refer to sidebar on "Recourse vs. Non-Recourse Financing" .

Now that you understand the financing market, the basic programs, and what is being offered in your area, you can shop around for the best program for your practice. Most ophthalmology trade magazines have advertisements for financing companies, and many have booths at conventions. Contact information for several companies is included at the end of this article.

You’ll need to consider many features when choosing a financing partner, including:

• A program’s competitiveness.
Does the company have what you need? Ideally, the financing partner you choose will offer programs that are affordable for your patients and competitive in your market. This is where your research will pay off.
The goal is to find a program that will provide you with a proactive marketing tool that will attract more patients incrementally and that will increase your patient conversion rate (turn prospective patients into patients). Of course, you also want to develop a program that will distinguish your practice from competitors’.
• Approval rate and credit line.
There are two great unknowns in financing: How many people will qualify for loans and how much will they qualify for? When you ask finance companies, the answer you get will usually refer to averages or examples. Both depend on the demographics in your area, the programs available, your advertising, how much risk the financing company is willing to take and other factors.
If you look at similar programs, differences in prices usually will be hidden in the approval rate or in the credit lines. You’ll also need to look at financing programs’ approaches to loan approvals and decide which approach works best for you.
One company may have a high approval rate, but you’ll learn that the company doesn’t always approve the full amount for surgery. (The patient pays the balance.) If so, ask yourself if partial approvals will conflict with your marketing message. Offering financing to a prospective patient and then telling him he only qualifies for 50% of the fee could dampen his enthusiasm for the procedure.
But consider this: A company that offers only full approvals could have a lower approval rate, meaning more of your prospective patients might not qualify for any financing. So you have to ask yourself if it’s better to have at least partial approvals to motivate patients to undergo surgery instead of losing them because they are not fully approved.
Plans will vary in terms of repayment schedules as well. Find out what range of possibilities exists. To increase approvals, some companies might shorten repayment terms, raise certain applicants’ interest rates or increase their fees, based on their credit histories. You might not want a patient who plans to pay off a loan in 60 months discovering that he has to pay it off in 24 months, for example. Your choices should be determined by how you want to manage marketing, elective procedures and patient expectations.
• Value
. I say value instead of cost because, in financing, you usually get what you pay for. There may be a valid reason why one program is lower in price than another. It may be worth less. The approval rate or credit lines may be lower, the financing charge may be higher, and corners may have been cut on service.

Once you’ve picked a finance program, make it a central part of your growth plans for elective procedures. Take the following steps:

• Integration
. This step is almost philosophical. Decide that financing is going to be part of your day-to-day business. Integrate it into your business plan. Treat your new financing with as much attention as you would a new surgical procedure. The importance you give the program will radiate to others in the office. They will give it equal weight and, eventually, financing will become a regular, consistent and significant source of income.
• Delegation
. Usually the doctor or executive who chooses a financing partner is not the person who goes over the options with patients. This task is left to receptionists, managers, coordinators and other support staff members.
They’re the ones who will be explaining the financing, walking patients through the paperwork and closing the sale. Patient financing is extra work for your staff.
Make sure that your patient consultants are people who can appreciate the benefit that financing offers your patients and your practice.
• Presentation.
Financing is an excellent marketing tool. Include information about affordable payment options in your ads, on your Web page and around the office. Have your financing company check the ads for accuracy and provide you with any needed disclosures.
• Closing the sale
. When talking to patients about financing, focus on what the monthly payment will be. Remember that the main reason to offer financing is to make your procedures more affordable to more patients. First, let them know how inexpensive the surgery can be. Then you can go into more detail about programs and answer questions.
• Checking up.
I recommend tracking your approval rate, procedures by payment type and customer satisfaction. I have created a spreadsheet that you can download from ophmanagement.com to assist you. Follow-up exams are a wonderful opportunity for a quick survey. Make sure your financing partner is living up to your expectations. At the same time, ask if you are meeting theirs.
• Share your success.
A successful financing program will increase the number of procedures you perform. Consequently, your staff will be doing that much more work. I know of some laser surgery centers with a full-time staff person dedicated to financing. Some centers even offer incentive bonuses if procedures exceed goals. Whatever your level of use, be sure to share with staff the beneficial effects their extra efforts are having on your practice.

Ultimately, the success of patient financing in your office will depend on a combination of the partner you choose, the programs you offer, and the people you put in charge of those programs. As interest in elective procedures grows, so will the opportunity for surgeons and partner lenders to make those procedures more affordable.

With a convenient, reliable, attractive financing program in place, everyone benefits. Your surgery volume grows, the lender turns a profit and your patients improve the quality of their lives.

Imagine the outcomes of those hypothetical patient interactions I presented at the beginning of this article.