Tapping the Power of Patient Financing
Understanding your options in this now competitive arena will allow you to use this key selling tool more effectively.
By Jerry Helzner, Associate Editor

Tom Herbelin, president of Patriot Financial Services, Inc., a Dallas-based company that provides financing programs for LASIK and other ophthalmic procedures, says the biggest change he's seen in patient financing over the past few years is that refractive surgeons have accepted it as an important marketing tool that can help build procedure volume.

"Five years ago, ophthalmologists believed that if you came into the office to inquire about LASIK, you had the money to pay for it," says Herbelin. "They thought it was enough to be a skilled surgeon. They weren't very interested in offering their LASIK patients payment options. It's a lot different today. Of necessity, ophthalmologists have had to learn how to effectively market their services. Now, it's hard to find a refractive surgeon who doesn't offer a variety of payment options. They know that affordability is a key factor today in people making the decision to have LASIK."

And just as refractive surgeons have learned that offering payment options is key to selling LASIK, the leading patient financing companies have been able to adapt their lending programs so that many of their payment plans are now more attractive to patients than using a credit card or even paying cash.

Ophthalmology Management recently spoke with a number of refractive surgery coordinators to determine what features practices want in a patient financing plan. We also talked to representatives of the leading providers of ophthalmic financing programs to see what they're offering now. In this article, we'll tell you what practices want in a financing program, what types of plans are now available, and how to find what works best for you and your patients.

Affordability is key

"The primary goal of a good patient financing program is to help the physician increase his procedure volume without having to lower his fees," says Cindy Hearn, vice president of marketing for CareCredit, the nation's largest company specializing only in patient financing. "Offering patients low monthly payments makes that possible."

"Almost half of the people who are currently considering LASIK say affordability is the biggest obstacle to having the procedure done," notes Brendan Leonard, senior brand manager, Vision Fee Plan, a leading patient financing organization. "Practices that understand the effective use of financinig are now seeing about 25% of their LASIK patients finance the procedure. Most of those people wouldn't be having LASIK at all if not for the availability of attractive payment terms."

"Offering an attractive financing program for LASIK becomes even more important when the economy is slowing, as it is now," says Sonny deRama, vice president of sales and marketing for Unicorn Financial Services. "You have people who are looking for new jobs. They want to improve their appearance, maybe look younger. They want to have LASIK, but you've got to give them an affordable way to pay for it."

Patient financing made simple

Your practice manager or refractive coordinator is looking for a few basic -- but very important -- features from any financing plan. These generally include:

• a simple credit application
• credit decisions within minutes, by phone, fax or online
• responsive customer service; minimal paperwork
• a high percentage of credit approvals
• an interest rate and payment terms that the patient finds immediately acceptable
• a low processing fee (the money the practice must pay to the finance company)
• no credit risk to the practice
• quick payment of the procedure fee to the practice
• effective training and marketing support provided by the financing company.

At first glance, it may appear difficult to find all of these attractive features in a single program, but patient financing has become a highly competitive arena. Every financing company we surveyed says it offers a package containing all or most of the elements that practices want. However, variations in these programs can make one plan more attractive to you than another -- and sometimes these differences aren't immediately apparent. If a plan you're considering doesn't offer the following features, it's best to look elsewhere:

• Simple credit application. All the finance plans say they have made a concerted effort to reduce the length of their credit application and the time it takes to complete it. Most require only some basic financial information and clear proof of identity (photo i.d), which ensures that the individual applying for the loan is the same person who will undergo the procedure. The Internet has proven to be an excellent credit application facilitator. The refractive coordinator can sit down with the patient, log on to the finance company's Web site, and complete the application within a few minutes, or the patient can schedule the procedure during his office consultation and complete the entire online credit process in the privacy of his home. Prospective LASIK candidates are often uncertain at this early stage of the process and can be turned off by a complicated credit application that they view as an invasion of their privacy. Make sure the patient financing plan you choose has a quick and easy application process.
• Fast decisions on credit. Refractive coordinators and the financing companies agree that it's important to get a credit decision within a few minutes, while the patient is still in the office. This fast turnaround is possible because the leading patient financing companies are all linked to one or more of the major credit confirmation services. Quick credit approval usually ensures that a consultation will result in the procedure being performed. If the patient is allowed to leave the office without a credit decision, you may never see him again. And if a financing plan can't provide credit decisions within minutes, you should probably choose another program.
• Responsive customer service. Refractive coordinators want a finance company's customer service personnel to provide clear answers to their questions and verify information quickly. They also don't want to deal with a lot of paperwork.
  "One financing plan we tried faxed us a stack of loan papers that the patient had to return to the office to sign," recalls a refractive coordinator for an Ohio practice. "We now primarily use one company that gives us immediate credit decisions with minimal paperwork once the loan is approved."
• High percentage of credit approvals. This is a sticky area. Some financing programs boast very high overall approval rates, but gloss over the fact that less creditworthy individuals are only approved at extremely high interest rates of 20% and above. Other, more selective, plans have a lower percentage of credit approvals, but will offer more acceptable interest rates -- usually in the 9.9% to 14.9% range -- to everyone they approve, with the actual rate often dependent on the length of the loan and/or the patient's credit history.
  There's nothing sinister about pegging the interest rate of a loan to a person's credit history. In fact, it's good business. Just make sure you know in advance whether a financing plan offers reasonably attractive rates to all the patients it approves, or a wide range of rates based on individual credit risk. You may feel more comfortable using a plan that only approves people with clean credit histories. On the other hand, if your goal is a big increase in procedure volume, you may want to choose a program that's more flexible about extending credit.
• Acceptable interest rates. Many patients will forgo the procedure -- or go elsewhere -- if they receive a credit approval that comes with a very high interest rate. This all goes back to the financing plan that you choose to work with. If the interest rate on the loan is the only stumbling block, your refractive coordinator may be able to arrange a shorter term loan at a lower rate.
  Or your coordinator can explore possible financing alternatives, such as a loan from a company credit union. In some instances, a loan from the employee credit union may provide the best possible terms for the patient.
  Elaine Dyer, refractive coordinator for the Hart Eye Center of Lake Charles, La., says many of the practice's LASIK patients work for the major chemical companies and refineries located in the area. "They'll use the credit union to finance their procedure, because it's hard to beat the 11.99% rate and the easy terms offered by their credit union," she notes.
• Low processing fees. The fee paid by the practice to the financing company can vary from 3% to 15% of the total loan, based on several factors, including the terms of the loan and the credit history of the borrower. For example, The Hillside Group, which is based in Ocala, Fla., charges practices a 3% processing fee for approximately 70% of its patient loans, with escalating fees for riskier credits.Practices also pay significantly higher processing fees -- sometimes as much as double the regular fee -- for so-called "interest-free" loans that allow a patient to repay a loan in full and without interest within a 6-month or 12-month period. The practice must pay more because the processing fee is the only money the finance company will make on an interest-free loan.
  With the popularity of interest-free loans growing, the advisability of offering them has become the subject of controversy. Some financing plans promote interest-free loans as a way to increase procedure volume, but others argue that these loans only result in converting cash payers to credit customers.
  William W. Curtis, chairman and CEO of the Hillside Group, believes interest-free loans are great for the finance companies that collect the higher fees but bad for refractive surgeons. He's against offering these types of loans.
  "If you're strictly a finance company, you'll push interest-free loans," says Curtis. "But we've seen no dramatic increases in procedure volume resulting from offering these loans."
• No credit risk to the practice. Every financing plan we surveyed says it assumes any loss if the borrower defaults on the loan. Make sure this is the case with any plan you use. Of course, riskier loans will require you to pay a much higher processing fee to the finance company.
• Quick payments to your practice. All the financing companies we talked to say they pay the practice the full amount of the procedure -- minus the processing fee -- no more than 2 business days after the loan is approved.
• Training and marketing support. This is one area in which companies provide different levels of service, so it's worth it to you to find out in advance what each financing company offers in the way of training and support. While some companies offer only a stack of brochures, a link to their Web site and perhaps a training video or two for your staff, others will also conduct "live" training (and retraining) sessions at your office, emphasizing selling and closing techniques and Internet-based marketing. Make sure you know exactly what you're getting in the way of training and marketing support.

Tailoring a payment program

If you find it difficult to choose between two patient financing programs because each has features that are effective with a specific type of patient, you can work with both of them. For example, one plan may give the borrower 6 "free" months before making his first monthly payment. This arrangement may appeal to a college student about to enter the workforce. Another company may offer a 60-month loan with much lower monthly payments. This payment plan might be attractive to someone who has a number of other monthly bills to pay. For practical purposes, there's no reason to be working with more than two financing programs.

It's also important to note that some companies are involved in both patient and equipment financing. HealthCapital Financial Group, LLC got into financing LASIK after being involved in leasing Alcon Summit Autonomous excimer lasers to refractive surgeons. If you're already leasing or financing an excimer laser, you may feel comfortable conducting your patient financing through the same company that's handling the laser. But it never hurts to get information on a few different financing programs just to see whether another plan is better suited to your needs.

When it comes to selecting a patient financing program, the best course of action is always to shop around a bit and do your homework before making your choice.