What Is Patient Financing and How Does It Work?

What is Patient Financing and How Does it Work

Have you wanted to get a medical procedure done but don’t know where to start for payment plans? 

According to a recent survey, about 40% of people cannot cover a $400 unplanned emergency.  And approximately a quarter of Americans have a family member who has skipped necessary medical care because of the expense.  Unfortunately, missed doctor visits can lead to even more costly events, such as hospital admissions, trips to the emergency room, or death.  In some cases, many healthcare providers will refuse to schedule new appointments if a patient has unpaid bills from a previous service.

This guide will help you understand patient financing.

What is Patient Financing?

Patient financing gives you the flexible option to pay for medical procedures over time rather than all at once, usually in a span of several months or years.

Healthcare providers often lend the necessary funds and will hold the balance until you pay the total amount.  This offering certainly isn’t new and has been in the market since the nineties and has since become popular for procedures, such as cosmetic surgery.

Traditionally, patients would finance medical expenses using credit cards or by taking out a small loan; however, this route has become far less appealing, especially with sky-high interest rates. The balance on your credit card can lead you to a never ending pool of debt that is hard to recover from, making it difficult to qualify for future lines of credit or loans.

With these downfalls of traditional financing, businesses have capitalized on offering and providing flexible patient financing options. Companies have started to offer patient financing and can take form in different offers, such as an affordable payment plan or 0% financing.

Benefits of Patient Financing

1. Patients First

An aching back shouldn’t be overlooked, and with this financing option, you’re able to put your health first and can get the necessary medical treatment to continue moving forward with your life.

Patient financing eliminates financial pressure and uncertainty when deciding on future procedures, giving you access to needed care.

2. Affordability

Aside from immediate care, not paying for medical procedures that cost over $400 all at once is alleviating, especially when there are other bills to worry about.

Your cash flow is protected from unexpected large expenses and prevents financial strain.

Some financing programs have bonuses such as no annual fees depending on the provider and when you enroll or an ongoing line of credit that allows you to use its financial resource for additional care.

Patient Payment Options

Here are just some of the patient healthcare finance methods available for you to explore.

1. Medical Credit Cards

Medical credit cards are similar to traditional credit cards but are strictly for medical expenses, such as dental, healthcare, or veterinary costs. Typically medical credit cards offer 0% short-term interest options followed by high-interest rates ranging from 14%-18%.  However, with high-interest rates, it can be less appealing. Offers will vary depending on your credit score and history.

Remember that medical debt doesn’t appear on your regular credit report unless you have a significant past due payment.

2. Internal Financing Programs

This financing program is offered through the medical provider that will be rendering the services. They are responsible for administering and managing their programs on an ongoing basis; for medical providers to offer this option, the practices need a written patient financing policy that is management-approved.

The practice will also provide a list of eligibility criteria, distributed on request. There are two main types of internal patient medical financing programs: direct pay and co-signing.

Direct pay is when patients pay the full cost upfront and then have installments added to their account over time based on the provider’s policy.

Co-signing is when a patient gives their credit information to the company. By doing this, a portion of the procedure will be paid upfront.

Risks of Internal Patient Financing Programs for Practices

However, from a service provider perspective, several risks are related to internal medical patient financing programs.

  • Loan Defaults: When patients cannot make the payments, they can default on their loans, resulting in huge debt and sometimes bankruptcy.
  • Income and credit score: When a company has sole responsibility for healthcare patient financing, it is important to consider credit scores and income.  Being unable to estimate the likelihood of a patient repaying a loan can leave the business at a loss.

To solve the risks of internal patient financing programs, many healthcare providers partner with external financing companies that take responsibility for managing patient payments.

Companies like Denefits offer available customer payment plans for businesses without any credit checks, making them accessible to anyone. Denefits help practices with payment processing and is responsible for tracking down payments. They provide guaranteed payments up to 90% of each contact; this is only applicable if the business uses Denefits’ no-fee financing, has a minimum of one new contract per month, and a 10% down from the defaulted contract.

Bottom Line

Take advantage of different patient financing options to put your health first. More health organizations are beginning to use patient portal apps to provide easier access to healthcare billing systems making real-time payments easier.

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