Q: Since the pandemic started, we’ve had more difficulty getting patients approved for 3rd party financing. Do you have any solutions for this?
A timely question and I’m glad you asked! Lending companies do seem to have tightened up a bit on their criteria recently, and it’s a bit of a wake-up call for a lot of dental offices that have become overly reliant on 3rd party financing—using it as a sort of catch-all solution for any financial barriers.
The inherent risk with depending too heavily 3rd party financing is that if you bring it up as the first and only solution for a patient…and then they get declined…it can kill the financial discussion quickly, making it hard to move forward.
With that in mind, here are a few key pieces of advice to address this issue, as well as increase the odds of getting treatment accepted and paid for—regardless of what happens with 3rd party financing.
(As a note: We cover how to handle the financial discussion, including 3rd party financing, in on our online training platform, DDS Success in both the Financial Coordinator and Treatment Coordinator Training Courses.
Some patients want to jump right into the financial discussion before you’ve fully discussed the treatment plan.
You don’t want to get into the financial discussion too heavily until the patient is “closed” on the treatment in the first place. Establish first that they a) understand their diagnosis and treatment plan, and then b) want to do the treatment.
(Related: Patient Financial Tips for Dental Practices)
Figuring out finances, overcoming barriers, and coming up with alternative plans is easy when the patient is on your side trying to figure it out with you.
On the flip side, if they’re not convinced about the treatment, then making financial arrangements starts to feel like (excuse the pun) pulling teeth. And if they get denied for financing, acceptance becomes all that more difficult.
Now, of course, it’s okay to let them know how much it’s going to cost if they ask—I’m just saying don’t get into discussing how they’re going to pay for it until they’ve decided to do the treatment.
For example, you may be talking to a patient and while they’re thinking about the treatment they ask, “how much is this going to cost me?” And they ask this before they’ve decided to do the treatment. So one thing you can say is, “It’s going to be about $5,000, but Joe, what I want to do is not actually discuss the money right now—we’re going to put that aside for a second. The first thing I need you to understand is what the treatment is, why you need it, and make the decision that you’re going to have this treatment. Then we will figure out how you’re going to pay for it.”
2. Get the patient involved in solving their finances
The person who knows their finances best is the patient.
You want to make sure the patient is taking some responsibility for figuring out how they are going to pay. When a patient sits down with you and asks how they can pay for this, don’t immediately get into, “oh we can finance that.” Ask the patient what they’re thinking. So, here’s an example:
Patient: Do you take payments? How much do I pay for this?
Doctor: We do have payment plans and outside financing, what kind of payment arrangements are you looking at?
You’re putting the ball back in their court.
(Related: Patient Denied for Financing? Try This!)
For example, if the patient asks if they can do two payments, that is much better than doing third-party financing.
3. Explore other options before committing to 3rd party financing
Something to understand is that when you are using third-party financing, there are liabilities and risks associated with it. Specifically, the cost to your office can be significant. Even though the patient might get 0% interest for the payments, the doctor is paying the interest for them—anywhere from 10 to 17%.
So, I do not like using third-party financing unless I really have no other option for the patient. Especially if you’re planning to give any other discounts on top of that.
The other thing you have to take a look at is when you are doing third-party financing with a patient right off the bat without having discussed any other options, you run the risk of that patient being declined for financing, even if they have a high credit score.
The truth is, we don’t always know the parameters the finance company sets for approving financing. I’ve seen patients get disapproved for financing that had great credit scores, and conversely, I’ve seen cases where I thought there was no way they were going to get approved and they did. So, we don’t always know the algorithm they are using or what they’re looking for to approve patients.
So, with this in mind, put yourself in your patient’s shoes. It can be upsetting when someone comes to you and tells you, “I’m sorry, they didn’t approve you.” And now you have to ask them if they have any other options – all while they are upset because they’ve been declined. It’s really not the best way to do it and is a damper on the entire situation.
So I have three pieces of advice for this:
- If you’d already explored other options before getting into 3rd party financing, you can secure a backup plan. Perhaps a credit card, a family member that could help, a co-signer, etc.
- Before submitting the application, tell them that you never know if someone will get approved or not. You’ve seen people with great credit get declined and others you wouldn’t expect get approved. So you want to have their agreement on a backup plan just in case.
- If they get disapproved, keep it light. It’s a normal everyday occurrence. You just say, “So, the financing company did not approve the application, let’s go ahead with Plan B.” This makes the entire process smooth and easy.
5. If they’re declined, you can always get a co-signer and try again.
Getting a co-signer can be very easy. Just ask the patient who might be willing to co-sign for them. They may have a parent, a sibling, a friend, etc. that would be happy to help. Most people have someone they can at least ask.
Then it’s just a quick phone call and 10 minutes later you’ve got a new application submitted.
And if that one doesn’t get approved, just keep it light and continue to look for solutions as applicable.
6. Work with multiple lending companies.
Different lending companies specialize in different types of loans and have different criteria. So work with several. The more options, the more likely you’ll find one that works for any given situation
In society in general right now, finances are tight. Beyond lending companies, we have fewer patients willing to come to see the dentist right now many people have less disposable income than they used to as a result of business closures and shutdowns. But their health is still just as important as it ever was, so it’s on you to be very good at helping them understand their treatment and solve the financial part of it.
So find out how you can get sharper. I highly recommend attending the MGE Communication & Sales Seminars. They can now be attending online via live stream, from the comfort of your own home or office, and the average attendee collects an additional $288,000 a year after attending. Now’s the time to do it.
I hope these tips help! If you have any questions you can call us at (800) 640-1140 or email me at email@example.com.