Now more than ever, healthcare and dental offices are confronting the need to offer patient financing. And that push comes from all angles.

On the one hand, patients seek to resume services they put on hold during COVID-19, but many can’t afford to pay those bills in full amid the pandemic’s economic strains.[1] At the same time, bad debt[2] has worsened medical practices’ preexisting financial troubles—and a rush of easy-pay giants like Amazon has created new competition[3] continuum-wide.

As these trends take shape, flex payment plans are a sensible response. But although they’re in high demand, they can create a financial burden on practices if not deployed in a way that accounts for the business’ cash flow, staffing, RCM technology, and other resources.

Here are some models to consider that can help make patient financing work for both your patients and your bottom line:

1. Internal Financing

In this model, the practice self-finances the accounts receivable on its own. Doing so gives businesses the benefit of owning their accounts receivable outright without paying fees to third-party vendors.

But obviously, this model doesn’t work for everyone. The practice assumes 100 percent of the risk of unpaid bills, and the burden of follow-up and collection falls on internal staff. Internal models also require enough cash flow to sustain amortizations, although business owners can pursue commercial loan options to keep operations running.

Even within this single model, there are many gradients. For example, if staffing and existing technology can’t support internal financing processes but cashflow can, many practices work with companies to select from predefined payment terms[4] that offer easy online pay solutions many consumers have come to expect.

2. Medical Credit Cards

Some practices make patient financing work by engaging with third-party vendors that extend lines of credit to patients. Such models are quite popular; many consumers are already familiar with them, and the availability of interest-free financing can help attract and retain patients. Moreover, many vendors offer software, promotional materials, and other resources that minimize the lift on internal staff.

But these services can involve fees that take a bite out of a practice’s accounts receivable, so it’s important to plan accordingly. Some—but not all—agreements require practices to assume the risk for unpaid bills.

3. Concierge Payments

Concierge and direct care are a different business model that resembles a retainer for self-pay patients. These are particularly popular for dental offices but have gained popularity[5] even among medical practices.

These models make cash flow more predictable year-round through ongoing membership fees. For dental offices, membership plans can provide care beyond what traditional dental insurance maximum benefits may allow.

However, starting up this model can be more challenging and involve lower revenue in the beginning and difficulty recruiting patients.[6]

4. Bank Financing

This option provides third-party financing through medical credit cards or lines of credit but with the added bonus of working through your bank[7] for ancillary support. Having the support of an existing bank relationship may provide certain efficiencies, such as onboarding and ongoing data management.

Ultimately, these have similar pros and cons to medical credit cards: They may involve a fee that lessens the value of accounts receivable, but they offload the hassle and potentially the risk of managing patient financing on an external party.

Making Patient Financing Work for You

If you haven’t yet implemented a patient financing model, now’s the time to consider it. There are multiple models to explore between internal financing, medical credit cards, concierge programs, and bank financing, and they all have advantages and disadvantages.

As you think about the options, it’s important to assess what’s feasible with your staff, financing, and technology considering current strains like labor shortages. Also consider financial pressures, for both your practice and your patients.

But you don’t have to go through it alone: Work with trusted financial and banking experts to determine which path is best for your short- and long-term needs.