Client financing pays dividends

Third-party funding, whether by credit card or loan, can ensure that the pet gets the care it needs and the practice gets the business.

Client financing pays dividends
Clients can quickly and easily apply for financing themselves, often from a smartphone.

When pet owners can’t afford to pay for veterinary services, everyone suffers: the patient, which might go without proper medical treatment; the client, who can’t help the pet and might consider euthanasia in place of costly treatment options; and the clinic, which misses out on the revenue.

“Affordability can be a primary barrier for pet owners when deciding on a procedure,” said Patrick Keefe, director of veterinary health for the health care financing company CareCredit. “If a client’s concern regarding cost is resolved early in the decision-making process, they may be more likely to accept recommended treatment. If cost isn’t resolved, clients may delay or not accept recommended procedures.”

Neil Stanga, vice president of business development for Scratch Financial, pointed to a 2017 Bankrate report that showed nearly 6 in 10 Americans didn’t have enough savings to pay a $1,000 veterinary bill.

“With that in mind, it isn’t surprising that pet parents decline 51 percent of veterinary procedures above $1,000,” he said. “It’s estimated that as much as $31.5 billion in veterinary treatment was foregone [in 2016].”

Options to Help Clients Pay

Offering in-clinic payment plans is one way to ensure a patient gets the care it needs, but the collections process can take up the front office staff’s precious time and energy. Clients might need months, if not years, to pay off their balance, and all too often they simply stop paying, forcing clinics to either write off the amount owed or turn to a collection agency.

Partnering with one or more third-party financing companies can be a win-win for patients, clients and clinics. Terms vary by company, and clinics might be charged enrollment, merchant or transaction fees, but in general, the hospital is paid in full when a client opts for third-party financing of veterinary expenses.

Scratch Financial supplies a loan rather than a line of credit.

“When someone applies for a credit card, it leaves a hard inquiry on their credit report even if they’re declined,” Stanga said. “Scratch isn’t a credit card, so clients apply without affecting their credit score. Many of our customers are people who don’t want another credit card.”

Easier Approvals

In decades past, applying for third-party financing was often cumbersome. Veterinary clients had to fill out lengthy paper applications, and then the front office staff spent significant time inputting the information, running the credit inquiry and waiting for a response. Today, clients can quickly and easily apply themselves, often from a smartphone.

“Financing programs for veterinary clinics fundamentally function the same way they did 10 years ago,” said Terry Fuller, business development manager for Wells Fargo Retail Services, which provides a credit card to veterinary clients. “The way clients access these programs, however, is very different. We’ve seen strong migration away from old paper processes and credit card terminals to online and mobile applications, and integration with practice management software.”

Benefits to the Clinic

When the treatment plan for a sick or injured pet will run into the thousands of dollars, informing the already emotional owner can be difficult. With third-party financing, CareCredit’s Keefe said, “Practices are able to have a payment solution which can help make the financial conversation easier.”

Clients who opt for a line of credit might feel more comfortable authorizing treatment of an ongoing medical problem or even a future issue, he said.

“On average, CareCredit cardholders who opened their account at a veterinary office used their card 5.25 times per year for veterinary services in 2016,” Keefe said.

The value to the clinic is being paid upfront without having to follow up with the client for monthly payments. The finance company assumes full liability on the debt so that if the client defaults, the practice owner is unaffected.

“We don’t want to see our customers default,” said Fuller, with Wells Fargo. “If a customer has difficulties, we want them to contact us and we will work with them to find a resolution.”

Benefits to Clients

Third-party financing gives clients the peace of mind that they will be able to afford needed care for their pets. Typically, many financing plans are like other consumer credit cards.

“It is a credit card with a revolving line of credit that can be used repeatedly, subject to credit approval and availability, to pay at any location within CareCredit’s network of over 200,000 enrolled providers and select retail locations,” Keefe said.

Alternatively, Scratch’s payment plans allow clients to pay a large bill over time without the need for a credit check. Customers can choose from one of two plans.

“Scratch’s Pay Later product gives customers 30 days to pay a bill with no interest and without any hard credit inquiry,” Stanga said. “Clients with pet health insurance often use Pay Later so they don’t have to outlay all of the money upfront and wait to be reimbursed by the insurance company.”

Ninety-five percent of Scratch customers choose the other option, Pay Over Time, a simple-interest, 12-month payment plan, Stanga said.

One choice doesn’t always work for all clients, so the best approach for a veterinary practice might be to offer a variety of financial options, including credit cards and third-party payment plans. In some cases, in-house payment plans might be an option for clients unable to get credit approval.