Business , Columns

Why not follow human medicine?

Physicians offer payment plans to clients, and a veterinary practice can, too.

Why not follow human medicine?
Human hospitals, which have offered payment plans for years, are now experimenting with prepayment options. That’s where outsourced companies have entered the picture, offering interest-free loans and manageable payments.

You need a non-emergency medical procedure that costs about $6,000. Since your health insurance plan includes a $6,500 annual deductible, your doctor asks you to prepay for the procedure. What do you do?

It might sound crazy, but it’s not. Situations like this one are happening more often as consumers face higher deductibles in order to afford monthly insurance premiums. Many patients cannot afford to pay their deductible upfront, and hospitals and physicians are having a harder time collecting it. A 2017 survey conducted by Harris Poll — — found that 78 percent of workers lived paycheck to paycheck, up 
3 percent from the year before.

Now, carry this over to the veterinary profession. How many times have you been unable to provide the gold standard of care because a pet owner could not pay in full at the time of service? How often has a client delayed or denied treatment because of the cost? This happens far too often, and it’s having a drastic effect on the veterinary profession.

Manageable Payments

As workers live paycheck to paycheck, it’s not surprising that new-client visits fell nearly every month from January 2015 to July 2017, according to the Veterinary Hospital Managers Association. How can the veterinary profession thrive amid such a dramatic decline? How can you attract new clients?

Does the answer lie in what human medicine is doing? Human hospitals, which have offered payment plans for years, are now experimenting with prepayment options. That’s where outsourced companies have entered the picture, offering interest-free loans and manageable payments.

Human health care has realized the need for payment alternatives in order to meet changing economic conditions. Karen Popa, former director of revenue cycle at Munson Healthcare, stated in an article in Becker’s Hospital Review, “From a strategic standpoint, adopting a proactive approach to payment plans positions the organization to succeed as the overall industry demands more and more direct payment from its consumers.”

Jeff Hurst, former senior vice president of finance at Florida Hospital/Adventist Health System, told the online publication RevCycle Intelligence that the mindset of “you need to pay in full at the time of service or you need to pay in full when you get your initial bill has to transform to a more consumer-friendly mindset.”

“You really need to be a little more flexible in how you’re approaching your patients in terms of those who want to satisfy their responsibility but just need a little bit more time,” Hurst said.

Multiple Benefits

Veterinary practices face the same challenges — probably even more challenges — as human hospitals. How many unpaid patient bills are on your books? How often has a client had to delay treatment for financial reasons? How many clients have you referred to third-party financing, costing you 5 to 15 percent of your treatment fees? How often have you lost revenue because the pet owner declined a procedure? How many clients have you turned away because they could not pay in full at the time of service? How many appointment slots remain unfilled?

Should the veterinary profession do what human medicine is doing? The benefits to offering additional payment alternatives are many:

  • Increased patient visits.
  • More new clients.
  • Better compliance with necessary procedures.
  • An enhanced quality of life for animals, pet owners and the veterinary team.

In-House Billing Can Be Trouble

But who wants to manage multiple payment options? Sure, you can manage accounts receivables yourself. Gone are the days of stuffing envelopes and mailing statements. Everything is electronic, and plenty of software options are available. Technology puts many resources at your fingertips to ensure a successful accounts receivables system. However, I would not recommend this option if you don’t have the staff to properly manage and follow up on client bank changes and missed payments.

The better solution might be to outsource receivables, similar to what many human hospitals have done, to a company that is experienced in handling veterinary accounts and that can give you and your clients more options and proper customer service. Clients are more likely to pay a bank or billing company than they are to pay your practice directly. These companies will typically work to collect a debt, while hospitals are traditionally more relaxed when it comes to debt collection.

Some of the no-interest companies that hospitals use offer payment plans regardless of a client’s credit score. Hospitals also have total control over the length of time extended.

April York, senior director of patient finance for Novant Health, said in an interview with Health News in April 2017: “To remain financially stable, we had to do something. Patients needed longer to pay. They needed a variety of options.”

Since Novant launched a payment plan system, the patient default rate fell from 32 percent to 12 percent because the patient was given control of how to pay the bill.

Wake Forest Baptist Medical Center noticed that patients did not realize their deductibles had increased. Wake Forest now asks for payment before non-emergency services and offers zero-interest, longer term payment plans.

With less than 3 percent of pet owners carrying pet insurance and veterinary prices increasing every year, the profession must rethink the way it approaches clients about paying for services if it wants to attract new clients. Consider extending payment plans to your clients. Don’t let the 1 to 5 percent of potential deadbeats stop you from helping the other 95 percent of pet owners who pay on time. 
If you have open appointment slots, wouldn’t you rather have 
95 percent of something than 
100 percent of nothing?

Coupled with wellness plans and prepayment plans for non-emergency procedures, you can offer client-centric solutions to help many more pets and create tremendous goodwill in your community.

Payment options generate a recurring revenue stream, and your practice will reap the benefits associated with professionally managed accounts receivables.

VetPartners member Tony Ferraro is president of Total Financial Services Inc.